EXHIBIT 1.1
2,750,000 SHARES
PROASSURANCE CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
DATED , 2002
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TABLE OF CONTENTS
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................2
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................2
(a) Compliance with Registration Requirements............................................................2
(b) Offering Materials Furnished to Underwriters.........................................................3
(c) Distribution of Offering Material By the Company.....................................................3
(d) The Underwriting Agreement...........................................................................3
(e) Authorization of the Common Shares...................................................................3
(f) No Applicable Registration or Other Similar Rights...................................................3
(g) No Material Adverse Change...........................................................................3
(h) Independent Accountants..............................................................................4
(i) Preparation of the Financial Statements..............................................................4
(j) Incorporation and Good Standing of the Company and its Subsidiaries..................................4
(k) Capitalization and Other Capital Stock Matters.......................................................5
(l) Stock Exchange Listing...............................................................................5
(m) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required...........5
(n) No Material Actions or Proceedings...................................................................6
(o) Intellectual Property Rights.........................................................................6
(p) All Necessary Permits, etc...........................................................................6
(q) Absence of Labor Dispute.............................................................................6
(r) Title to Properties..................................................................................7
(s) Tax Law Compliance...................................................................................7
(t) Company Not an "Investment Company"..................................................................7
(u) Insurance............................................................................................7
(v) No Price Stabilization or Manipulation...............................................................7
(w) Related Party Transactions...........................................................................7
(x) Exchange Act Compliance..............................................................................8
(y) No Unlawful Contributions or Other Payments..........................................................8
(z) Company's Accounting System and Internal Controls....................................................8
(aa) ERISA Compliance....................................................................................8
(bb) Brokers.............................................................................................9
(cc) No Outstanding Loans or Other Indebtedness..........................................................9
(dd) Compliance with Laws................................................................................9
(ee) Statutory Insurance Filings.........................................................................9
(ff) Reserving Practices.................................................................................9
(gg) Claims-paying Ability Rating........................................................................9
(hh) Validity of Reinsurance Treaties...................................................................10
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER....................................10
(a) The Underwriting Agreement..........................................................................10
(b) The Custody Agreement and Power of Attorney.........................................................10
(c) Title to Common Shares to be Sold; All Authorizations Obtained......................................10
(d) Security Entitlement................................................................................11
(e) Delivery of the Common Shares to be Sold............................................................11
(f) Non-Contravention; No Further Authorizations or Approvals Required..................................11
(g) No Registration or Other Similar Rights.............................................................11
(h) No Further Consents, etc............................................................................11
(i) Disclosure Made by the Selling Stockholder in the Prospectus........................................12
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(j) No Price Stabilization or Manipulation..............................................................12
(k) Confirmation of Company Representations and Warranties..............................................12
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.............................................12
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY..........................................................15
A. COVENANTS OF THE COMPANY....................................................................15
(a) Representative's Review of Proposed Amendments and Supplements......................................15
(b) Securities Act Compliance...........................................................................15
(c) Amendments and Supplements to the Prospectus and Other Securities Act Matters.......................15
(d) Copies of any Amendments and Supplements to the Prospectus..........................................16
(e) Use of Proceeds.....................................................................................16
(f) Transfer Agent and Custodian........................................................................16
(g) Earnings Statement..................................................................................16
(h) Periodic Reporting Obligations......................................................................16
(i) Company to Provide Interim Financial Statements.....................................................16
(j) New York Stock Exchange Listing.....................................................................16
(k) Exchange Act Compliance.............................................................................16
(l) Agreement Not to Offer or Sell Additional Securities................................................16
(m) Future Reports to the Representatives...............................................................17
(n) Investment Limitation...............................................................................17
(o) No Manipulation of Price............................................................................17
(p) Existing Lock-Up Agreement..........................................................................17
B. COVENANTS OF THE SELLING STOCKHOLDER........................................................17
(a) Agreement Not to Offer or Sell Additional Securities................................................17
(b) Delivery of Forms W-8 and W-9.......................................................................18
(c) BAS.................................................................................................18
SECTION 4. PAYMENT OF EXPENSES..........................................................................18
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS............................................19
(a) Accountants' Comfort Letter.........................................................................19
(b) Compliance with Registration Requirements; No Stop Order; No Objection from NASD....................19
(c) No Material Adverse Change or Ratings Agency Change.................................................20
(d) Opinion of External and Internal Counsel for the Company............................................20
(e) Opinion of Counsel for the Underwriters.............................................................20
(f) Officers' Certificate...............................................................................20
(g) Bring-down Comfort Letter...........................................................................21
(h) Opinion of Counsel for the Selling Stockholder......................................................21
(i) Selling Stockholder's Certificate...................................................................21
(j) Selling Stockholder's Documents.....................................................................21
(k) Lock-Up Agreement from Officers and Directors of the Company........................................21
(l) Additional Documents................................................................................21
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES......................................................22
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT..............................................................22
SECTION 8. INDEMNIFICATION..............................................................................22
(a) Indemnification of the Underwriters by the Company..................................................22
(b) Indemnification of the Underwriters by the Selling Stockholder......................................23
(c) Indemnification of the Company, its Directors and Officers and the Selling Stockholder..............24
(d) Notifications and Other Indemnification Procedures..................................................25
(e) Settlements.........................................................................................25
SECTION 9. CONTRIBUTION.................................................................................26
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS..........................................28
SECTION 11. TERMINATION OF THIS AGREEMENT...............................................................28
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.........................................29
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SECTION 13. NOTICES.....................................................................................29
SECTION 14. SUCCESSORS..................................................................................30
SECTION 15. PARTIAL UNENFORCEABILITY....................................................................30
SECTION 16. GOVERNING LAW...............................................................................30
SECTION 17. FAILURE OF THE SELLING STOCKHOLDER TO SELL AND DELIVER COMMON SHARES........................30
SECTION 18. GENERAL PROVISIONS..........................................................................30
UNDERWRITING AGREEMENT
, 0000
XXXX XX XXXXXXX SECURITIES LLC
XXXXXXX, XXXXXXX & CO.
XXXXXXX X'XXXXX & PARTNERS, L.P.
As Representatives of the several Underwriters
c/o BANC OF AMERICA SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. ProAssurance Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 2,500,000 shares of its common
stock, par value $0.01 per share (the "Common Stock"); and a stockholder of the
Company, A Xxxxxxx Xxxxx, M.D. (the "Selling Stockholder") severally proposes to
sell to the Underwriters an aggregate of 250,000 shares of Common Stock. The
2,500,000 shares of Common Stock to be sold by the Company and the 250,000
shares of Common Stock to be sold by the Selling Stockholder are collectively
called the "Firm Common Shares". In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 375,000 shares of Common
Stock, as provided in Section 2. The additional 375,000 shares to be sold by the
Company pursuant to such option are called the "Optional Common Shares". The
Firm Common Shares and, if and to the extent such option is exercised, the
Optional Common Shares are collectively called the "Common Shares". Banc of
America Securities LLC ("BAS"), Xxxxxxx, Xxxxxxx & Co. and Sandler X'Xxxxx &
Partners, L.P. have agreed to act as representatives of the several Underwriters
(in such capacity, the "Representatives") in connection with the offering and
sale of the Common Shares.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 333-100526), which contains a form of prospectus to be used in
connection with the public offering and sale of the Common Shares. Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933 and the rules and regulations
promulgated thereunder (collectively, the "Securities Act"), including all
documents incorporated or deemed to be incorporated by reference therein and any
information deemed to be a part thereof at the time of effectiveness pursuant to
Rule 430A or Rule 434 under the Securities Act or the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder (collectively, the
"Exchange Act"), is called the "Registration Statement". Any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act
is called the "Rule 462(b) Registration Statement", and from and after the date
and time of filing of the Rule 462(b) Registration Statement the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
Such prospectus, in the form first used by the Underwriters to confirm sales of
the Common
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Shares, is called the "Prospectus"; provided, however, if the Company has, with
the consent of BAS, elected to rely upon Rule 434 under the Securities Act, the
term "Prospectus" shall mean the Company's prospectus subject to completion
(each, a "preliminary prospectus") dated October 25, 2002 (such preliminary
prospectus is called the "Rule 434 preliminary prospectus"), together with the
applicable term sheet (the "Term Sheet") prepared and filed by the Company with
the Commission under Rules 434 and 424(b) under the Securities Act and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus or the Term Sheet, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System ("XXXXX"). All
references in this Agreement to financial statements and schedules and other
information which is "contained," "included" or "stated" in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the
Registration Statement or the Prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement or
the Prospectus shall be deemed to mean and include the filing of any document
under the Exchange Act which is or is deemed to be incorporated by reference in
the Registration Statement or the Prospectus, as the case may be.
Each of the Company and the Selling Stockholder hereby confirm
their respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents, warrants and covenants to each Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has complied
to the Commission's satisfaction with all requests of the Commission for
additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are contemplated or
threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Common Shares.
