Exhibit 1.1
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
[ ]% SENIOR NOTES DUE [ ], 20[ ]
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UNDERWRITING AGREEMENT
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July [ ], 2006
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
Banc of America Securities LLC
As Representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Allied World Assurance Company Holdings, Ltd, a company incorporated under
the laws of Bermuda (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the Underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of $ 500 million principal
amount of [ ]% Senior Notes due 20[ ] of the Company, (the "Securities"). The
Securities will be issued pursuant to an Indenture, dated as of July [ ], 2006
(the "Base Indenture"), between the Company and The Bank of New York as Trustee
(the "Trustee"), as supplemented by the First Supplemental Indenture, to be
dated July, [ ], 2006 (the "First Supplemental Indenture" and, together with the
Base Indenture, the "Indenture") between the Company and the Trustee.
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-135464) (the
"Initial Registration Statement") in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding exhibits
thereto, to you for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose has
been initiated or, to our knowledge, threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act, is
hereinafter called a "Preliminary Prospectus"; the various parts of the
Initial Registration Statement and the Rule 462(b) Registration Statement,
if any, including all exhibits thereto and including the information
contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof and deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared effective, each
as amended at the time such part of the Initial Registration Statement
became effective or such part of the Rule 462(b) Registration Statement,
if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statement"; the Preliminary
Prospectus relating to the Securities that was included in the
Registration Statement immediately prior to the Applicable Time (as
defined in Section 1(a)(iii) hereof) is hereinafter called the "Pricing
Prospectus"; such final prospectus, in the form first filed pursuant to
Rule 424(b) under the Act, is hereinafter called the "Prospectus"; and any
"issuer free writing prospectus" as defined in Rule 433 under the Act
relating to the Securities is hereinafter called an "Issuer Free Writing
Prospectus";
(ii) No order preventing or suspending the use of any Preliminary
Prospectus or any Issuer Free Writing Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing
thereof, conformed in all material respects to the requirements of the Act
and the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and the rules and regulations of the Commission thereunder, and did
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by an Underwriter through the Representatives expressly for use
therein;
(iii) For the purposes of this Agreement, the "Applicable Time" is [
: m] (Eastern time) on July [ ], 2006; the Pricing Prospectus as
supplemented by the final term sheet prepared and filed pursuant to
Section 5(a) hereof, taken together (collectively, the "Pricing Disclosure
Package") as of the Applicable Time, did not include any untrue statement
of a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and each Issuer Free Writing
Prospectus listed on Schedule II hereto does not conflict with the
information contained in the Registration Statement, the Pricing
Prospectus or the Prospectus and each such Issuer Free Writing Prospectus,
as supplemented by and taken together with the Pricing Disclosure Package
as of the Applicable Time, did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to statements or omissions
made in an Issuer Free Writing Prospectus in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement and the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and do not and will not,
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as of the applicable effective date as to each part of the Registration
Statement and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter
through the Representatives expressly for use therein;
(v) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Pricing Prospectus any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in each of
the Pricing Prospectus and the Prospectus; and, since the respective dates
as of which information is given in the Registration Statement and the
Pricing Prospectus, there has not been any change in the capital stock
(other than pursuant to employee stock option and incentive plans that are
described in the Pricing Prospectus and the Prospectus) or the capital or
surplus or long-term debt of the Company or any of its subsidiaries or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated
in each of the Pricing Prospectus and the Prospectus;
(vi) The Company and its subsidiaries do not own any real property;
the Company and its subsidiaries have good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in each of the
Pricing Prospectus and the Prospectus and would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on
the current or future consolidated financial position, shareholders'
equity, assets or results of operations of the Company and its
subsidiaries (a "Material Adverse Effect"); and any real property and
buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions
as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect;
(vii) The Company has been duly incorporated and is validly existing
as a company in good standing under the laws of Bermuda, with power and
authority (corporate and other) to own its properties and conduct its
business as described in each of the Pricing Prospectus and the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, except to the extent that
the failure to be so qualified in any such jurisdiction would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in each of the Pricing Prospectus and the
Prospectus, and each subsidiary of the Company has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification,
except to the extent that the failure to be so qualified
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in any such jurisdiction would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(viii) The Company has an authorized capitalization as set forth in
each of the Pricing Prospectus and the Prospectus, and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and conform to
the description of the share capital contained in the Pricing Prospectus
and Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims; except as
described in the Pricing Prospectus under the captions "Certain
Relationships and Related Party Transactions" and "Description of our
Share Capital", the holders of outstanding shares of the Company are not
entitled to preemptive or other rights to acquire the common shares, par
value $0.03 per share (the "Common Shares") of the Company; except as
described in each of the Pricing Prospectus and the Prospectus under the
captions "Certain Relationships and Related Party Transactions" and
"Description of our Share Capital", there are no outstanding securities
convertible into or exchangeable for, or warrants, rights or options to
purchase from the Company, or obligations of the Company to issue, the
Common Shares or any other class of shares of the Company; except as
described in each of the Pricing Prospectus and the Prospectus under the
captions "Certain Relationships and Related Party Transactions" and
"Description of our Share Capital", there are no restrictions on
subsequent transfers of the Common Shares under the laws of Bermuda or the
United States; and except as described in each of the Pricing Prospectus
and the Prospectus under the captions "Certain Relationships and Related
Party Transactions" and "Description of our Share Capital", no party has
the right to require the Company to register securities;
(ix) The Securities have been duly authorized and, when issued,
delivered to and paid for by the Underwriters pursuant to this Agreement
and executed and authenticated pursuant to the Indenture, will have been
duly executed, authenticated, issued and delivered, will constitute valid
and legally binding obligations of the Company (subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles) entitled to the benefits provided by the
Indenture, which is substantially in the form filed as an exhibit to the
Registration Statement; the Indenture has been duly authorized and duly
qualified under the Act and the Trust Indenture Act and when executed and
delivered by the Company and the Trustee, will constitute a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Securities and the
Indenture will conform to the descriptions thereof in the Pricing
Disclosure Package and the Prospectus;
(x) All consents, approvals, authorizations, orders, registrations,
clearances and qualifications of or with any court or governmental agency
or body or any stock exchange authorities (hereinafter referred to as a
"Governmental Agency") having jurisdiction over the Company or any of its
subsidiaries or any of their properties (hereinafter referred to as
"Governmental Authorizations") required for the sale of the Securities
hereunder and for the execution and delivery by the Company of this
Agreement and the Indenture to be duly and validly authorized have been
obtained or
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made and are in full force and effect, except to the extent as such would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect;
(xi) The issue and sale of the Securities hereunder and the
compliance by the Company with all of the provisions of the Securities,
the Indenture and this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, or give rise to a right of termination under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
except to the extent as such would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, nor will such
action result in any violation of the provisions of the bye-laws which are
described in each of the Pricing Prospectus and the Prospectus as becoming
effective as of the Time of Delivery, as hereinafter defined) or
memorandum of association or any other organizational documents of the
Company or any of its subsidiaries or any statute or any order, rule or
regulation of any court or Governmental Agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties;
and no consent, approval, authorization, order, registration or
qualification of or with any such court or Governmental Agency or body is
required for the issue and sale of the Securities, or the consummation by
the Company of the transactions contemplated by this Agreement or the
Indenture, except (A) the registration under the Act of the Securities,
(B) such consents, approvals, authorizations, registrations or
qualifications as may be required under the Trust Indenture Act, (C) such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection with
the purchase and distribution of the Securities by the Underwriters, (D)
the filing of the Prospectus under the Bermuda Companies Act 1981 in