Each of the Registration Statement, any Rule 462(b) Registration Statement and
any post-effective amendment thereto, at the time it became effective and at all
subsequent times, complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus, as
amended or supplemented, as of its date and at all subsequent times, did not and
will not contain 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. The
representations and
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warranties set forth in the two immediately preceding sentences do not apply to
statements in or omissions from the Registration Statement, any Rule 462(b)
Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by the Representatives expressly for use therein. There are
no contracts or other documents required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement which have not been described
or filed as required. Neither the Company nor any of its subsidiaries are in
receipt of, or are aware of, any unresolved or disputed comments on any
statutory or regulatory filings with the Securities and Exchange Commission.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives three complete manually signed copies of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The Company has
not distributed and will not distribute, prior to the later of the Second
Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Common Shares, any offering material in connection with the
offering and sale of the Common Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(d) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(e) Authorization of the Common Shares. The Common Shares to be
purchased by the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as
one entity (any such change is called a "Material Adverse Change"); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any
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material transaction or agreement not in the ordinary course of business; and
(iii) there has been no dividend or distribution of any kind declared, paid or
made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or
repurchase or redemption by the Company or any of its subsidiaries of any class
of capital stock.
(h) Independent Accountants. Ernst & Young LLP and
PricewaterhouseCoopers LLP, who have each expressed their opinion with respect
to the financial statements (which term as used in this Agreement includes the
related notes thereto) and supporting schedules filed with the Commission as a
part of the Registration Statement and included in the Prospectus, are
independent public or certified public accountants as required by the Securities
Act. Neither Ernst & Young LLP nor PricewaterhouseCoopers LLP have provided any
non-audit services to the Company or its subsidiaries since December 31, 2000,
except for tax, actuarial and cash management services as well as services
provided in conjunction with the Common Stock offering provided for herein.
(i) Preparation of the Financial Statements. The financial statements
(a) filed with the Commission as a part of the Registration Statement and
included, or incorporated by reference, in the Prospectus and (b) filed by
Professionals Group, Inc. with the Commission for the three months ended March
31, 2002 on Form 10-Q present fairly the consolidated financial position of the
Company and its subsidiaries, or of Professionals Group, Inc. and its
subsidiaries, as the case may be, as of and at the dates indicated and the
results of their operations and cash flows for the periods specified. The
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein. Such financial statements and
supporting schedules have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes thereto. No
other financial statements or supporting schedules are required to be included
in the Registration Statement. The financial data set forth in the Prospectus
under the captions "Prospectus Summary--Summary Selected Financial Data",
"Selected Financial Data" and "Capitalization" fairly present the information
set forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement. The unaudited pro forma
condensed consolidated statement of income of the Company and its subsidiaries
and the related notes thereto included under the caption "Pro Forma Financial
Data" and elsewhere in the Prospectus and in the Registration Statement present
fairly the information contained therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly presented 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.
(j) Incorporation and Good Standing of the Company and its
Subsidiaries. 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 of its incorporation and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and, in the case of the Company, to enter into
and perform its obligations under this Agreement. Each of the Company and each
subsidiary 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 for such jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a
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Material Adverse Change. All of the issued and outstanding capital stock of each
subsidiary has been duly authorized and validly issued, is fully paid and
nonassessable and, other than with respect to MEEMIC Holdings, Inc., is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or claim, except that the shares
of capital stock of Medical Assurance, Inc. Professionals Group, Inc., The
Medical Assurance Company, Inc. and ProNational Insurance Company are subject to
a pledge and security agreement with SouthTrust Bank, as Administrative Agent,
for the ratable benefit of certain lenders under a credit facility dated May 10,
2001. The Company owns, directly or through its subsidiaries, approximately 84%
of the outstanding common stock of MEEMIC Holdings, Inc., free and clear of any
security interest, mortgage, pledge, lien, encumbrance or other claim. The
Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in Exhibit 22 to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001.
(k) Capitalization and Other Capital Stock Matters. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options described in the Prospectus).
The Common Stock (including the Common Shares) conforms in all material respects
to the description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock (including the shares of Common Stock owned
by the Selling Stockholder) have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with federal and
state securities laws. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in the
Prospectus. The description of the Company's stock option, stock bonus and other
stock plans or arrangements, and the options or other rights granted thereunder,
set forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(l) Stock Exchange Listing. The Common Shares have been approved for
listing on the New York Stock Exchange.
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default (or,
with the giving of notice or lapse of time, would be in default) ("Default")
under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other 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 of its subsidiaries is
subject (each, an "Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change. The
Company's execution, delivery and performance of this Agreement and consummation
of the transactions contemplated hereby and by the Prospectus (i) have been duly
authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter or by-laws of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach of, or Default
under, or result in the creation or imposition of any
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lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary. No consent, approval, authorization or other
order of, or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for the Company's execution,
delivery and performance of this Agreement and consummation of the transactions
contemplated hereby and by the Prospectus.
(n) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened (i) against or affecting the Company or any of
its subsidiaries, (ii) which has as the subject thereof any officer or director
of, or property owned or leased by, the Company or any of its subsidiaries or
(iii) relating to environmental or discrimination matters, where in any such
case (A) there is a reasonable possibility that such action, suit or proceeding
might be determined adversely to the Company or such subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement.
(o) Intellectual Property Rights. The Company and its subsidiaries own
or possess sufficient trademarks, trade names, patent rights, copyrights, domain
names, licenses, approvals, trade secrets and other similar rights
(collectively, "Intellectual Property Rights") reasonably necessary to conduct
their businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change.
Neither the Company nor any of its subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights of others,
which infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Change. The Company is not a party to or bound by
any options, licenses or agreements with respect to the Intellectual Property
Rights of any other person or entity that are required to be set forth in the
Prospectus and are not described in all material respects. None of the
technology employed by the Company has been obtained or is being used by the
Company in violation of any contractual obligation binding on the Company or, to
the Company's knowledge, any of its officers, directors or employees or
otherwise in violation of the rights of any persons.
(p) All Necessary Permits, etc. The Company and each subsidiary possess
such valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct their respective businesses, and neither the Company nor any subsidiary
has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.
(q) Absence of Labor Dispute. No labor dispute with the employees of
the Company, nor any of its subsidiaries 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 subsidiary's principal
customers or contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Change.
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(r) Title to Properties. The Company and each of its subsidiaries has
good and marketable title to all the properties and assets reflected as owned in
the financial statements referred to in Section 1(A) (i) above (or elsewhere in
the Prospectus), in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such property
by the Company or such subsidiary. The real property, improvements, equipment
and personal property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as are not material and
do not materially interfere with the use made or proposed to be made of such
real property, improvements, equipment or personal property by the Company or
such subsidiary.
(s) Tax Law Compliance. The Company and its subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns and have
paid all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them. The
Company has made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 1(A) (i) above in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has not been
finally determined.
(t) Company Not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and after receipt of
payment for the Common Shares will not be, an "investment company" within the
meaning of Investment Company Act and will conduct its business in a manner so
that it will not become subject to the Investment Company Act.
(u) Insurance. Each of the Company and its subsidiaries are insured by
recognized, financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied. The term insurance as applied in this
section (u) is deemed not to include reinsurance contracts or treaties.
(v) No Price Stabilization or Manipulation. The Company has not taken
and will not take, directly or indirectly, any action designed to or that might
be reasonably expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Common Shares. The Company acknowledges that the Underwriters may engage in
market making transactions in the Common Shares on the New York Stock Exchange
in accordance with Regulation M under the Exchange Act.
(w) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any other
person required to be described in the Prospectus which have not been described
as required.
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(x) Exchange Act Compliance. The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material respects
with the requirements of the Exchange Act, and, when read together with the
other information in the Prospectus, at the time the Registration Statement and
any amendments thereto become effective and at the First Closing Date and the
Second Closing Date, as the case may be, 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 fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, and, with respect to any financial statements and other
financial information, fairly present in all material respects the financial
condition, results of operations and cash flows of the company as of, and for,
the periods so presented.
(y) No Unlawful Contributions or Other Payments. Neither the Company
nor any of its subsidiaries nor, to the best of the Company's knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution or
other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be
disclosed in the Prospectus.
(z) Company's Accounting System and Internal Controls. The Company
maintains a system of accounting and internal controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles as applied in the United States and to
maintain accountability for assets; (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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences; (v) financial statement certification requirements under the
Exchange Act or otherwise are accurate and all requisite pre-certification
procedures are adequately performed; (vi) an industry-standard code of ethics is
consistently reviewed and followed without exception; and (vii) New York Stock
Exchange corporate governance requirements are complied with, in all material
respects, including, without limitation, audit and other board of directors
committee composition requirements, except as permitted by any applicable NYSE
waiting period.
(aa) ERISA Compliance. The Company and its subsidiaries and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained by
the Company, its subsidiaries or their "ERISA Affiliates" (as defined below) are
in compliance in all material respects with ERISA. "ERISA Affiliate" means, with
respect to the Company or a subsidiary, any member of any group of organizations
described in Sections 414(b),(c),(m) or (o) of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder
(the "Code") of which the Company or such subsidiary is a member. No "reportable
event" (as defined under ERISA) has occurred or is reasonably expected to occur
with respect to any "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect
9
to termination of, or withdrawal from, any "employee benefit plan" or (ii)
Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification.
(bb) Brokers. There is no broker, finder or other party that is
entitled to receive from the Company any brokerage or finder's fee or other fee
or commission as a result of any transactions contemplated by this Agreement.
(cc) No Outstanding Loans or Other Indebtedness. There are no
outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees or indebtedness by the Company to or
for the benefit of any of the officers or directors of the Company or any of the
members of any of them, except as disclosed in the Prospectus.
(dd) Compliance with Laws. The Company and each of its subsidiaries is
conducting its business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, except
where failure to be so in compliance would not result in a Material Adverse
Change. In particular, without limitation, each of the subsidiaries of the
Company is in compliance with the requirements of the insurance laws and
regulations of its jurisdiction of incorporation and the insurance laws and
regulations of other jurisdictions which are applicable to each such subsidiary,
and has filed all notices, reports, documents or other information required to
be filed thereunder, except where the failure to so comply or file would not
have, individually or in the aggregate with other such failures, result in a
Material Adverse Change.
(ee) Statutory Insurance Filings. The 2001 statutory annual statements
of each regulated insurance subsidiary of the Company and the statutory balance
sheets and income statements included in such statutory annual statements
together with related schedules and notes, have been prepared, in all material
respects, in conformity with statutory accounting principles or practices
required or permitted by the appropriate insurance regulator of the jurisdiction
of domicile of each such subsidiary, and such statutory accounting practices
have been applied on a consistent basis throughout the periods involved, except
as may otherwise be indicated therein or in the notes thereto, and present
fairly, in all material respects, the statutory financial position of such
insurance subsidiaries as of the dates thereof, and the statutory basis results
of operations of such insurance subsidiaries for the periods covered thereby.
(ff) Reserving Practices. The Company and its insurance subsidiaries
have made no material changes in their insurance reserving practices since
December 31, 2001, except where such change in such insurance reserving
practices would not reasonably be expected to result in a Material Adverse
Change.
(gg) Claims-paying Ability Rating. The Company is not aware of any
threatened or pending downgrading of any of its subsidiary's claims-paying
ability rating by A.M. Best Company, Inc. or any other "nationally recognized
statistical rating organization" as such term is defined for purposes of Rule
436(g)(2) under the Securities Act.
10
(hh) Validity of Reinsurance Treaties. All reinsurance treaties and
arrangements to which the Company or any subsidiary is a party are in full force
and effect and neither the Company nor any subsidiary is in violation of or in
default in the performance, observance or fulfillment of, any obligation,
agreement, covenant or condition contained therein; neither the Company nor any
subsidiary has received any notice from any of the other parties to such
treaties, contracts or agreements that such other party intends not to perform
such treaty and, to the best knowledge of the Company and its subsidiaries, the
Company and its subsidiaries have no reason to believe that any of the other
parties to such treaties or arrangements will be unable to perform such treaty
or arrangement; except, in each of the above cases, (i) to the extent adequately
and properly reserved for in the consolidated financial statements of the
Company included in the Prospectus and (ii) for such violations or defaults that
would not result in a Material Adverse Change.
Any certificate signed by an officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter as
to the matters set forth therein.
The Company acknowledges that the Underwriters and, for
purposes of the opinions to be delivered pursuant to Section 5 hereof, counsel
to the Company and counsel to the Underwriters, will rely upon the accuracy and
truthfulness of the foregoing representations and hereby consents to such
reliance.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER.
In addition to the representations, warranties and covenants set forth in
Section 1(A), the Selling Stockholder represents, warrants and covenants to each
Underwriter as follows:
(a) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and is a valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
(b) The Custody Agreement and Power of Attorney. The Custody Agreement
signed by the Selling Stockholder and Mellon Investor Services LLC, as custodian
(the "Custodian"), relating to the deposit of the Common Shares to be sold by
the Selling Stockholder (the "Custody Agreement") and the appointment of the
Custodian as the Selling Stockholder's attorney-in-fact to the extent set forth
therein relating to the transactions contemplated hereby and by the Prospectus,
of the Selling Stockholder has been duly authorized, executed and delivered by
the Selling Stockholder and is a valid and binding agreement of the Selling
Stockholder, enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(c) Title to Common Shares to be Sold; All Authorizations Obtained. The
Selling Stockholder has, and on the First Closing Date and the Second Closing
Date (as defined below) will have, good and valid title to or a valid "security
entitlement" within the meaning
11
of Section 8-102 of the New York Uniform Commercial Code ("NYUCC") in respect
of, all of the Common Shares which may be sold by the Selling Stockholder
pursuant to this Agreement free and clear of all security interests, claims,
liens, equities or other encumbrances on such date and the legal right and
power, and all authorizations and approvals required by law or other
organization documents to enter into this Agreement and its Custody Agreement,
to sell, transfer and deliver all of the Common Shares which may be sold by the
Selling Stockholder pursuant to this Agreement and to comply with its other
obligations hereunder and thereunder.
(d) Security Entitlement. Upon payment for the Common Shares to be sold
by the Selling Stockholder pursuant to this Agreement, delivery of such Common
Shares, as directed by the Underwriters, to Cede & Co. ("Cede") or such other
nominee as may be designated by the Depository Trust Company ("DTC"),
registration of such Common Shares in the name of Cede or such other nominee and
the crediting of such Common Shares on the records of DTC to securities accounts
of the Underwriters (assuming that neither DTC nor any such Underwriter has
notice of any adverse claim to such Common Shares or any security entitlement in
respect of such Common Shares), (A) DTC shall be a "protected purchaser" of such
Common Shares within the meaning of Section 8-303 of the NYUCC and (B) the
Underwriters will acquire a security entitlement in respect of such Common
Shares free and clear of any adverse claim.
(e) Delivery of the Common Shares to be Sold. Delivery of the Common
Shares which are sold by the Selling Stockholder pursuant to this Agreement will
pass good and valid title to such Common Shares, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or other claim.
(f) Non-Contravention; No Further Authorizations or Approvals Required.
The execution and delivery by the Selling Stockholder of, and the performance by
the Selling Stockholder of its obligations under, this Agreement and the Custody
Agreement will not contravene or conflict with, result in a breach of, or
constitute a Default under, or require the consent of any other party to, the
charter or by-laws, or other organizational documents of the Selling Stockholder
or any other agreement or instrument to which the Selling Stockholder is a party
or by which it is bound or under which it is entitled to any right or benefit,
any provision of applicable law or any judgment, order, decree or regulation
applicable to the Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having jurisdiction over
the Selling Stockholder. No consent, approval, authorization or other order of,
or registration or filing with, any court or other governmental authority or
agency, is required for the consummation by the Selling Stockholder of the
transactions contemplated in this Agreement, except the as have been obtained or
made and are in full force and effect under the Securities Act, applicable state
securities or blue sky laws and from the NASD.
(g) No Registration or Other Similar Rights. The Selling Stockholder
does not have any registration or other similar rights to have any equity or
debt securities registered for sale by the Company under the Registration
Statement or included in the offering contemplated by this Agreement, except for
the rights as are described in the Prospectus under "Shares Eligible for Future
Sale".
(h) No Further Consents, etc. No consent, approval or waiver is
required under any instrument or agreement to which the Selling Stockholder is a
party or by which it is bound or under which it is entitled to any right or
benefit, in connection with the offering, sale or
12
purchase by the Underwriters of any of the Common Shares which may be sold by
the Selling Stockholder under this Agreement or the consummation by the Selling
Stockholder of any of the other transactions contemplated hereby.
(i) Disclosure Made by the Selling Stockholder in the Prospectus. All
information furnished by or on behalf of the Selling Stockholder in writing
expressly for use in the Registration Statement and Prospectus is, and on the
First Closing Date and the Second Closing Date will be, true, correct, and
complete in all material respects, and does not, and on the First Closing Date
and the Second Closing Date will not, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the information not
misleading. The Selling Stockholder confirms as accurate the number of shares of
Common Stock set forth opposite the Selling Stockholder's name in the Prospectus
under the caption "Principal Stockholders" (both prior to and after giving
effect to the sale of the Common Shares).
(j) No Price Stabilization or Manipulation. The Selling Stockholder has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Shares.
(k) Confirmation of Company Representations and Warranties. The Selling
Stockholder has no reason to believe that the representations and warranties of
the Company contained in Section 1(A) hereof are not true and correct, is
familiar with the Registration Statement and the Prospectus and has no knowledge
of any material fact, condition or information not disclosed in the Registration
Statement or the Prospectus which has had or may have a Material Adverse Change
and is not prompted to sell shares of Common Stock by any information concerning
the Company which is not set forth in the Registration Statement and the
Prospectus.
Any certificate signed by or on behalf of the Selling
Stockholder and delivered to the Representatives or to counsel for the
Underwriters shall be deemed to be a representation and warranty by the Selling
Stockholder to each Underwriter as to the matters covered thereby.
The Selling Stockholder acknowledges that the Underwriters
and, for purposes of the opinion to be delivered pursuant to Section 5 hereof,
counsel to the Company and counsel to the Underwriters, will rely upon the
accuracy and truthfulness of the foregoing representations and hereby consents
to such reliance.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
The Firm Common Shares. Upon the terms herein set forth, (i) the
Company agrees to issue and sell to the several Underwriters an aggregate of
2,500,000 Firm Common Shares and (ii) the Selling Stockholder agrees to sell to
the several Underwriters 250,000 Firm Common Shares. On the basis of the
representations, warranties and agreements herein contained, and upon the terms
but subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholder the respective number of Firm Common Shares set forth opposite their
names on Schedule A. The purchase price per Firm Common Share to be paid by the
several Underwriters to the Company and the Selling Stockholder shall be $[___]
per share.
13
The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of the Company, 000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 (or
such other place as may be agreed to by the Company and BAS) at 9:00 a.m. New
York time, on [___], or such other time and date not later than 1:00 p.m. New
York time, on [___] as the Representatives shall designate by notice to the
Company (the time and date of such closing are called the "First Closing Date").