connection with the sale of the Securities and (E) such consents,
approvals, authorizations, registrations or qualifications as may be
required and have been obtained from the Bermuda Monetary Authority;
(xii) There is no contract, document or other agreement required to
be described in the Registration Statement, the Pricing Prospectus or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required by the Act. Each description
of a contract, document or other agreement in the Registration Statement,
Pricing Prospectus and the Prospectus accurately reflects in all material
respects the terms of the underlying contract, document or other
agreement. Each contract, document or other agreement described in the
Registration Statement, Pricing Prospectus and Prospectus or listed in the
exhibits to the Registration Statement (such listed contracts, documents
and other agreements, collectively, the "Filed Agreements") to which the
Company or a subsidiary of the Company is a party is in full force and
effect and is valid and enforceable by and against the Company or such
subsidiary, as the case may be, in accordance with its terms, except to
the extent as such would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. Neither the Company nor any
of its subsidiaries, if a subsidiary is a party, nor to the Company's
knowledge, any other party, is in default in the observance or performance
of any term or obligation to be performed by it under any Filed Agreement,
and no event has occurred which with notice or lapse of time or both would
constitute such a default;
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(xiii) Neither the Company nor any of its subsidiaries is in
violation of its bye-laws or memorandum of association or any other
organizational documents or in default in the performance or observance of
any material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or to which it is bound or to which any
of the property of the Company or any of its subsidiaries is subject,
except for such defaults that would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect;
(xiv) No stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Underwriters to Bermuda or any political subdivision or
taxing authority thereof or therein in connection with (A) the sale and
delivery by the Company of the Securities to or for the respective
accounts of the Underwriters or (B) the sale and delivery outside Bermuda
by the Underwriters of the Securities to the initial purchasers thereof;
and no registration, documentary, recording, transfer or other similar
tax, fee or charge by any Bermuda government authority is payable in
connection with the execution, delivery, filing, registration or
performance of this Agreement;
(xv) Neither the Company nor any of its subsidiaries has taken,
directly or indirectly, any action which was designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities;
(xvi) The statements set forth in each of the Pricing Prospectus and
Prospectus under the captions "Regulatory Matters", "Principal
Shareholders", "Certain Relationships and Related Party Transactions",
"Description of Notes", "Description of Our Share Capital", "Certain Tax
Considerations" and "Underwriting", insofar as they purport to describe
the provisions of the laws and documents referred to therein, are
accurate, complete and fair;
(xvii) Other than as set forth in each of the Pricing Prospectus and
the Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject which,
if determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect; and, to
the best of the Company's knowledge, no such proceedings are threatened or
contemplated by any Governmental Agency or threatened by others;
(xviii) The financial statements included in the Registration
Statement, the Pricing Prospectus and the Prospectus, together with the
related schedules and notes, present fairly the financial position of the
Company and its subsidiaries on a consolidated basis as of the dates
indicated and the results of operations, shareholders' equity and cash
flows of the Company and its subsidiaries on a combined basis for the
periods indicated. Such financial statements have been prepared in
conformity with generally accepted accounting principles in the United
States ("GAAP") applied on a consistent basis throughout the periods
involved. The financial statement schedules, if any, included in the
Registration Statement present fairly the information required to be
stated therein. The selected financial data included in the Pricing
Prospectus present fairly the information shown therein and have been
compiled on a basis consistent in all material respects with that of the
audited financial statements included in the Registration Statement, as
the case may be; no other financial statements or supporting schedules
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are required to be included in the Registration Statement, the Pricing
Prospectus or the Prospectus;
(xix) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof,
will not be an "investment company", as such term is defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(xx) The Company has all requisite corporate power and authority to
enter into this Agreement and the Indenture; and each of this Agreement
and the Indenture have been duly authorized, and validly executed and
delivered by the Company;
(xxi) Each of the Company and its subsidiaries is a holding company
or is duly licensed as an insurer or reinsurer, as the case may be, under
the insurance laws (including laws that relate to companies that control
insurance companies) and the rules, regulations and interpretations of the
insurance regulatory authorities thereunder (collectively, "Insurance
Laws"), of each jurisdiction in which the conduct of its business requires
such licensing. Each of the Company and its subsidiaries has made all
required filings under applicable holding company statutes or other
Insurance Laws in each jurisdiction where such filings are required. Each
of the Company and its subsidiaries has all other necessary
authorizations, approvals, orders, consents, certificates, permits,
registrations, qualifications and other concessions of and from all
insurance regulatory authorities necessary to conduct their respective
businesses as described in each of the Pricing Prospectus and the
Prospectus and all of the foregoing are in full force and effect; none of
the Company or any of its subsidiaries has received any notification from
any insurance regulatory authority or other governmental authority in the
United States, Bermuda, Ireland, the United Kingdom or elsewhere to the
effect that any additional authorization, approval, order, consent,
certificate, permit, registration, qualification or concession is needed
to be obtained by either the Company or any of its subsidiaries; and no
insurance regulatory authority has issued any order or decree impairing,
restricting or prohibiting the payment of dividends by the Company or any
of its subsidiaries;
(xxii) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, services marks and trade
names (collectively, the "Intellectual Property") necessary for the
Company and its subsidiaries to be able to conduct their respective
businesses as described in each of the Pricing Prospectus and the
Prospectus, except where the failure to own or possess or have the right
to use such Intellectual Property would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, and
none of the Company or its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing;
(xxiii) Except as could not reasonably be expected to result in a
Material Adverse Effect, each of the Company and its subsidiaries has
filed all statutory financial returns, reports, documents and other
information required to be filed pursuant to the applicable Insurance Laws
of the United States and the various states thereof, Bermuda, Ireland, the
United Kingdom and each other jurisdiction applicable thereto, and has
duly paid all taxes (including franchise taxes and similar fees) it is
required to have paid under the applicable Insurance Laws of the United
States and the various states thereof, ▇▇▇▇▇▇▇,
▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and each other jurisdiction applicable
thereto; and, except as could not reasonably be expected to result in a
Material Adverse Effect, each of the Company and its subsidiaries
maintains its books and records in accordance with, and is otherwise in
compliance with, the applicable Insurance Laws of the United States and
the various states thereof, Bermuda, Ireland, the United Kingdom and each
other jurisdiction applicable thereto;
(xxiv) Any tax returns required to be filed by the Company or any of
its subsidiaries in any jurisdiction have been filed, except where the
failure to file would not, individually or in the aggregate, have a
Material Adverse Effect, and any taxes, including any withholding taxes,
excise taxes, penalties and interest, assessments and fees and other
charges due or claimed to be due from such entities have been paid, other
than any of those being contested in good faith and for which adequate
reserves have been provided or any of those currently payable without
penalty or interest or those that could not reasonably be expected to
result in a Material Adverse Effect;
(xxv) Each of the Company, Allied World Assurance Company, Ltd.
("AWAC") and Allied World Assurance Holdings (Ireland) Ltd. ("Allied
Ireland") has received from the Bermuda Minister of Finance an assurance
under The Exempted Undertakings Tax Protection Act, 1966 of Bermuda to the
effect set forth in each of the Pricing Prospectus and the Prospectus
under the caption "Certain Tax Considerations" and neither the Company,
AWAC nor Allied Ireland have received any notification to the effect (and
is not otherwise aware) that such assurance may be revoked or otherwise
not honored by the Bermuda government. There is no Bermuda income,
corporation or profits tax, withholding tax, capital gains tax, estate
duty or inheritance tax payable by the Company, any of its subsidiaries or
any Underwriter, except where such Underwriter is ordinarily resident in
Bermuda or resident in Bermuda for exchange control purposes;
(xxvi) The Company and its subsidiaries have not taken, and have no
plan or intention to take, directly or indirectly, any action that would
or would be reasonably expected to cause or result in (A) the Company
and/or any of AWAC, Allied Ireland, Allied World Assurance Company
(Europe) Limited ("Allied Europe") and Allied World Assurance Company
(Reinsurance) Limited ("Allied Re" and, together with AWAC, Allied Ireland
and Allied Europe, "Non-U.S. Subsidiaries") being treated as engaged in a
trade or business within the United States for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"), (B) the Company and/or any
Non-U.S. Subsidiary being treated as a passive foreign investment company
within the meaning of section 1297 of the Code, (C) the Company and/or any
non-U.S. Subsidiary being treated as a controlled foreign corporation
within the meaning of section 957 of the Code or (D) any shareholder of
the Company having "related party insurance income" inclusions for U.S.