The Company and the Selling Stockholder hereby acknowledge that circumstances
under which the Representatives may provide notice to postpone the First Closing
Date as originally scheduled include, but are in no way limited to, any
determination by the Company, the Selling Stockholder or the Representatives to
recirculate to the public copies of an amended or supplemented Prospectus or a
delay as contemplated by the provisions of Section 10.
The Optional Common Shares; the Second Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to an aggregate of [375,000] Optional Common Shares from the
Company at the purchase price per share to be paid by the Underwriters for the
Firm Common Shares. The option granted hereunder is for use by the Underwriters
solely in covering any over-allotments in connection with the sale and
distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Common Shares are to be registered and (iii) the
time, date and place at which such certificates will be delivered (which time
and date may be simultaneous with, but not earlier than, the First Closing Date;
and in such case the term "First Closing Date" shall refer to the time and date
of delivery of certificates for the Firm Common Shares and the Optional Common
Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Optional Common
Shares are to be purchased, (a) each Underwriter agrees, severally and not
jointly, to purchase the number of Optional Common Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may determine)
that bears the same proportion to the total number of Optional Common Shares to
be purchased as the number of Firm Common Shares set forth on Schedule A
opposite the name of such Underwriter bears to the total number of Firm Common
Shares and (b) the Company agrees to sell the number of Optional Common Shares
(subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Optional Common Shares to be sold as the number of Firm Common Shares
set forth in the "Introductory" paragraph of this Agreement to be sold by the
Company, bears to the total number of Firm Common Shares. The Representatives
may cancel the option at any time prior to its expiration by giving written
notice of such cancellation to the Company.
Public Offering of the Common Shares. The Representatives hereby advise
the Company and the Selling Stockholder that the Underwriters intend to offer
for sale to the public, as described in the Prospectus, their respective
portions of the Common Shares as soon after this Agreement has been executed and
the Registration Statement has been
14
declared effective as the Representatives, in their sole judgment, has
determined is advisable and practicable.
Private Placement Offering of Common Shares into Canada. The
Representatives hereby advise the Company and the Selling Stockholder that the
Underwriters may offer the Common Shares for sale to certain purchasers in
Canada pursuant to exemptions from the requirements to file a prospectus with
the appropriate Canadian securities regulators and in accordance with certain
dealer registration requirements under applicable provincial securities laws or,
alternatively, pursuant to exemptions from the dealer registration requirement
in the relevant province or territory of Canada in which such offer or sale is
made.
Payment for the Common Shares. Payment for the Common Shares to be sold
by the Company shall be made at the First Closing Date (and, if applicable, at
the Second Closing Date) by wire transfer of immediately available funds to the
order of the Company. Payment for the Common Shares to be sold by the Selling
Stockholder shall be made at the First Closing Date (and, if applicable, at the
Second Closing Date) by wire transfer of immediately available funds to the
order of the Custodian.
It is understood that the Representatives have been authorized, for
their own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Common Shares and any Optional Common Shares the Underwriters have agreed
to purchase. BAS, individually and not as the Representatives of the
Underwriters, may (but shall not be obligated to) make payment for any Common
Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second Closing
Date, as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under
this Agreement.
The Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Common Shares to be sold by such Selling Stockholder to
the several Underwriters, or otherwise in connection with the performance of
such Selling Stockholder's obligations hereunder and (ii) the Custodian is
authorized to deduct for such payment any such amounts from the proceeds to such
Selling Stockholder hereunder and to hold such amounts for the account of such
Selling Stockholder with the Custodian under the Custody Agreement.
Delivery of the Common Shares. The Company and the Selling Stockholder
shall deliver, or cause to be delivered, to the Representative for the accounts
of the several Underwriters certificates for the Firm Common Shares to be sold
by them at the First Closing Date, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The Company and the Selling Stockholder shall also deliver, or cause
to be delivered, to the Representatives for the accounts of the several
Underwriters, certificates for the Optional Common Shares the Underwriters have
agreed to purchase from them at the First Closing Date or the Second Closing
Date, as the case may be, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. The
certificates for the Common Shares shall be in definitive form and registered in
such names and denominations as the Representatives shall have requested at
least two full business days prior to the First Closing Date (or the Second
Closing Date, as the case may be) and shall be made available for inspection on
the business day preceding the First Closing Date (or the Second Closing Date,
as the case may be) at a
15
location in New York City as the Representatives may designate. Time shall be of
the essence, and delivery at the time and place specified in this Agreement is a
further condition to the obligations of the Underwriters.
Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m.
on the second business day following the date the Common Shares are first
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered, copies of the Prospectus in such quantities and at
such places as the Representatives shall request.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY.
A. COVENANTS OF THE COMPANY. The Company further covenants and
agrees with each Underwriter as follows:
(a) Representative's Review of Proposed Amendments and Supplements.
During such period beginning on the date hereof and ending on the later of the
First Closing Date or such date, as in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), prior to amending or supplementing the Registration Statement
(including any registration statement filed under Rule 462(b) under the
Securities Act) or the Prospectus (including any amendment or supplement through
incorporation by reference of any report filed under the Exchange Act), the
Company shall furnish to the Representatives for review a copy of each such
proposed amendment or supplement, and the Company shall not file any such
proposed amendment or supplement to which the Representatives reasonably
objects.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at any time,
the Company will use its best efforts to obtain the lifting of such order at the
earliest possible moment. Additionally, the Company agrees that it shall comply
with the provisions of Rules 424(b), 430A and 434, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings
made by the Company under such Rule 424(b) were received in a timely manner by
the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities
Act Matters. If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Representatives or counsel for the
16
Underwriters it is otherwise necessary to amend or supplement the Prospectus to
comply with law, the Company agrees to promptly prepare (subject to Section
3(A)(a) hereof), file with the Commission and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will comply
with law.
(d) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any
supplementary materials prepared in accordance with Canadian securities laws
(the "Canadian Wrapper") and any amendments and supplements thereto (including
any documents incorporated or deemed incorporated by reference therein) as the
Representatives may request.
(e) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Common Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(f) Transfer Agent and Custodian. The Company shall engage and
maintain, at its expense, a registrar and transfer agent for the Common Stock as
well as the Custodian for the Common Shares offered by the Selling Stockholder.
(g) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
ending December 31, 2003 that satisfies the provisions of Section 11(a) of the
Securities Act.
(h) Periodic Reporting Obligations. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and the
New York Stock Exchange all reports and documents required to be filed under the
Exchange Act.
(i) Company to Provide Interim Financial Statements. Prior to the
Closing Date, the Company will furnish the Underwriters, as soon as they have
been prepared by or are available to the Company, a copy of any unaudited
interim financial statements of the Company for any period subsequent to the
period covered by the most recent financial statements appearing in the
Registration Statement and the Prospectus.
(j) New York Stock Exchange Listing. The Company will use its best
efforts to list, subject to notice of issuance, the Common Shares on the New
York Stock Exchange.
(k) Exchange Act Compliance. During the Prospectus Delivery Period, the
Company will file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within
the time periods required by the Exchange Act.
(l) Agreement Not to Offer or Sell Additional Securities. During the
period commencing on the date hereof and ending on the 180th day following the
date of the Prospectus, the Company will not, without the prior written consent
of BAS (which consent may be withheld at the sole discretion of BAS), directly
or indirectly, sell, offer, contract or
17
grant any option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any shares of
Common Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares of Common
Stock (other than as contemplated by this Agreement with respect to the Common
Shares); provided, however, that the Company may issue shares of its Common
Stock or options to purchase its Common Stock, or Common Stock upon exercise of
options, pursuant to any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, but only if the holders of such shares,
options, or shares issued upon exercise of such options, agree in writing not to
sell, offer, dispose of or otherwise transfer any such shares or options during
such 180 day period without the prior written consent of BAS (which consent may
be withheld at the sole discretion of the BAS).
(m) Future Reports to the Representatives. During the period of five
years hereafter the Company will furnish to the BAS at 0 Xxxx 00xx Xxxxxx, Xxx
Xxxx, XX 00000 Attention: Xxxxxx Xxxxxxxxx: (i) as soon as practicable after the
end of each fiscal year, copies of the Annual Report of the Company containing
the balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public or certified
public accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form
10-Q, Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its capital stock.
(n) Investment Limitation. The Company shall not invest, or otherwise
use the proceeds received by the Company from its sale of the Common Shares in
such a manner as would require the Company or any of its subsidiaries to
register as an investment company under the Investment Company Act.
(o) No Manipulation of Price. The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any securities of the Company.
(p) Existing Lock-Up Agreement. The Company will enforce all existing
agreements between the Company and any of its security holders that prohibit the
sale, transfer, assignment, pledge or hypothecation of any of the Company's
securities in connection with the Company's initial public offering. In
addition, the Company will direct the transfer agent to place stop transfer
restrictions upon any such securities of the Company that are bound by such
existing "lock-up" agreements for the duration of the periods contemplated in
such agreements.