federal income tax purposes as a result of being a shareholder of the
Company;
(xxvii) There are no currency exchange control laws or withholding
taxes, in each case of Bermuda, Ireland or the United Kingdom (or any
political subdivision or taxing authority thereof), that would be
applicable to the payment of interest on the Securities (other than as may
apply to residents of Bermuda for Bermuda exchange control purposes). The
Company is an "exempted company" under Bermuda law and has not (A)
acquired and does not hold any land in Bermuda, other than that held by
way of lease or tenancy for terms of not more than 50 years, without the
express authorization of the Bermuda legislature, (B) taken mortgages on
land in Bermuda to secure an amount in excess of $50,000, without the
consent of the Bermuda Minister of Finance, (C) acquired any bonds or
debentures secured by any land in Bermuda (other than
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certain types of Bermuda government securities), or (D) conducted their
business in a manner that is prohibited for "exempted companies" under
Bermuda law. The Company has not received notification from the Bermuda
Monetary Authority or any other Bermuda governmental authority of
proceedings relating to the modification or revocation of its designation
as nonresident for exchange control purposes, its permission to issue and
transfer the Securities, or its status as an "exempted company";
(xxviii) The Company has validly and irrevocably submitted to the
non-exclusive jurisdiction of any United States federal or State court in
the Borough of Manhattan, the City of New York, State of New York (a "New
York Court") with respect to suits, actions or proceedings brought by any
Underwriter or by any person who controls such Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") against the Company
arising out of or in connection with violations of United States federal
securities laws relating to offers and sales of the Securities, has
validly and irrevocably waived, to the fullest extent permitted by law,
any objections that it may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in any New York Court based on
or arising under this Agreement or any claims that any such suit, action
or proceeding brought in any New York Court has been brought in an
inconvenient forum, and has duly and irrevocably appointed CT Corporation
as its agent to receive service of process with respect to actions arising
out of or in connection with any such suit, action or proceeding; and
service of process effected in the manner set forth in Section 15 of this
Agreement will be effective under the laws of Bermuda to confer personal
jurisdiction over the Company;
(xxix) Deloitte & Touche, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(xxx) No relationship, direct or indirect, exists between or among
any of the Company or any affiliate of the Company on the one hand, and
any former or current director, officer, shareholder, broker, customer or
supplier of any of them, on the other hand, which is required by the Act
or the rules and regulations thereunder to be described in the
Registration Statement, the Pricing Prospectus and the Prospectus which is
not so described or is not described as required; there are no outstanding
loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by the Company
or any affiliate of the Company to or for the benefit of any of the
executive officers or directors of the Company or any affiliate of the
Company or any of their respective family members;
(xxxi) The Company and its consolidated subsidiaries maintain a
system of internal control over financial reporting that is sufficient to
provide reasonable assurances that (A) material transactions are executed
in accordance with management's authorization; (B) material transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (C) material
access to assets is permitted only in accordance with management's
authorization; (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences; and (E) material information
relating to the Company and its consolidated subsidiaries is promptly made
known to the officers responsible for establishing and maintaining the
system of internal accounting controls; the Company's internal control
over financial reporting will be effective in all material respects at the
time required by the Exchange Act and the
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Company is not aware of any material weakness in its internal control over
financial reporting;
(xxxii) The Company and its consolidated subsidiaries employ
disclosure controls and procedures that comply or will comply at the time
required by the Exchange Act in all material respects with the
requirements of the Exchange Act, such disclosure controls are designed to
ensure that, from and after the Time of Delivery, information required to
be disclosed by the Company in the reports that it will file or submit
under the Exchange Act will be recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and
forms, and will be accumulated and communicated to the Company's
management, including its principal executive officer or officers and
principal financial officer or officers, as appropriate to allow timely
decisions regarding disclosure; such disclosure controls and procedures
are effective to provide reasonable assurance that information required to
be disclosed by the Company in reports filed or submitted by the Company
under the Exchange Act is recorded, processed, summarized and reported as
specified in the Commission's rules and forms;
(xxxiii) There are no transactions, arrangements and other
relationships between and/or among the Company, any of its affiliates (as
such term is defined in Rule 405 under the Act) and any unconsolidated
entity, including, but not limited to, any structural finance, special
purpose or limited purpose entity (each, an "Off Balance Sheet
Transaction") that could reasonably be expected to affect materially the
Company's liquidity or the availability of or requirements for its capital
resources, including those Off Balance Sheet Transactions described in the
Commission's Statement about Management's Discussion and Analysis of
Financial Conditions and Results of Operations (Release Nos. 33-8056;
34-45321; FR-61), required to be described in the Prospectus which have
not been described as required; and
(xxxiv) At the time of filing the Initial Registration Statement,
the Company was not and is not an "ineligible issuer" as defined under
Rule 405 under the Act.
(xxxv) Except as described in the Pricing Prospectus and the
Prospectus, the Company has no knowledge of any threatened or pending
downgrading of the rating accorded the Company's debt securities or the
Company's or any of its subsidiaries' financial strength or claims paying
ability by A.M. Best Company, Inc., Standard & Poor's Ratings Service, a
Division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and ▇▇▇▇▇'▇ Investors
Services, Inc., the only "nationally recognized statistical rating
organizations," as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Act which currently rate the debt securities or
claims-paying ability of one or more of the Company or its subsidiaries.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price of [ ]% of the principal amount thereof, plus accrued interest,
if any, from [ ], 2006 to the Time of Delivery (as defined below) hereunder, the
principal amount of Securities set forth opposite the name of such Underwriter
in Schedule I hereto.
10
3. Upon the authorization by you of the release of the Securities, the
several Underwriters propose to offer the Securities for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The Securities to be purchased by each Underwriter hereunder
will be represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with the Depository
Trust Company ("DTC") or its designated custodian. The Company will deliver the
Securities to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., for the account of such Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer of federal (same-day) funds to the account specified by the
Company and the Custodian to ▇▇▇▇▇▇▇, Sachs & Co. at least forty-eight hours in
advance, by causing DTC to credit the Securities to the account of ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. at DTC. The Company will cause the certificates representing the
Securities to be made available for checking and packaging at least twenty-four
hours prior to the Time of Delivery (as defined below) with respect thereto at
the office of DTC or its designated custodian (the "Designated Office"). The
time and date of such delivery and payment shall be 9:30 a.m., New York time, on
July [ ], 2006 or such other time and date as ▇▇▇▇▇▇▇ Sachs & Co. and the
Company may agree upon in writing. Such time and date for delivery of the
Securities is herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 8 hereof, including the
cross-receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 8 hereof will be delivered at the offices of
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ (the "Closing Location"), and the Securities will be delivered at the
Designated Office all at the Time of Delivery. A meeting will be held at the
Closing Location at 2:00 p.m., New York City time, on the New York Business Day
next preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further amendment or any
supplement to the Registration Statement or the Prospectus which shall be
disapproved by you promptly after reasonable notice thereof; to advise you
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any amendment or
supplement to the Prospectus has been filed and to furnish you copies thereof;
to prepare a final term sheet, containing solely a description of the
Securities, in a form approved by you and to file such term sheet pursuant to
Rule 433(d) under the Act within the time required by such Rule; to file
promptly all material required to be filed by the Company with the Commission
pursuant to Rule 433(d) under the Act; to advise you promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or other
prospectus in respect of the Securities, of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information;
11
and, in the event of the issuance of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or other prospectus or
suspending any such qualification, to promptly use its reasonable best efforts
to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) Prior to 10:00 A.M., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with written and electronic copies of the Prospectus in New
York City in such quantities as you may reasonably request, and, if the delivery
of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under
the Act) is required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the offering or sale of
the Securities and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus in order to comply with the Act or the Trust Indenture
Act, to notify you and upon your request to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many written and
electronic copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such statement
or omission or effect such compliance, and in case any Underwriter is required
to deliver a prospectus (or in lieu thereof, the notice referred to in Rule
173(a) under the Act) in connection with sales of any of the Securities at any
time nine months or more after the time of issue of the Prospectus, upon your
request but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many written and electronic copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earning statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and continuing to
the later of the Time of Delivery and such earlier time as you may notify the
Company after the date of the Prospectus (the "Lock-Up Period"), not to offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose, except as provided hereunder, of any debt securities
of the Company that are substantially similar to the Securities, without your
prior written consent;
(f) To furnish to its shareholders as soon as practicable after the end
of each fiscal year an annual report (including a balance sheet and statements
of income, shareholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent
12
public accountants) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement), to make
available to its shareholders consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail, other than
such reports and financial statements that are publicly available on the
Commission's ▇▇▇▇▇ system;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and to deliver to
you (A) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any securities exchange
on which any class of securities of the Company is listed, other than such
reports and financial statements that are publicly available on the Commission's
▇▇▇▇▇ system; and (B) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in reports
furnished to its shareholders generally or to the Commission);
(h) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the Pricing
Prospectus under the caption "Use of Proceeds";
(i) Not to (and to cause its subsidiaries not to) take, directly or
indirectly, any action which is designed to or which constitutes or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company or facilitate the sale or resale or the
Securities;
(j) To file with the Commission such information on Form 10-Q or Form
10-K as may be required by Rule 463 under the Act;
(k) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act;
and
(l) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if any,
operated by such Underwriter for the purpose of facilitating the on-line
offering of the Securities (the "License"); provided, however, that the License
shall be used solely for the purpose described above, is granted without any fee
and may not be assigned or transferred.
6. (a) The Company represents and agrees that, other than the final
term sheet prepared and filed pursuant to Section 5(a) hereof, without the prior
consent of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., it has not made and will not make any offer
relating to the Securities that would constitute a "free writing prospectus" as
defined in Rule 405 under the Act; each Underwriter represents and agrees that,
without the prior consent of the Company and ▇▇▇▇▇▇▇, Sachs & Co., other than
one or more term sheets relating to the Securities containing customary
information and conveyed to purchasers of Securities, it has not made and will
not make any offer relating to the Securities that would constitute a free
writing prospectus; and any such free writing prospectus
13
the use of which has been consented to by the Company and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
(including the final term sheet prepared and filed pursuant to Section 5(a)
hereof) is listed on Schedule II hereto;
(b) The Company has complied and will comply with the requirements of Rule
433 under the Act applicable to any Issuer Free Writing Prospectus, including
timely filing with the Commission or retention where required and legending; the
Company represents that it has satisfied and agrees that it will satisfy the
conditions under Rule 433 under the Act to avoid a requirement to file with the
Commission any electronic road show;
(c) The Company agrees that if at any time following issuance of an Issuer
Free Writing Prospectus any event occurred or occurs as a result of which such
Issuer Free Writing Prospectus would conflict with the information in the
Registration Statement, the Pricing Prospectus or the Prospectus or would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances then prevailing, not misleading, the Company will give prompt
notice thereof to ▇▇▇▇▇▇▇, Sachs & Co. and, if requested by ▇▇▇▇▇▇▇, ▇▇▇▇▇ &
Co., will prepare and furnish without charge to each Underwriter an Issuer Free
Writing Prospectus or other document which will correct such conflict, statement
or omission; provided, however, that this representation and warranty shall not
apply to any statements or omissions in an Issuer Free Writing Prospectus made
in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use
therein.
7. The Company covenants and agrees with the several Underwriters that
the Company will pay the following: (i) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the registration of the
Securities under the Act and the Trust Indenture Act and all other expenses in
connection with the preparation, printing, reproduction and filing of the
Registration Statement, any Preliminary Prospectus, any Issuer Free Writing
Prospectus and the Prospectus and amendments and supplements thereto, including
the expenses of any special audits and/or "cold comfort" letters required by or
incident to the performance of the accountants and the mailing and delivering of
copies thereof to the Underwriters and dealers; (ii) the cost of printing or
preparing any Agreement among Underwriters, this Agreement, the Indenture, the
Blue Sky Memorandum and any other documents or agreements in connection with the
offering, purchase, sale and delivery of the Securities; (iii) all expenses in
connection with the qualification of the Securities for offering and sale under
state securities laws as provided in Section 4(a) hereof, including the
reasonable fees and disbursements of counsel for the Underwriters in connection
with such qualification and in connection with the Blue Sky surveys; (iv) any
fees charged by securities rating services for rating the securities; (v) the
filing fees incident to, and the fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the NASD of the
terms of the sale of the Securities; (vi) all Commission and stock exchange
registration and filing fees; (vii) the cost of preparing the Securities; (viii)
the fees and expenses of the Trustee and any agent of the Trustee and the fees
and disbursements of counsel for the Trustee in connection with the Indenture
and the Securities; and (ix) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. Except as provided in this Section, and Sections 9
and 12 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes on resale of any of
the Securities by them, and any advertising expenses connected with any offers
they may make.
8. The obligations of the Underwriters hereunder, as to the Securities
to be delivered at the Time of Delivery, shall be subject, in their discretion,
to the condition that all representations
14
and warranties and other statements of the Company herein are, at and as of the
Time of Delivery, true and correct, and the condition that the Company shall
have performed all of its obligations hereunder theretofore to be performed and
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) under the Act within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; the final term sheet contemplated by Section 5(a) hereof, and any
other material required to be filed by the Company pursuant to Rule 433(d) under
the Act shall have been filed with the Commission within the applicable time
period prescribed for such filing by Rule 433 under the Act; if the Company has
elected to rely upon Rule 462(b) under the Act, the Rule 462(b) Registration
Statement shall have become effective by 10:00 P.M., Washington, D.C. time, on
the date of this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; no stop order suspending or preventing the use of the Prospectus or
any Issuer Free Writing Prospectus shall have been initiated or threatened by
the Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction;
(b) Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, shall have furnished to you such written opinion or opinions,
dated the Time of Delivery, in a form or forms acceptable to you, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to render such opinion or opinions;
(c) ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel for the Company, shall have
furnished to you their written opinion dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) Assuming this Agreement has been duly authorized, executed and
delivered by the Company under Bermuda law, this Agreement has been duly
authorized, executed and delivered by the Company;
(ii) Assuming the Indenture has been duly authorized, executed and
delivered by the Company under Bermuda law, the Indenture has been duly
authorized, executed and delivered by the Company and constitutes a valid
and legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Indenture has been duly
qualified under the Trust Indenture Act;
(iii) Each of Allied World Assurance Company (U.S.) Inc. ("AWAC US")
and Newmarket Underwriters Insurance Company ("Newmarket") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with corporate power
and authority to conduct its business as described in the Prospectus;
(iv) All of the issued shares of capital stock of each of AWAC US
and Newmarket have been duly and validly authorized and issued, are fully
paid and non-assessable, and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims;
(v) Under the laws of the State of New York relating to submission
to jurisdiction, pursuant to Section 15 of the Agreement, (A) the Company
has validly and irrevocably
15
submitted to the non-exclusive jurisdiction of any New York Court, and has
validly and irrevocably waived any objection to the venue of a proceeding
in any such court, and (B) the Company has validly and irrevocably
appointed the Authorized Agent (as defined herein) as its authorized agent
for the purpose and to the extent described in Section 15 hereof, and
service of process effected on such agent in the manner set forth in
Section 15 hereof will be effective to confer valid personal jurisdiction
over the Company assuming, in each of clauses (A) and (B), the due
authorization, execution and delivery of this Agreement by the
Underwriters and with respect to the Company, the validity of such actions
under Bermuda law;
(vi) To counsel's knowledge and other than as set forth in each of
the Pricing Prospectus and the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries; and, to such counsel's knowledge, no such proceedings are
threatened or contemplated by any Governmental Agency or threatened by
others;
(vii) Assuming the Securities have been duly authorized, executed
and delivered under Bermuda law, and assuming due authentication and
delivery in accordance with the provisions of the Indenture, the
Securities have been duly authorized, executed, authenticated, issued and