B. COVENANTS OF THE SELLING STOCKHOLDER. The Selling
Stockholder further covenants and agrees with each Underwriter:
(a) Agreement Not to Offer or Sell Additional Securities. Such Selling
Stockholder will not, without the prior written consent of BAS (which consent
may be withheld in its sole discretion), directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, establish an open "put equivalent
18
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of any shares of Common Stock, options or warrants to acquire
shares of Common Stock, or securities exchangeable or exercisable for or
convertible into shares of Common Stock currently or hereafter owned either of
record or beneficially (as defined in Rule 13d-3 under Securities Exchange Act
of 1934, as amended) by the undersigned, or publicly announce the undersigned's
intention to do any of the foregoing, for a period commencing on the date hereof
and continuing through the close of trading on the date 180 days after the date
of the Prospectus. Notwithstanding the foregoing, in the event that the Selling
Stockholder determines not to sell all 250,000 shares of Common Stock, or such
other number of shares as agreed in writing with Banc of America Securities LLC,
as part of the Offering, the undersigned may sell up to 150,000 shares of Common
Stock at any time provided such shares are sold at a price that equals or
exceeds the offering price of the shares of Common Stock sold pursuant to the
Offering.
(b) Delivery of Forms W-8 and W-9. To deliver to the Representatives
prior to the First Closing Date a properly completed and executed United States
Treasury Department Form W-9.
(c) BAS. BAS, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by the Company or the Selling
Stockholder of any one or more of the foregoing covenants or extend the time for
their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company and the Selling
Stockholder, jointly and severally, agree to pay all costs, fees and expenses
incurred in connection with the performance of their obligations hereunder and
in connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the Common
Shares (including all printing, without limitation, costs), (ii) all fees and
expenses of both the aforementioned Custodian and the registrar and transfer
agent of the Common Stock, (iii) all necessary issue, transfer and other stamp
taxes in connection with the issuance and sale of the Common Shares to the
Underwriters, (iv) all fees and expenses of the Company's counsel, independent
public or certified public accountants and other advisors, (v) all costs and
expenses incurred in connection with the preparation, printing, filing, shipping
and distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), each preliminary
prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement, (vi) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD's review
and approval of the Underwriters' participation in the offering and distribution
of the Common Shares, (vii) the fees and expenses associated with listing the
Common Shares on the New York Stock Exchange, and (viii) all other fees, costs
and expenses referred to in Item 14 of Part II of the Registration Statement.
Except as provided in this Section 4, Section 6, Section 8 and Section 9 hereof,
the Underwriters shall pay their own expenses, including the fees and
disbursements of their counsel which shall include all filing and reasonable
attorney's fees and expenses incurred by the Underwriters in connection with the
qualification of the Common Shares for offer and sale under the provincial
securities laws of Canada.
The Selling Stockholder further agrees with each Underwriter
to pay (directly or by reimbursement) all fees and expenses incident to the
performance of his obligations under this Agreement which are not otherwise
specifically provided for herein, including but not limited to (i) fees and
expenses of counsel and other advisors for such Selling Stockholder, (ii) fees
and expenses of the Custodian and (iii) expenses and taxes
19
incident to the sale and delivery of the Common Shares to be sold by such
Selling Stockholder to the Underwriters hereunder (which taxes, if any, may be
deducted by the Custodian under the provisions of Section 2 of this Agreement).
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Stockholder set forth in Section 1, Sections 1(A) and 1(B) hereof as
of the date hereof and as of the First Closing Date as though then made and,
with respect to the Optional Common Shares, as of the Second Closing Date as
though then made, to the timely performance by the Company and the Selling
Stockholder of their respective covenants and other obligations hereunder, and
to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Representatives shall have received from each of Ernst & Young LLP, independent
public or certified public accountants for the Company, and
PricewaterhouseCoopers LLP, independent public or certified public accountants
for Professionals Group Inc., a letter dated the date hereof addressed to the
Underwriters, in form and substance satisfactory to the Representatives,
containing statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters, delivered according to Statement
of Auditing Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial information
contained in the Registration Statement and the Prospectus (and the
Representatives shall have received an additional three conformed copies of such
accountants' letter for each of the several Underwriters).
(b) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the Optional
Common Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective
amendment shall have become effective; or, if the Company elected to
rely upon Rule 434 under the Securities Act and obtained the
Representatives' consent thereto, the Company shall have filed a Term
Sheet with the Commission in the manner and within the time period
required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in
effect and no proceedings for such purpose shall have been instituted
or threatened by the Commission; and
20
(iii) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For the
period from and after the date of this Agreement and prior to the First Closing
Date and, with respect to the Optional Common Shares, the Second Closing Date:
(i) in the judgment of the Representatives there shall
not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the claims-paying
ability rating accorded the Company's insurance subsidiaries by any
"nationally recognized statistical rating organization" as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act.
(d) Opinion of External and Internal Counsel for the Company. On
each of the First Closing Date and the Second Closing Date the Representatives
shall have received: (1) the favorable opinion of Xxxx & Xxxxxx LLP, external
counsel for the Company, dated as of such Closing Date, the form of which is
attached as Exhibit A (and the Representatives shall have received an
additional three conformed copies of such counsel's legal opinion for each of
the several Underwriters); and (2) the favorable opinion of internal counsel
for the Company dated as of such Closing Date, the form of which is attached as
Exhibit D (and the Representatives shall have received an additional three
conformed copies of such counsel's legal opinion for each of the several
Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Shearman & Sterling, counsel for the
Underwriters, dated as of such Closing Date, with respect to the matters
customarily addressed in such transactions.
(f) Officers' Certificate. On each of the First Closing Date and
the Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer or
President of the Company and the Chief Financial Officer or Chief Accounting
Officer of the Company, dated as of such Closing Date, to the effect set forth
in subsections (b)(ii) and (c)(ii) of this Section 5, and further to the effect
that:
(i) for the period from and after the date of this
Agreement and prior to such Closing Date, there has not occurred any
Material Adverse Change;
(ii) the representations, warranties and covenants of the
Company set forth in Section 1(A) of this Agreement are true and
correct with the same force and effect as though expressly made on and
as of such Closing Date; and
(iii) the Company has complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed
or satisfied hereunder at or prior to such Closing Date.
21
(g) Bring-down Comfort Letter. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received from Ernst
& Young, LLP, independent public or certified public accountants for the
Company, and PricewaterhouseCoopers LLP, independent public or certified public
accountants for Professionals Group Inc., a letter dated such date, in form and
substance satisfactory to the Representatives, to the effect that they reaffirm
the statements made in the letter furnished by them pursuant to subsection (a)
of this Section 5, except that the specified date referred to therein for the
carrying out of procedures shall be no more than three business days prior to
the First Closing Date or Second Closing Date, as the case may be (and the
Representatives shall have received an additional three conformed copies of
such accountants' letter for each of the several Underwriters).
(h) Opinion of Counsel for the Selling Stockholder. On each of
the First Closing Date and the Second Closing Date the Representatives shall
have received the favorable opinion of Xxxx & Xxxxxx LLP, counsel for the
Selling Stockholder, dated as of such Closing Date, the form of which is
attached as Exhibit B (and the Representatives shall have received an additional
three conformed copies of such counsel's legal opinion for each of the several
Underwriters).
(i) Selling Stockholder's Certificate. On each of the First
Closing Date and the Second Closing Date the Representatives shall receive a
written certificate executed by the Selling Stockholder, dated as of such
Closing Date, to the effect that:
(i) the representations, warranties and covenants of the
Selling Stockholder set forth in Section 1(B) of this Agreement are
true and correct with the same force and effect as though expressly
made by the Selling Stockholder on and as of such Closing Date; and
(ii) the Selling Stockholder has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date.
(j) Selling Stockholder's Documents. On the date hereof, the
Company and the Selling Stockholder shall have furnished for review by the
Representatives copies of the Custody Agreement executed by the Selling
Stockholder and such further information, certificates and documents as any
Representative may reasonably request.
(k) Lock-Up Agreement from Officers and Directors of the Company.
On or prior to the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of Exhibit C hereto from each officer
and director of the Company, and such agreement shall be in full force and
effect on each of the First Closing Date and the Second Closing Date, except
that the agreement with the Selling Stockholder shall be modified to give effect
to the provisions of Section 3.B(a) hereof.
(l) Additional Documents. On or before each of the First Closing
Date and the Second Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Common Shares as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
22
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholder at any
time on or prior to the First Closing Date and, with respect to the Optional
Common Shares, at any time prior to the Second Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section 4, Section 6, Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If
this Agreement is terminated by the Representatives pursuant to Section 5,
Section 7, Section 10, Section 11 or Section 17, or if the sale to the
Underwriters of the Common Shares on the First Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company or the
Selling Stockholder to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse each Representative and the
other Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all out-of-pocket expenses
that shall have been reasonably incurred by the Representatives and the
Underwriters in connection with the proposed purchase and the offering and sale
of the Common Shares, including but not limited to fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT. This
Agreement shall not become effective until the later of (i) the execution of
this Agreement by the parties hereto and (ii) notification by the Commission to
the Company and the Representatives of the effectiveness of the Registration
Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated
by any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (a) the Company or the
Selling Stockholder to any Underwriter, except that the Company and the Selling
Stockholder shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Sections 4 and 6 hereof, (b) any Underwriter
to the Company or the Selling Stockholder, or (c) any party hereto to any other
party except that the provisions of Section 8 and Section 9 shall at all times
be effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriters by the Company. The
Company agrees to indemnify and hold harmless each Underwriter, its officers
and employees, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which such Underwriter or such
controlling person may become subject, under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, or the laws or
regulations of the provinces of Canada where the Common Shares have been
offered or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based (i) upon
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule 434 under
the Securities Act, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to
23
make the statements therein not misleading; or (ii) upon any untrue statement
or alleged untrue statement of a material fact contained in any preliminary
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; or (iii) in whole or in part upon any inaccuracy in
the representations and warranties of the Company contained herein; or (iv) in
whole or in part upon any failure of the Company to perform its respective
obligations hereunder or under law; or (v) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Common Stock or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon any matter covered by
clause (i) or (ii) above, provided that the Company shall not be liable under
this clause (v) to the extent that a court of competent jurisdiction shall have
determined by a final judgment that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act undertaken or
omitted to be taken by such Underwriter through its bad faith or willful
misconduct or violation of any applicable law or regulation of the provinces of
Canada where the Common Shares have been offered, and to reimburse each
Underwriter and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by BAS) as such
expenses are reasonably incurred by such Underwriter or such controlling person
in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided, however,
that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out
of or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for use
in the Registration Statement, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto). The indemnity agreement set forth in this
Section 8(a) shall be in addition to any liabilities that the Company may
otherwise have.