delivered in accordance with the provisions of the Indenture and this
Agreement, and constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles, and are in the form contemplated by, and
are entitled to the benefits of, the Indenture; the Securities conform to
the description thereof in the Prospectus under the caption "Description
of Notes";
(viii) The issuance and sale of the Securities being delivered at
such Time of Delivery to be sold by the Company and the compliance by the
Company with all of the provisions of the Securities, the Indenture and
this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give
rise to a right of termination under, any of the Filed Agreements (except
such as would not individually or in the aggregate reasonably be expected
to have a Material Adverse Effect) or any statute or any order, rule or
regulation known to such counsel of any Governmental Agency of the United
States or the State of New York having jurisdiction over the Company or
any of its subsidiaries or any of their properties;
(ix) No Governmental Authorization of the United States or the State
of New York is required for the issuance and sale of the Securities being
delivered at the Time of Delivery or the consummation by the Company of
the transactions contemplated by this Agreement and the Indenture, except
the registration under the Act of the Securities and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Trust Indenture Act and state securities, Blue Sky or
insurance securities laws in connection with the purchase and distribution
of the Securities by the Underwriters;
16
(x) The statements set forth in each of the Pricing Prospectus and
the Prospectus under the captions "Regulatory Matters -- United States",
insofar as they purport to describe the provisions of the insurance laws
referred to therein, are accurate, complete and fair;
(xi) The statements set forth in each of the Pricing Prospectus and
the Prospectus under the captions "Principal Shareholders", "Certain
Relationships and Related Party Transactions,", "Description of Notes",
"Description of Our Share Capital", "Certain Tax Considerations --
Taxation of Our Non-U.S. Companies -- United States", " -- U.S. Taxation
of Our U.S. Subsidiaries", " -- U.S. Taxation of Holders" and
"Underwriting", insofar as they purport to describe the provisions of the
laws and documents referred to therein, are accurate and complete in all
material respects;
(xii) The Company is not an "investment company", as such term is
defined in the Investment Company Act;
(xiii) To such counsel's knowledge, the only agreements to which the
Company has agreed to register securities are in the Registration Rights
Agreement, as described in each of the Pricing Prospectus and the
Prospectus; and
(xiv) The Registration Statement, as of the effective date thereof,
and the Prospectus, as of the date thereof, and any further amendments and
supplements thereto made by the Company prior to such Time of Delivery
(other than the financial statements, related schedules and other
financial data therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the
Act and the applicable rules and regulations thereunder.
Further, although such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to in
Section 8(c)(x) and (xi) above insofar as they relate to provisions of documents
or of United States federal tax law, such counsel has no reason to believe that
any part of the Registration Statement or any amendment thereto, as of its
effective date or as of such Time of Delivery, contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto, as of its issue date or as of
such Time of Delivery, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and such counsel has no reason to believe that the documents
constituting the Pricing Disclosure Package, as of the Applicable Time, when
considered together, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, provided that for all purposes of this paragraph, such counsel need
express no opinion as to the financial statements, related schedules and other
financial and accounting information contained in the Registration Statement,
the Prospectus or the Pricing Disclosure Package.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the United States.
17
(d) ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, special Bermuda counsel for the Company,
shall have furnished to you their written opinion dated the Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) Each of the Company, Allied World Assurance Company, Ltd
("AWAC") and Allied World Assurance Holdings (Ireland) Ltd ("AWAH
Ireland") (together "the Companies"), is duly incorporated and validly
existing as an exempted company with limited liability under the laws of
Bermuda in good standing (meaning solely that the relevant company has not
failed to make any required filing with any Bermuda governmental authority
or to pay any Bermuda government fee or tax which would make it liable to
be struck off the Register of Companies and thereby cease to exist under
the laws of Bermuda). The Company possesses the capacity to ▇▇▇ and be
sued in its own name under the laws of Bermuda;
(ii) The Company has the necessary corporate power and authority to
execute and file the Registration Statement under the Securities Act, to
enter into and perform its obligations under this Agreement and the
Indenture and to issue and sell the Securities pursuant to this Agreement.
The execution and filing under the Securities Act of the Registration
Statement by the Company and the execution and delivery of this Agreement
and the Indenture by the Company and the performance by the Company of its
obligations under the Agreement and the Indenture including the issuance
and sale of the Securities will not violate the memorandum of association
or bye-laws of each of the Company, AWAC and AWAH Ireland, nor any
applicable law, regulation, order or decree in Bermuda.
(iii) The Company has taken all corporate action required to
authorise (i) the execution, delivery and performance of this Agreement
and the Indenture and, as applicable, the issuance and delivery of the
Securities and (ii) the execution and filing of the Registration Statement
with the Commission under the Securities Act. This Agreement and the
Indenture have been duly executed and delivered by or on behalf of the
Company and constitutes the valid and binding obligations of the Company
in accordance with the respective terms thereof. The Registration
Statement has been duly executed by or on behalf of the Company;
(iv) Each of the Company, AWAC and AWAH Ireland, has the necessary
corporate power and authority and all permits, licences and authorisations
required by Bermuda law to conduct its business as described under the
caption "Business" in the Prospectus as being conducted by that particular
entity and to own, lease and operate its properties as described under the
caption "Business" in the Prospectus;
(v) No order, consent, approval, licence, authorisation or
validation of or exemption by any government or public body or authority
of Bermuda or any sub division thereof is required to authorise or is
required to be obtained by the Company or the Underwriters to authorise or
in connection with (i) the execution and filing of the Registration
Statement, (ii) the issue and sale of the Securities by the Company
pursuant to this Agreement, or (iii) the execution, delivery, performance
and enforcement of this Agreement and the Indenture including the
consummation by the Company of the transactions contemplated by this
Agreement and the Indenture, except such as have been duly obtained in
accordance with Bermuda law and which are in full force and effect;
18
(vi) It is not necessary or desirable to ensure the enforceability
in Bermuda of this Agreement or the Indenture that they be registered in
any register kept by, or filed with, any governmental authority or
regulatory body in Bermuda.
However, to the extent that this Agreement or the Indenture creates a
charge over assets of the Company, it may be desirable to ensure the
priority in Bermuda of the charge that it be registered in the Register of
Charges in accordance with Section 55 of the Companies ▇▇▇ ▇▇▇▇. On
registration, to the extent that Bermuda law governs the priority of a
charge, such charge will have priority in Bermuda over any unregistered
charges, and over any subsequently registered charges, in respect of the
assets which are the subject of the charge. A registration fee of $515
will be payable in respect of the registration.
While there is no exhaustive definition of a charge under Bermuda law, a
charge includes any interest created in property by way of security
(including any mortgage, assignment, pledge, lien or hypothecation). As
this Agreement and the Indenture are governed by the laws of the State of
New York ("Foreign Laws"), the question of whether they create such an
interest in property would be determined under the Foreign Laws;
(vii) When the Securities to be sold by the Company are duly issued
and paid for in accordance with the Indenture and this Agreement, such
Securities will be duly authorized and validly issued;
(viii) There are no Bermuda stamp duty, transfer or similar taxes
payable in respect of the issue and delivery of the Securities to the
Underwriters or any subsequent purchasers pursuant to this Agreement and
the Indenture, and the Underwriters will not become subject to any income,
franchise or other tax imposed by a governmental authority of Bermuda
solely by reason of the execution, delivery and performance of this
Agreement and the Indenture. This Agreement, the Indenture and the
Securities are not subject to ad valorem stamp duty in Bermuda, and no
registration, documentary, recording, transfer or other similar tax, fee
or charge by any Bermuda government authority is payable in connection
with the execution, delivery, filing, registration or performance of this
Agreement and the Indenture;
(ix) There is no capital gains, income or other tax of Bermuda
imposed by withholding or otherwise on any payment to be made to or by the
Company pursuant to this Agreement or the Indenture. Under current Bermuda
law there is no Bermuda income tax, withholding tax, capital gains tax,
capital transfer tax, estate or inheritance tax, payable by holders of
Securities who are not resident in Bermuda (or are deemed not to be
resident in Bermuda for Bermuda exchange purposes);
(x) The Underwriters will not be deemed to be resident, domiciled or
carrying on business in Bermuda by reason only of the entry into,
execution, delivery, performance and/or enforcement of this Agreement or
the Indenture. It is not necessary under the laws of Bermuda that the
Underwriters be authorized, licensed or qualified to carry on business in
Bermuda for the purposes of the entry into, execution, delivery,
performance or enforcement of this Agreement or the Indenture;
(xi) Neither the Company, AWAC nor AWAH Ireland, is entitled to any
immunity under the laws of Bermuda, whether characterised as sovereign
immunity or otherwise, from any legal proceedings to enforce this
Agreement, the Indenture or the Securities, in respect of itself or its
property;
19
(xii) Consummation of the transactions contemplated by this
Agreement, including but not limited to any actions taken pursuant to the
indemnification and contribution provisions set forth therein, will not
constitute unlawful financial assistance by the Company under Bermuda law;
(xiii) Based solely upon a review of the Company BMA letters, the
AWAC BMA letters and the AWAH Ireland BMA Letters, the Companies have been
designated as non-resident of Bermuda for the purposes of the ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ and as such are free to acquire, hold, transfer
and sell foreign currency and securities without restriction under such
legislation (including the payment of dividends, interests, premiums or
additional amounts or other distributions which may be lawfully made by
the Companies under the Companies ▇▇▇ ▇▇▇▇ and the Insurance Act 1978);
(xiv) The statements contained in the Prospectus under the captions
"Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Liquidity and Capital Resources -- Restrictions and
Specific Requirements", "Regulatory Matters -- Bermuda", "Description of
Our Share Capital", "Certain Tax Considerations -- Taxation of Our
Companies -- Bermuda", " -- Bermuda Taxation of Holders", "Risk Factors --
Risks Related to this Offering and Ownership of Our Common Shares -- Our
Bye-Laws contain restrictions on ownership, voting and transfers of our
common shares" and " -- There are regulatory limitations on the ownership
and transfer of our common shares" insofar as they purport to describe the
provisions of the laws of Bermuda referred to therein, are accurate in all
material respects. The statements contained in the Registration Statement,
in item 14 ("Part II - Information not required in Prospectus -
Indemnification of Directors and Officers"), insofar as they purport to
describe the provisions of the laws of Bermuda referred to therein, are
accurate in all material respects;
(xv) The choice of the Foreign Laws as the governing law of this
Agreement and the Indenture is a valid choice of law and would be
recognised and given effect to in any action brought before a court of
competent jurisdiction in Bermuda, except for those laws (i) which such
court considers to be procedural in nature, (ii) which are revenue or
penal laws or (iii) the application of which would be inconsistent with
public policy, as such term is interpreted under the laws of Bermuda. The
submission by the Company to the non-exclusive jurisdiction of the New
York Courts, the waiver by the Company of any objection related to
inconvenient forum and the appointment by the Company of an agent for
service of process, in each case pursuant to this Agreement and the
Indenture, is valid and binding upon the Company;
(xvi) The courts of Bermuda would recognise as a valid judgment, a
final and conclusive judgment in personam obtained in the New York Courts
against the Company based upon this Agreement, the Indenture or the
Securities under which a sum of money is payable (other than a sum of
money payable in respect of multiple damages, taxes or other charges of a
like nature or in respect of a fine or other penalty) and would give a
judgment based thereon provided that (a) such courts had proper
jurisdiction over the parties subject to such judgment, (b) such courts
did not contravene the rules of natural justice of Bermuda, (c) such
judgment was not obtained by fraud, (d) the enforcement of the judgment
would not be contrary to the public policy of Bermuda, (e) no new
admissible evidence relevant to the action is submitted prior to the
rendering of the judgment by the courts of Bermuda and (f) there is due
compliance with the correct procedures under the laws of Bermuda;
20
(xvii) There is no income or other tax of Bermuda imposed by
withholding or otherwise on the payment of interest on the Securities or
any dividend or distribution on the Common Shares to be made by (i) the
Company to the holders of the Common Shares; and (ii) AWAC to the Company
as holder of all of the common shares in AWAC. Each of the Companies has
received an assurance from the Minister of Finance under the Exempted
Undertakings Tax Protection ▇▇▇ ▇▇▇▇ that in the event of there being
enacted in Bermuda any legislation imposing tax on profits or income or
computed on any capital asset, gain or appreciation, or any tax in the
nature of estate duty or inheritance tax, then the imposition of any such
tax shall not be applicable to the Companies or any of their operations or
their shares, debentures or other obligations until March 28, 2016
(subject to the proviso expressed in such assurance as described in the
Prospectus).;
(xviii) Based solely upon a review of the AWAC insurance licence and
AWAC's memorandum of association, AWAC is duly registered in Bermuda as a
class 4 insurer in accordance with the provisions of the Insurance ▇▇▇
▇▇▇▇;
(xix) Based solely upon a review of the memorandum of association
and the bye-laws of the Company and the Register of Members of the Company
as at July [ ], 2006:
(A) the authorised share capital of the Company established
under its memorandum of association is US$10,000,000, divided into
333,333,333 shares of par value US$0.03 each;
(B) there are issued and outstanding [22,170,198] voting
common shares and [36,792,644] non-voting common shares of the
Company, all of which are duly authorised, validly issued, fully
paid and non-assessable and such shares are not subject to any
statutory pre-emptive or similar statutory rights of general
application under Bermuda law;
(xx) The form of the certificate representing the Securities
complies with the requirements of Bermuda law;
(xxi) Based solely upon a search of the Cause Book of the Supreme
Court of Bermuda conducted at approximately [ ] a.m. on July [ ], 2006
(which would not reveal details of proceedings which have been filed but
not actually entered in the Cause Book at the time of our search), there
are no judgments against the Companies nor any legal or governmental
proceedings pending in Bermuda to which the Companies are subject;
(xxii) Based solely upon a search of the public records in respect
of the Companies maintained at the offices of the Registrar of Companies
at approximately [ ] a.m. on July [ ], 2006 (which would not reveal
whether a winding-up petition or application to the Court for the
appointment of a receiver has been presented) and a search of the Cause
Book of the Supreme Court of Bermuda conducted at approximately [ ] a.m.