(b) Indemnification of the Underwriters by the Selling
Stockholder. The Selling Stockholder agrees to indemnify and hold harmless each
Underwriter, its officers and employees, and each person, if any, who controls
any Underwriter within the meaning of the Securities Act and the Exchange Act
against any loss, claim, damage, liability or expense, as incurred, to which
such Underwriter or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or the laws or regulations of the provinces of Canada where the
Common Shares have been offered, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Selling Stockholder), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based (i) upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any
amendment thereto, including any information deemed to be a part thereof
pursuant to Rule 430A or Rule 434 under the Securities Act, 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 (ii) upon any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary 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 light of the
circumstances under which they were made, not misleading; provided, however,
that the selling stockholder shall be liable under these clauses (i) and (ii)
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any
24
preliminary prospectus, the Prospectus (or any amendment or supplement
thereto), in reliance upon and in conformity with written information furnished
to the Company by the Selling Stockholder expressly for use therein; or (iii)
in whole or in part upon any inaccuracy in the representations and warranties
of the Selling Stockholder contained herein; or (iv) in whole or in part upon
any failure of the Selling Stockholder to perform its respective obligations
hereunder or under law; or (v) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Common Stock or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon any matter covered by clause (i) or (ii) above,
provided that the Selling Stockholder shall not be liable under this clause (v)
to the extent that a court of competent jurisdiction shall have determined by a
final judgment that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be
taken by such Underwriter through its bad faith or willful misconduct or
violation of any applicable law or regulation of the provinces of Canada where
the Common Shares have been offered, and to reimburse each Underwriter and each
such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by BAS) as such expenses are reasonably
incurred by such Underwriter or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Selling Stockholder by the Representatives
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto). The indemnity
agreement set forth in this Section 8(a) shall be in addition to any
liabilities that the Selling Stockholder may otherwise have.
(c) Indemnification of the Company, its Directors and Officers
and the Selling Stockholder. Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, each of its directors,
each of its officers who signed the Registration Statement, the Selling
Stockholder and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer, Selling Stockholder or controlling person may become
subject, under the Securities Act, the Exchange Act, or other federal or state
statutory law or regulation, or the laws or regulations of the provinces of
Canada where the Common Shares have been offered, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Underwriter), insofar as such loss, claim, damage,
liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based upon any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus or the Canadian Wrapper (or any amendment or
supplement thereto), or arises out of or is based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus or the Canadian Wrapper
(or any amendment or supplement thereto), in reliance upon and in conformity
with written information furnished to the Company and the Selling Stockholder
by the Representatives expressly for use therein; and to reimburse the Company,
or any such director, officer, Selling Stockholder or controlling person for
any legal and other expense reasonably incurred by the
25
Company, or any such director, officer, Selling Stockholder or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. Each of the
Company and the Selling Stockholder, hereby acknowledges that the only
information that the Underwriters have furnished to the Company and the Selling
Stockholder expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus or the Canadian Wrapper (or any amendment or
supplement thereto) are the statements set forth in the table in the first
paragraph as well as the second last paragraph under the caption "Underwriting"
in the Prospectus; and the Underwriters confirm that such statements are
correct. The indemnity agreement set forth in this Section 8(b) shall be in
addition to any liabilities that each Underwriter may otherwise have.
(d) Notifications and Other Indemnification Procedures. 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 an indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8 or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent that
it shall elect, jointly with all other indemnifying parties similarly notified,
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or 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, the indemnified party or parties shall have the
right to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of such indemnifying party's election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (BAS in the case of Section 8(b) and Section 9), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(e) Settlements. The indemnifying party under this Section 8
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by
26
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by Section 8(c) hereof, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding.
SECTION 9. CONTRIBUTION. If the indemnification
provided for in Section 8 is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by
such indemnified party, as incurred, as a result of any losses, claims,
damages, liabilities or expenses referred to therein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Stockholder, on the one hand, and the Underwriters, on the other hand,
from the offering of the Common Shares pursuant to this Agreement or (ii) if
the allocation provided by clause (i) above 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 and
the Selling Stockholder, on the one hand, and the Underwriters, on the other
hand, in connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholder, on the one hand, and the Underwriters, on the other hand, in
connection with the offering of the Common Shares pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the Common Shares pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling
Stockholder, and the total underwriting discount received by the Underwriters,
in each case as set forth on the front cover page of the Prospectus (or, if
Rule 434 under the Securities Act is used, the corresponding location on the
Term Sheet) bear to the aggregate initial public offering price of the Common
Shares as set forth on such cover. The relative fault of the Company and the
Selling Stockholder, 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 or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company or
the Selling Stockholder, on the one hand, or the Underwriters, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Section 8(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth
in Section 8(c) with respect to notice of commencement of any action
27
shall apply if a claim for contribution is to be made under this Section 9;
provided, however, that no additional notice shall be required with respect to
any action for which notice has been given under Section 8(c) for purposes of
indemnification.
The Company, the Selling Stockholder and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in this
Section 9.
Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 9 are several, and not joint, in
proportion to their respective underwriting commitments as set forth opposite
their names in Schedule A. For purposes of this Section 9, each officer and
employee of an Underwriter and each person, if any, who controls an Underwriter
within the meaning of the Securities Act and the Exchange Act 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 with the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Company.
28
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL
UNDERWRITERS. If, on the First Closing Date or the Second Closing Date, as the
case may be, any one or more of the several Underwriters shall fail or refuse
to purchase Common Shares that it or they have agreed to purchase hereunder on
such date, and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not
exceed 10% of the aggregate number of the Common Shares to be purchased on such
date, the other Underwriters shall be obligated, severally, in the proportions
that the number of Firm Common Shares set forth opposite their respective names
on Schedule A bears to the aggregate number of Firm Common Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as may be specified by the Representatives with the consent of the
non-defaulting Underwriters, to purchase the Common Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date. If, on the First Closing Date or the Second Closing Date, as the
case may be, any one or more of the Underwriters shall fail or refuse to
purchase Common Shares and the aggregate number of Common Shares with respect
to which such default occurs exceeds 10% of the aggregate number of Common
Shares to be purchased on such date, and arrangements satisfactory to the
Representatives and the Company for the purchase of such Common Shares are not
made within 48 hours after such default, this Agreement shall terminate without
liability of any party to any other party except that the provisions of Section
4, Section 6, Section 8 and Section 9 shall at all times be effective and shall
survive such termination. In any such case either the Representatives or the
Company shall have the right to postpone the First Closing Date or the Second
Closing Date, as the case may be, but in no event for longer than seven days in
order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter under
this Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the
First Closing Date this Agreement may be terminated by the Representatives by
notice given to the Company and the Selling Stockholder if at any time (i)
trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission or by the New York Stock Exchange, or
trading in securities generally on either the Nasdaq Stock Market or the New
York Stock Exchange shall have been suspended or limited, or minimum or maximum
prices shall have been generally established on any of such stock exchanges;
(ii) a general banking moratorium shall have been declared by any of federal,
New York, Delaware or California authorities; (iii) there shall have occurred
any outbreak or escalation of national or international hostilities or any
crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States' or international political,
financial or economic conditions, as in the judgment of the Representatives is
material and adverse and makes it impracticable to market the Common Shares in
the manner and on the terms described in the Prospectus or to enforce contracts
for the sale of securities; (iv) in the judgment of the Representatives there
shall have occurred any Material Adverse Change; or (v) the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as in the judgment of the Representatives may interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured. Any termination
pursuant to this Section 11
29
shall be without liability on the part of (a) the Company or the Selling
Stockholder to any Underwriter, except that the Company and the Selling
Stockholder shall be obligated to reimburse the expenses of the Representatives
and the Underwriters pursuant to Sections 4 and 6 hereof, (b) any Underwriter
to the Company or the Selling Stockholder, or (c) of any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE
DELIVERY. The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its officers, of the Selling
Stockholder and of the several 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
its or their partners, officers or directors or any controlling person, or the
Selling Stockholder, as the case may be, and will survive delivery of and
payment for the Common Shares sold hereunder and any termination of this
Agreement.
SECTION 13. NOTICES. All communications hereunder shall
be in writing and shall be mailed, hand delivered or telecopied and confirmed
to the parties hereto as follows:
If to the Representatives:
Banc of America Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Child/Xxxxxxx X. XxXxxx, Xx.
with a copy to:
Banc of America Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to the Company:
ProAssurance Corporation
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: A. Xxxxxxx Xxxxx, M.D.
If to the Selling Stockholder:
A. Xxxxxxx Xxxxx, M.D.
c/o ProAssurance Corporation
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Any party hereto may change the address for receipt of
communications by giving written notice to the others.
30
SECTION 14. SUCCESSORS. This Agreement will inure to
the benefit of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 10 hereof, and to the benefit of the
employees, officers and directors and controlling persons referred to in
Section 8 and Section 9, and in each case their respective successors, [and
personal representatives], and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser of
the Common Shares as such from any of the Underwriters merely by reason of such
purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 16. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York applicable to agreements made and to be performed in such state.
SECTION 17. FAILURE OF THE SELLING STOCKHOLDER TO SELL
AND DELIVER COMMON SHARES. If the Selling Stockholder shall fail to sell and
deliver to the Underwriters the Common Shares to be sold and delivered by the
Selling Stockholder at the First Closing Date or the Second Closing Date
pursuant to this Agreement, then the Underwriters may at their option, by
written notice from the Representatives to the Company and the Selling
Stockholder, either (i) terminate this Agreement without any liability on the
part of any Underwriter or, except as provided in Sections 4, 6, 8 and 9
hereof, the Company or the Selling Stockholder, or (ii) purchase the shares
which the Company has agreed to sell and deliver in accordance with the terms
hereof. If the Selling Stockholder shall fail to sell and deliver to the
Underwriters the Common Shares to be sold and delivered by the Selling
Stockholder pursuant to this Agreement at the First Closing Date or the Second
Closing Date, then the Underwriters shall have the right, by written notice
from the Representatives to the Company and the Selling Stockholder, to
postpone the First Closing Date or the Second Closing Date, as the case may be,
but in no event for longer than seven days in order that the required changes,
if any, to the Registration Statement and the Prospectus or any other documents
or arrangements may be effected.
SECTION 18. GENERAL PROVISIONS. This Agreement
constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Table of Contents and the Section
headings herein are for the convenience of the parties only and shall not
affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation,
the indemnification provisions of Section 8
31
and the contribution provisions of Section 9, and is fully informed regarding
said provisions. Each of the parties hereto further acknowledges that the
provisions of Sections 8 and 9 hereto fairly allocate the risks in light of the
ability of the parties to investigate the Company, its affairs and its business
in order to assure that adequate disclosure has been made in the Registration
Statement, any preliminary prospectus and the Prospectus (and any amendments
and supplements thereto), as required by the Securities Act and the Exchange
Act.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, the Selling
Stockholder and the several Underwriters set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, regardless of
(i) any investigation, or statement as to the results thereof, made by or on
behalf of any Underwriter, the officers or employees of any Underwriter, any
person controlling any Underwriter, the Company, the officers or employees of
the Company, or any person controlling the Company, the Selling Stockholder or
any person controlling the Selling Stockholder, (ii) acceptance of the Shares
and payment for them hereunder and (iii) termination of this Agreement.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Selling Stockholder, the Underwriters, the Underwriters' officers and
employees, any controlling persons referred to herein, the Company's directors
and the Company's officers who sign the Registration Statement and their
respective successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Shares from any of the several Underwriters merely
because of such purchase.
32
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company and the Custodian the
enclosed copies hereof, whereupon this instrument, along with all counterparts
hereof, shall become a binding agreement in accordance with its terms.
Very truly yours,
PROASSURANCE CORPORATION
By:
----------------------------------------
Xxxxxx X. Xxxxx
President and Chief Operating Officer
-------------------------------------------
A. Xxxxxxx Xxxxx, M.D.
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Representatives in San Francisco, California as of the date
first above written.
BANC OF AMERICA SECURITIES LLC
XXXXXXX, XXXXXXX & CO.
XXXXXXX X'XXXXX & PARTNERS, L.P.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By BANC OF AMERICA SECURITIES LLC
By:
-------------------------------
SCHEDULE A
NUMBER OF FIRM COMMON
UNDERWRITERS SHARES TO BE PURCHASED
Banc of America Securities LLC ........................................ [_______]
Xxxxxxx, Xxxxxxx & Co. ................................................ [_______]
Sandler X'Xxxxx & Partners L.P. ....................................... [_______]
[_______] ............................................................. [_______]
[_______] ............................................................. [_______]
Total ............................................... [_______]
EXHIBIT A
Opinion of external counsel for the Company to be delivered
pursuant to Section 5(d) of the Underwriting Agreement. References to the
Prospectus in this Exhibit A include any supplements thereto at the Closing
Date.
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware.
(ii) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Underwriting Agreement.
(iii) Counsel will opine as to the qualification of the
Company to transact business in each state in which the Company
operates or owns property as certified by an Officer of the Company.
(iv) Each Significant Subsidiary (defined as Medical
Assurance, Inc., Professionals Group, Inc., The Medical Assurance
Company, Inc., ProNational Insurance Company, MEEMIC Holdings, Inc.
and MEEMIC Insurance Company (and any other entity identified in an
Officer's certificate certifying as to each "Significant Subsidiary"
of the Company in accordance with Rule 405 under the Securities Act)
has been duly incorporated 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 Prospectus.
Counsel will opine only as to the qualification to transact business
of each such subsidiary in each state in which such subsidiaries
operate or own property as certified by an Officer of the Company.
(v) All of the issued and outstanding capital stock of
each Significant Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned of record by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or, to the best
knowledge of such counsel, any pending or threatened claim, except
that the shares of capital stock of Medical Assurance, Inc.,
Professionals Group, Inc., The Medical Assurance Company, Inc., and
ProNational Insurance Company are subject to the Pledge and Security
Agreement given to SouthTrust Bank as Administrative Agent for the
ratable benefit of the lenders under the Credit Agreement dated May
10, 2001.
(vi) The authorized, issued and outstanding capital stock
of the Company (including the Common Shares) conform to the
descriptions thereof set forth in the Prospectus. All of the
outstanding shares of Common Stock (including the shares of Common
Stock owned by Selling Stockholder) have been duly authorized and
validly issued, are fully paid and non-assessable and, to the best of
such counsel's knowledge, have been issued in compliance with the
registration and qualification requirements of federal and state
securities laws. The form of certificate used to evidence the Common
Stock is in due and proper form and complies with all applicable
requirements of the certificate of incorporation and by-laws of the
Company and the General Corporation Law of the State of Delaware. The
description of the ProAssurance Corporation Incentive Compensation
Stock Plan and the description of the ProAssurance Corporate Stock
Ownership Plan in the Prospectus accurately and fairly presents the
information
A-1
required to be shown with respect to such plans, arrangements, and the
options and rights granted and exercised thereunder.
(vii) No stockholder of the Company or any other person
has any preemptive right, right of first refusal or other similar
right to subscribe for or purchase securities of the Company arising
by operation of the charter or bylaws of the Company or the General
Corporation Law of the State of Delaware.
(viii) The Underwriting Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as
rights to indemnification thereunder may be limited by applicable law
and except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles.
(ix) The Common Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance
and sale pursuant to the Underwriting Agreement and, when issued and
delivered by the Company pursuant to the Underwriting Agreement
against payment of the consideration set forth therein, will be
validly issued, fully paid and non-assessable.
(x) The Registration Statement and the Rule 462(b)
Registration Statement, if any, has been declared effective by the
Commission under the Securities Act. To the best knowledge of such
counsel, no stop order suspending the effectiveness of either of the
Registration Statement or the Rule 462(b) Registration Statement, if
any, has been issued under the Securities Act and no proceedings for
such purpose have been instituted or are pending or are contemplated
or threatened by the Commission. Any required filing of the Prospectus
and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period
required by such Rule 424(b).
(xi) The Registration Statement, including any Rule
462(b) Registration Statement, the Prospectus including any document
incorporated by reference therein, and each amendment or supplement to
the Registration Statement and the Prospectus including any document
incorporated by reference therein, as of their respective effective or
issue dates (other than the financial statements and supporting
schedules included or incorporated by reference therein or in exhibits
to or excluded from the Registration Statement, as to which no opinion
need be rendered) comply as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
(xii) The Common Shares have been approved for listing on
the New York Stock Exchange.
(xiii) The statements (i) in the Prospectus under the
captions "Description of Capital Stock", "Shares Eligible for Future
Sale", and "Insurance Regulatory Matters" and (ii) in Item 15 of the
Registration Statement, insofar as such statements constitute matters
of law, summaries of legal matters, the Company's certificate of
incorporation or by-law provisions, documents or legal proceedings, or
legal conclusions, has been reviewed by such counsel and fairly
present and summarize, in all material respects, the matters referred
to therein.
A-2
(xiv) To the best knowledge of such counsel, there are no
legal or governmental actions, suits or proceedings pending or
threatened which are required to be disclosed in the Registration
Statement, other than those disclosed therein.
(xv) To the best knowledge of such counsel, there are no
Existing Instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto; and the descriptions thereof and
references thereto are correct in all material respects.
(xvi) No consent, approval, authorization or other order
of, or registration or filing with, any court or other governmental
authority or agency, is required for the Company's execution, delivery
and performance of the Underwriting Agreement and consummation of the
transactions contemplated thereby and by the Prospectus, except as
required under the Securities Act and from the NASD.