on July [ ], 2006 (which would not reveal details of proceedings which
have been filed but not actually entered in the Cause Book at the time of
our search), no steps have been taken, or are being taken, in Bermuda for
the appointment of a receiver or liquidator to, or for the winding up,
dissolution, reconstruction or reorganization of, the Companies;
(xxiii) Based solely on a search of the Register of Charges
maintained by the Registrar of Companies pursuant to Section 55 of the
Companies ▇▇▇ ▇▇▇▇ conducted at
21
approximately [ ] a.m. on July [ ], 2006 (which would not reveal details
of matters which have been lodged for registration but not actually
registered at the time of our search), there are no charges registered on
the assets of the Company and AWAH Ireland and one charge registered
against the assets of AWAC;
(xxiv) Each of the Underwriters has standing to bring an action or
proceedings before the appropriate courts in Bermuda for the enforcement
of this Agreement, the Indenture and the Securities. It is not necessary
or advisable in order for any of the Underwriters to enforce their
respective rights under this Agreement or the Indenture, including the
exercise of remedies thereunder, that it be licensed, qualified or
otherwise entitled to carry on business in Bermuda;
(xxv) Subject to the requirement that shares of the Company are
listed on the New York Stock Exchange or on another appointed stock
exchange (as defined in section 2(1) of the Companies Act 1981), the
Company has received permission under the Exchange Control Act 1972 (and
the Regulations made thereunder) from the Bermuda Monetary Authority for:
(i) the issue and subsequent transfer of the Company's shares, up to the
amount of its authorised capital from time to time, to persons resident
and non-resident of Bermuda for exchange control purposes; (ii) the issue
and subsequent free transferability of options, warrants, depository
receipts, rights and other securities of the Company; and (iii) the issue
and subsequent free transferability of loan notes and other debt
instruments and options, warrants, receipts, rights over loan notes and
other debt instruments of the Company to persons resident and non-resident
of Bermuda for exchange control purposes;
(xxvi) The procedure for the service of process on the Company
through C.T. Corporation in New York, New York, United States of America,
acting as agent for the Company, as set out in section 17 of this
Agreement, would be effective, in so far as Bermuda law is concerned, to
constitute valid service of the proceedings on the Company;
(xxvii) Based solely on our review of the bye-laws of the Company
and the Company Register, and except as disclosed in the Prospectus under
the captions "Certain Relationships and Related Party Transactions",
"Description of Our Share Capital", "Management" and "Underwriting", the
Company has no (i) outstanding securities or other obligations convertible
into or exchangeable or exercisable for shares in the authorised share
capital of the Company, or (ii) outstanding rights to subscribe for or
purchase, or options for the purchase of, or agreement providing for the
issuance (contingent or otherwise) of, or calls, commitments or claims of
any character relating to, any shares in the authorised share capital of
the Company, or (iii) securities convertible into or exchangeable or
exercisable for any shares in the authorised share capital of the Company,
or (iv) obligation (in the nature of the existence of a pre-emptive or
similar right) to offer the shares in the authorised share capital of the
Company any shareholder of the Company prior to the sale of the Shares.
In giving such opinion, such counsel may state that with respect to all
matters of United States federal and New York state law they have relied upon
the opinions of United States counsel for the Company delivered pursuant to
paragraph (c) of this Section 8.
22
(e) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel for the Company, shall have
furnished to you his written opinion dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company is qualified to do business and is in good standing,
as a foreign corporation, under the laws of each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so
qualified or to be in good standing would not singularly or in the
aggregate have a material adverse effect on the consolidated financial
position, shareholders' equity or results of operations of the Company;
(ii) To such counsel's knowledge and other than as set forth in each
of the Pricing Prospectus and the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of the Company; and, to such
counsel's knowledge, no such proceedings are threatened or contemplated by
any Governmental Agency or threatened by others;
(iii) The issuance and sale of the Securities being delivered at
such Time of Delivery to be sold by the Company, the compliance by the
Company with all of the provisions of the Securities, the Indenture and
this Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give
rise to a right of termination under, any of the material Filed Agreements
or under any material indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject; or any statute or
any order, rule or regulation known to such counsel of any Governmental
Agency of the United States or the State of New York having jurisdiction
over the Company or any of its subsidiaries;
(iv) To such counsel's knowledge, neither the Company nor any of its
subsidiaries is in violation of its bye-laws, its memorandum of
association or its certificate of incorporation, as the case may be; and
the New Bye-Laws have been duly authorized and adopted;
(v) Each of AWAC US and Newmarket is duly licensed or qualified as
an insurer or reinsurer, as the case may be, under the insurance laws or
regulations of the State of New York, or is subject to no material
liability or disability by reason of the failure to be so licensed or
qualified in New York. Each of AWAC US and Newmarket has made all required
filings under applicable insurance laws or regulations in the State of New
York and has all other necessary authorizations, approvals, orders,
consents, certificates, permits, registrations and qualifications of and
from all insurance regulatory authorities of the State of New York
necessary to conduct their respective businesses as described in the
Prospectus and all of the foregoing are in full force and effect, or is
subject to no material liability or disability by reason of the failure to
have such filings, authorizations, approvals, orders, consents,
certificates, permits, registrations and qualifications; to such counsel's
knowledge, neither AWAC US nor Newmarket has received any
23
notification from any insurance regulatory authority or other governmental
authority in the United States, Ireland, the United Kingdom, Bermuda or
elsewhere to the effect that any additional authorization, approval,
order, consent, certificate, permit, registration or qualification is
needed to be obtained by AWAC US or Newmarket; and, to such counsel's
knowledge, no insurance regulatory authority has issued any order or
decree impairing, restricting or prohibiting the payment of dividends by
either AWAC US or Newmarket to its parent; and
(vi) Although he does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, he has no reason to believe (i)
that, as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to the Time of Delivery (other
than the financial statements and related schedules therein, as to which
such counsel need express no opinion) contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii)
that the Pricing Disclosure Package, as of the Applicable Time (other than
the financial statements and related schedules therein, as to which such
counsel need express no opinion), contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading, and (iii) that, as of its date, the
Prospectus or any further amendment or supplement thereto made by the
Company prior to the Time of Delivery (other than the financial statements
and related schedules therein, as to which such counsel need express no
opinion) contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. Also, counsel has no reason to believe that, as of the Time of
Delivery, the Prospectus or any further amendment or supplement thereto
made by the Company prior to the Time of Delivery (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) contains any untrue statement of a
material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
In giving such opinion, such counsel may state that with
respect to all matters of United States federal and New York law he has
relied upon the opinions of United States counsel for the Company
delivered pursuant to paragraph (c) of this Section 8.
(f) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at the Time of Delivery, Deloitte & Touche shall
have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex I hereto;
(g) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Pricing Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Pricing Prospectus, and (ii) since the
respective dates as of which information is given in the Pricing Prospectus
there shall not have been any change in the capital stock, capital or surplus or
long-term debt of the Company or
24
any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Pricing
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is in the judgment of the Representatives so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities being delivered at the Time of Delivery on the terms
and in the manner contemplated in the Prospectus;
(h) On or after the Applicable Time (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities or the Company's financial
strength or claims paying ability by any "nationally recognized statistical
rating organization", as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities or the
Company's financial strength or claims paying ability; provided that, any such
downgrading, surveillance or review which was publicly announced before the
Applicable Time shall be excepted;
(i) On or after the Applicable Time there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the Exchange; (ii) a suspension or material limitation in trading
in the Company's securities on the Exchange; (iii) a general moratorium on
commercial banking activities in New York, London or Bermuda declared by the
relevant authorities, or a material disruption in commercial banking or
securities settlement or clearance services in the United States, Ireland, the
United Kingdom or Bermuda; (iv) a change or development involving a prospective
change in United States or Bermuda taxation affecting the Company, the
Securities or the transfer thereof (v) the outbreak or escalation of hostilities
involving the United States, the United Kingdom or Bermuda or the declaration by
the United States, the United Kingdom or Bermuda of a national emergency or war
or (vi) the occurrence of any other calamity or crisis or any change in
financial, political or economic conditions or currency exchange rates or
controls in the United States, the United Kingdom, Bermuda or elsewhere, if the
effect of any such event specified in clause (v) or (vi) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities being delivered at the Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(j) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the New York Business
Day next succeeding the date of this Agreement; and
(k) The Company shall have furnished or caused to be furnished to you at
the Time of Delivery certificates of officers of the Company satisfactory to you
as to the accuracy of the representations and warranties of the Company herein
at and as of the Time of Delivery, as to the performance by the Company of its
obligations hereunder to be performed at or prior to the Time of Delivery, and
as to such other matters as you may reasonably request, and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (j) of this Section, and as to such other matters
as you may reasonably request.
9. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, to which such Underwriter
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus, the Pricing
25
Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer
Free Writing Prospectus or any "issuer information" filed or required to be
filed pursuant to Rule 433(d) under the Act, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter, in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or
the Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company, against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or
the Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, 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 Pricing Prospectus or the Prospectus,
or any amendment or supplement thereto, or any Issuer Free Writing Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company, in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (which shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim
26
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 9 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b), (d) or (e) above in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Securities. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities
purchased under this Agreement (before deducting expenses) received by the
Company and the total underwriting discounts and commissions payable to the
Underwriters as set forth in the table on the cover page of the Prospectus,
respectively, bear to the sum of the total proceeds from the sale of the
Securities (before deducting expenses) in the offering. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public, exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 9 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act and each broker dealer affiliate of
any Underwriter; and the obligations of the Underwriters under this Section 9
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company (including any person who, with his or her
consent, is named in the
27
Registration Statement as about to become a director of the Company) and to each
person, if any, who controls the Company within the meaning of the Act.
10. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement, the Pricing Prospectus or the Prospectus, or in any other documents
or arrangements, and the Company agrees to file promptly any amendments or
supplements to the Registration Statement, the Pricing Prospectus or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount all the Securities to be purchased at the Time of
Delivery, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the principal amount of Securities which such
Underwriter agreed to purchase hereunder at the Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the principal amount of Securities which such Underwriter agreed
to purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased exceeds one-eleventh of the aggregate
principal amount of all of the Securities to be purchased at the Time of
Delivery, or if the Company shall not exercise the right described in subsection
(b) above to require non-defaulting Underwriters to purchase Securities of a
defaulting Underwriter or Underwriters, then this Agreement shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 7 hereof and the indemnity and contribution
agreements in Section 9 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
11. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter, any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
28
12. If this Agreement shall be terminated pursuant to Section 10 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 7 and 9 hereof; but, if any Securities are not delivered by
or on behalf of the Company as provided herein for any reason other than solely
because of termination of this Agreement pursuant to Section 10 hereof, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities not so delivered, but the Company
shall then be under no further liability to any Underwriter in respect of the
Securities not so delivered except as provided in Sections 7 and 9 hereof.
13. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of ▇▇▇▇▇▇▇, Sachs &
Co., ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Registration Department; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth in
the Registration Statement, Attention: Secretary; provided, however, that any
notice to an Underwriter pursuant to Section 9(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request; provided, however, that notices under subsection 5(e) shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you or the Representatives at ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Control Room. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
14. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 9 and
11 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
15. Each of the parties hereto irrevocably (i) agrees that any legal suit,
action or proceeding against the Company brought by any Underwriter or by any
person who controls any Underwriter within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act (a "Control Person") arising out of or
based upon this Agreement or the transactions contemplated hereby may be
instituted in any New York Court, (ii) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such proceeding, (iii) waives, to the fullest extent it
may effectively do so, any objection based on the absence of a necessary or
indispensable party in any such proceeding, and (iv) submits to the
non-exclusive jurisdiction of such courts in any such suit, action or
proceeding. The Company irrevocably waives any immunity to jurisdiction to which
they may otherwise be entitled or become entitled (including sovereign immunity,
immunity to pre-judgment attachment, post-judgment attachment and execution) in
any legal suit, action or proceeding against them arising out of or based on
this Agreement or the transactions contemplated hereby which is
29
instituted in any New York Court or in any foreign court. To the fullest extent
permitted by law, the Company hereby waives any objection to the enforcement by
any competent foreign court of any judgment validly obtained in any such
proceeding. The Company designates and appoints CT Corporation, New York, New
York, as its authorized agent (the "Authorized Agent") upon whom process may be
served in any such action arising out of or based on this Agreement or the
transactions contemplated hereby which may be instituted in any New York Court
by any Underwriter or by any Control Person, expressly consents to the
jurisdiction of any such court in respect of any such action, and waives any
other requirements of or objections to personal jurisdiction with respect
thereto. Such appointment shall be irrevocable. The Company represents and
warrants that the Authorized Agent has agreed to act as such agent for service
of process and agrees to take any and all action, including the filing of any
and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Authorized Agent and written notice of such service to the Company shall be
deemed, in every respect, effective service of process upon the Company.
The provisions of this Section 15 shall survive any termination of this
Agreement, in whole or in part.
30
16. In respect of any judgment or order given or made for any amount due
hereunder that is expressed and paid in a currency (the "judgment currency")
other than United States dollars, the Company will indemnify each Underwriter
against any loss incurred by such Underwriter as a result of any variation as
between (i) the rate of exchange at which the United States dollar amount is
converted into the judgment currency for the purpose of such judgment or order
and (ii) the rate of exchange at which an Underwriter is able to purchase United
States dollars with the amount of the judgment currency actually received by
such Underwriter. The foregoing indemnity shall constitute a separate and
independent obligation of the Company and shall continue in full force and
effect notwithstanding any such judgment or order as aforesaid. The term "rate
of exchange" shall include any premiums and costs of exchange payable in
connection with the purchase of or conversion into United States dollars.
17. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
18. (a) The Company acknowledges and agrees that (i) the purchase and sale
of the Securities by it pursuant to this Agreement is an arm's-length commercial
transaction between the Company, on the one hand, and the several Underwriters,
on the other, (ii) in connection therewith and with the process leading to such
transaction each Underwriter is acting solely as a principal and not the agent
or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or
fiduciary responsibility in favor of the Company with respect to the offering
contemplated hereby or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Company on other matters)
or any other obligation to the Company except the obligations expressly set
forth in this Agreement and (iv) the Company has consulted its own legal and
financial advisors to the extent it deemed appropriate. The Company agrees that
it will not claim that the Underwriters, or any of them, has rendered advisory
services of any nature or respect, or owes a fiduciary or similar duty to the
Company, in connection with such transaction or the process leading thereto.
19. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Underwriters, or any of
them, with respect to the subject matter hereof.
20. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
21. The Company and each of the Underwriters hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
22. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
23. Notwithstanding anything herein to the contrary, the Company is
authorized to disclose to any persons the U.S. federal and state income tax
treatment and tax structure of the potential transaction and all materials of
any kind (including tax opinions and other tax analyses) provided to the Company
relating to that treatment and structure, without the Underwriters imposing any
limitation of any kind. However, any information relating to the tax treatment
and tax structure shall remain confidential (and the foregoing sentence shall
not apply) to the extent necessary to enable any person to comply with
securities laws. For this purpose, "tax structure" is limited to any facts that
may be relevant to that treatment.
31
If the foregoing is in accordance with your understanding, please sign and
return to us 5 counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement among each of the Underwriters, and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
By:
---------------------------------------
Name:
Title:
Accepted as of the date hereof at New York, New York.
▇▇▇▇▇▇▇, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
By:
--------------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
BANC OF AMERICA SECURITIES LLC
By:
--------------------------------------
Name:
Title:
On behalf of each of the Underwriters
32
PRINCIPAL AMOUNT OF
SECURITIES
UNDERWRITER TO BE PURCHASED
----------- -------------------
▇▇▇▇▇▇▇, Sachs & Co............................................. $
Banc of America Securities LLC.................................. $
Wachovia Capital Markets, LLC................................... $
Barclays Capital Inc............................................ $
Total.....................................................
------------
$500,000,000
============
33
SCHEDULE II
Issuer Free Writing Prospectuses not included in the Pricing Disclosure
Package:
34
ANNEX I
FORM OF COMFORT LETTER(1)
Pursuant to Section 8(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement comply
as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the unaudited consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have been
separately furnished to the representatives of the Underwriters (the
"Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of which have been
separately furnished to the Representatives and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published rules and regulations, nothing came to their attention that
caused them to believe that the unaudited condensed consolidated financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the four most recent fiscal years included in the Prospectus
agrees with the corresponding amounts in the audited consolidated
financial statements for such four fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter nothing came
to their attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all material
respects with the disclosure requirements of Items 301, 302, 402 and
503(d), respectively, of Regulation S-K;
----------
(1) The comfort letter to be delivered on the date of the Underwriting Agreement
shall refer to the Pricing Prospectus in lieu of the Prospectus.
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations, or (ii) any
material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus for
them to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any such
unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included in
the Prospectus;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in clause (B) were not determined on
a basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the capital
stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net assets or shareholders' equity or other items
specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which
are described in such letter; and
2
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
decreases or increases which the Prospectus discloses have occurred
or may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs
(iii) and (vi) above, they have carried out certain specified procedures,
not constituting an examination in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives, which are derived
from the general accounting records of the Company and its subsidiaries,
which appear in the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives,
and have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
3