(xvii) The execution and delivery of the Underwriting
Agreement by the Company and the performance by the Company of its
obligations thereunder (i) have been duly authorized by all necessary
corporate action on the part of the Company; (ii) will not result in
any violation of the provisions of the certificate of incorporation or
by-laws of the Company or any subsidiary; (iii) to the best of the
knowledge of such counsel, will not constitute a breach of, Default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or its
Significant Subsidiaries pursuant to any material Existing Instrument;
or (iv) to the best knowledge of such counsel, will not result in any
violation of any law, administrative regulation or administrative or
court decree applicable to the Company or any Significant Subsidiary.
(xviii) The Company is not, and after receipt of payment for
the Common Shares will not be, an "investment company" within the
meaning of Investment Company Act.
(xix) To the best knowledge of such counsel, there are no
persons with registration or other similar rights to have any equity
or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by the Underwriting
Agreement, other than the Selling Stockholder, except for such rights
as have been duly waived.
(xx) To the best knowledge of such counsel, neither the
Company nor any subsidiary is in violation of its certificate of
incorporation or by-laws or any law, administrative regulation or
administrative or court decree applicable to the Company or any
subsidiary or is in Default of any material Existing Instrument,
except in each such case for such Defaults as would not, individually
or in the aggregate, result in a Material Adverse Change.
(xxi) Each document filed pursuant to the Exchange Act
(other than the financial statements and supporting schedules included
therein, as to which no opinion need be rendered) and incorporated or
deemed to be incorporated by reference in the Prospectus complied when
so filed as to form in all material respects with the Exchange Act,
and such counsel has no reason to believe that any of such documents,
when they were so filed, contained an untrue statement of a material
fact or omitted to state a
A-3
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made when such
documents were filed, not misleading. In addition, such counsel shall
state that they have participated in conferences with officers and
other representatives of the Company, the Selling Stockholder and his
representatives, representatives of the independent public or
certified public accountants for the Company and with representatives
of the Underwriters at which the contents of the Registration
Statement and the Prospectus, and any supplements or amendments
thereto, and related matters were discussed and, although such counsel
is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as specified
above), and any supplements or amendments thereto, on the basis of the
foregoing, nothing has come to their attention which would lead them
to believe that either the Registration Statement or any amendments
thereto, at the time the Registration Statement or such amendments
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, as of its date or at the First Closing Date or the Second
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted 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 (it being understood that
such counsel need express no belief as to the financial statements or
schedules or other financial data derived therefrom, included or
incorporated by reference in the Registration Statement or the
Prospectus or any amendments or supplements thereto). In rendering
such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware or the federal law of the
United States, to the extent they deem proper and specified in such
opinion, upon the opinion (which shall be dated the First Closing Date
or the Second Closing Date, as the case may be, shall be satisfactory
in form and substance to the Underwriters, shall expressly state that
the Underwriters may rely on such opinion as if it were addressed to
them and shall be furnished to the Representative) of other counsel of
good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters.
A-4
EXHIBIT B
The opinion of counsel pursuant to Section 5(h) shall be
rendered to the Representatives at the request of the Company and shall so
state therein. References to the Prospectus in this Exhibit B include any
supplements thereto at the Closing Date.
(i) The Underwriting Agreement has been duly authorized,
executed and delivered by or on behalf of, and is a valid and binding
agreement of, such Selling Stockholder, enforceable in accordance with
its terms, except as rights to indemnification thereunder may be
limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or
by general equitable principles.
(ii) To the best of the knowledge of such counsel, the
execution and delivery by the Selling Stockholder of, and the
performance by the Selling Stockholder of its obligations under, the
Underwriting Agreement and its Custody Agreement and its Power of
Attorney will not violate or contravene any provision of applicable
law or regulation, or violate, result in a breach of or constitute a
Default under the terms of any other agreement or instrument to which
the Selling Stockholder is a party or by which he is bound, or any
judgment, order or decree applicable to the Selling Stockholder of any
court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Selling Stockholder.
(iii) The Selling Stockholder has the legal right and
power, and all authorizations and approvals required to enter into the
Underwriting Agreement and its Custody Agreement and its Power of
Attorney, to sell, transfer and deliver all of the Common Shares which
may sold by the Selling Stockholder under the Underwriting Agreement
and to comply with its other obligations under the Underwriting
Agreement, its Custody Agreement and its Power of Attorney.
(iv) Upon the delivery to DTC or its agent of the Common
Shares sold by the Selling Stockholder and registered in the name of
Cede, as nominee for DTC, and the crediting by DTC of such Common
Shares to the securities accounts of the several Underwriters with
DTC, DTC will be a "protected purchaser" of such Common Shares (as
defined in Section 8-303 of the NYUCC). Upon the payment of the
purchase price for such Common Shares and the crediting by DTC of such
Common Shares to the securities accounts of the several Underwriters
with DTC, each of the Underwriters will acquire a valid security
entitlement (within the meaning of Section 8-501 of the NYUCC) in
respect of such Common Shares to be purchased by it, and no action
(whether framed in conversion, replevin, constructive trust, equitable
lien, or other theory) based on an adverse claim to such Common Shares
may be asserted against the Underwriters.
(v) Each of the Custody Agreement and Power of Attorney
of the Selling Stockholder has been duly authorized, executed and
delivered by the Selling Stockholder and is a valid and binding
agreement of the Selling Stockholder, enforceable in accordance with
its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by
general equitable principles.
B-1
(vi) To the best of such counsel's knowledge, no consent,
approval, authorization or other order of, or registration or filing
with, any court or governmental authority or agency, is required for
the consummation by the Selling Stockholder of the transactions
contemplated in the Underwriting Agreement, except as required under
the Securities Act, applicable state securities or blue sky laws, and
from the NASD.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware or the federal law of the
United States, to the extent they deem proper and specified in such opinion,
upon the opinion (which shall be dated the First Closing Date or the Second
Closing Date, as the case may be, shall be satisfactory in form and substance
to the Underwriters, shall expressly state that the Underwriters may rely on
such opinion as if it were addressed to them and shall be furnished to the
Representative) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters.
B-2
EXHIBIT C
[Date]
Banc of America Securities LLC
Xxxxxxx, Xxxxxxx & Co.
Xxxxxxx X'Xxxxx & Partners L.P.
As Representatives of the Several Underwriters
c/o Banc of America Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: ProAssurance Corporation (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as
the representatives of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, (and will cause any spouse or immediate family member of
the spouse or the undersigned living in the undersigned's household not to),
without the prior written consent of Banc of America Securities LLC (which
consent may be withheld in its sole discretion), directly or indirectly, sell,
offer, contract or grant any option to sell (including without limitation any
short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended) by the undersigned (or
such spouse or family member), or publicly announce an intention to do any of
the foregoing, for a period commencing on the date hereof and continuing
through the close of trading on the date 90 days after the date of the
Prospectus. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
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This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
Printed Name of Holder
By:
-----------------------------------------
Signature
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
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EXHIBIT D
Opinion of internal counsel for the Company to be delivered
pursuant to Section 5(d) of the Underwriting Agreement. References to the
Prospectus in this Exhibit D include any supplements thereto at the Closing
Date.
(i) Each Significant Subsidiary is duly licensed to
conduct insurance business under the insurance statutes of each
jurisdiction in which the conduct of its business requires such
licensing, except for such jurisdictions in which the failure of the
Significant Subsidiaries to be so licensed would not, individually or
in the aggregate, result in a Material Adverse Change (as defined in
the Underwriting Agreement). The Significant Subsidiaries have made
all required filings under applicable insurance statutes in each
jurisdiction where such filings are required, except for such
jurisdictions in which the failure to make such filings would not,
individually or in the aggregate, result in a Material Adverse Change.
Each of the Significant Subsidiaries has all other necessary
authorizations, approvals, orders, consents, certificates, permits,
registrations and qualifications of and from all insurance regulatory
authorities necessary to conduct their respective businesses as
described in the Prospectus, except where the failure to have such
authorizations, approvals, orders, consents, certificates, permits,
registrations or qualifications would not, individually or in the
aggregate, result in a Material Adverse Change, and the Company and
each of its Significant Subsidiaries has not received any notification
from any insurance regulatory authority to the effect that any
additional authorization, approval, order, consent, certificate,
permit, registration or qualification is needed to be obtained by the
Company and each of its Significant Subsidiaries in any case where it
could be reasonably expected that (x) the Company and each of its
Significant Subsidiaries would be required either to obtain such
additional authorization, approval, order, consent, certificate,
permit, registration or qualification or to cease or otherwise limit
the writing of certain business and (y) the failure to obtain such
additional authorization, approval, order, consent, certificate,
permit, registration or qualification or the limiting of the writing
of such business would result in a Material Adverse Change; and no
insurance regulatory authority having jurisdiction over the Company or
any of its Significant Subsidiaries has issued any order or decree
impairing, restricting or prohibiting (i) the payment of dividends by
any of the Significant Subsidiaries to its parent or (ii) the
continuation of the business of the Company or any of the Significant
Subsidiaries in all material respects as presently conducted.
(ii) The descriptions in the Prospectus of U.S. insurance
statutes and regulations are based upon such counsel's knowledge of
such statutes and regulations and are not based upon such counsel's
state by state research. Such descriptions fairly summarize the
information required to be shown and, to the best of the knowledge of
such counsel, there are no U.S. insurance statutes or regulations
required to be described in the Prospectus in order to make such
descriptions summary not misleading.
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