EXHIBIT 1.01
TOWER GROUP, INC.
2,704,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
January 22, 2007
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES LLC
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
KEYBANC CAPITAL MARKETS, A DIVISION OF MCDONALD INVESTMENTS, INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Tower Group, Inc., a Delaware corporation (the "Company") confirms its
agreement with each of the Underwriters listed on Schedule II hereto
(collectively, the "Underwriters"), for whom Friedman, Billings, ▇▇▇▇▇▇ & Co.,
Inc. ("FBR"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities LLC, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
Inc. and KeyBanc Capital Markets, a division of McDonald Investments Inc. are
acting as Representatives (in such capacity, the "Representatives"), with
respect to (i) the sale by the Company of an aggregate of 2,704,000 shares of
Common Stock, par value $.01 per share, of the Company ("Common Stock") as set
forth opposite the name of the Company in Schedule I hereto (the "Initial
Shares"), and the purchase by the Underwriters, acting severally and not
jointly, of the respective number of shares of Common Stock set forth opposite
the names of the Underwriters in Schedule II hereto, and (ii) the grant of the
option described in Section 1(b) hereof to purchase all or any part of 405,600
additional shares of Common Stock to cover over-allotments, if any, from the
Company, in the respective numbers of shares of Common Stock set forth opposite
the name of the Company in Schedule I hereto (the "Option Shares"), to the
Underwriters, acting severally and not jointly, in the respective numbers of
shares of Common Stock set forth opposite the names of the Underwriters in
Schedule II hereto. The 2,704,000 shares of Common Stock to be purchased by the
Underwriters and all or any part of the 405,600 of Common Stock subject to the
option described in Section l(b) hereof are hereinafter called, collectively,
the "Shares."
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-3 (No. 333-138749) including a
related prospectus, for the registration of securities including the Shares
under the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations thereunder (the "Securities Act Regulations"). The Company
has prepared and filed such amendments to the registration statement and such
amendments or supplements to the related prospectus as may have been required to
the date hereof, and will file such additional amendments or supplements as may
hereafter be required. The registration statement has been declared effective
under the Securities Act by the Commission. The registration statement, as
amended at the time it was declared effective by the Commission (and, if the
Company files a post-effective amendment to such registration statement which
becomes effective prior to the Closing Time (as defined below), such
registration statement as so amended) and including all information deemed to be
a part of the registration statement pursuant to incorporation by reference,
Rule 430B of the Securities Act Regulations or otherwise, is hereinafter called
the "Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The term "Base Prospectus"
means the prospectus dated January 11, 2007 included in the Registration
Statement, including all information incorporated by reference therein. The term
"Prospectus Supplement" means the prospectus supplement specifically relating to
the Shares in the form first filed with the Commission pursuant to Rule 424
under the Securities Act, including all information incorporated by reference
therein. The term "Prospectus" means the Base Prospectus together with the
Prospectus Supplement. The term "Preliminary Prospectus" means any preliminary
form of the Prospectus in the form filed with the Commission pursuant to Rule
424 of the Securities Act Regulations.
The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus.
The term "Disclosure Package" means (i) the Preliminary Prospectus, as
most recently amended or supplemented immediately prior to the Initial Sale Time
(as defined herein), (ii) the Issuer Free Writing Prospectuses (as defined
below), if any, identified in Schedule III hereto, (iii) any other Free Writing
Prospectus (as defined below) that the parties hereto shall hereafter expressly
agree to treat as part of the Disclosure Package, and (iv) the pricing
information disclosed on Schedule IV hereto.
The term "Issuer Free Writing Prospectus" means any issuer free writing
prospectus, as defined in Rule 433 of the Securities Act Regulations. The term
"Free Writing Prospectus" means any free writing prospectus, as defined in Rule
405 of the Securities Act Regulations.
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The Company and the Underwriters each agrees as follows:
1. SALE AND PURCHASE:
(A) INITIAL SHARES. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of Common Stock of $29.6875, the Company hereby agrees to sell
to the Underwriters the Initial Shares, and each Underwriter agrees, severally
and not jointly, to purchase from the Company the number of Initial Shares set
forth in Schedule II opposite such Underwriter's name, plus any additional
number of Initial Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 8 hereof, subject in each case, to such
adjustments among the Underwriters as the Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional shares.
(B) OPTION SHARES. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of Common Stock set forth in paragraph (a) above, the Company
hereby grants an option to the Underwriters, acting severally and not jointly,
to purchase all or any part of the Option Shares. The option hereby granted will
expire 30 days after the date hereof and may be exercised in whole or in part
from time to time within such 30-day period only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representatives to the
Company and the Attorneys setting forth the number of Option Shares as to which
the several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Shares. Any such time and date of delivery
(an "Option Closing Time") shall be determined by the Representatives, but shall
not be later than three full business days (or earlier, without the consent of
the Company, than two full business days) after the exercise of such option, nor
in any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Shares, the Company will sell
that number of Option Shares then being purchased, and each of the Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of Option Shares then being purchased which the number of Initial Shares
set forth in Schedule II opposite the name of such Underwriter bears to the
total number of Initial Shares, plus any additional number of Option Shares
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof, subject in each case to such adjustments among
the Underwriters as the Representatives in their sole discretion shall make to
eliminate any sales or purchases of fractional shares.
2. PAYMENT AND DELIVERY:
(A) INITIAL SHARES. The Initial Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representatives, including, at the option of the
Representatives, through the facilities of The Depository Trust Company ("DTC")
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 to the Representatives by the Company,
upon at least forty-eight hours' prior notice. The Company will cause the
certificates, if any, representing the Initial Shares to be made available for
checking and packaging not later than 1:00 p.m. New York City time on the
business day prior to the Closing Time (as defined below) with respect thereto
at the offices of Lord, Bissell & Brook LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the Company and the Representatives may
agree (the "Designated Office"). The time and date of such delivery and payment
shall be 9:30 a.m., New York City time, on the third (fourth, if the
determination of the purchase price of the Initial Shares occurs after 4:30
p.m., New York City time) business day after the date hereof (unless another
time and date shall be agreed to by the Representatives and the Company). The
time and date at which such delivery and payment are actually made is
hereinafter called the "Closing Time." The closing shall take place at the
offices of Lord, Bissell & Brook LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, or such other place as the Company and the Representatives may agree.
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(B) OPTION SHARES. Any Option Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Representatives may request upon at least
forty-eight hours' prior notice to the Company shall be delivered to the
Representatives, including, at the option of the Representatives, through the
facilities of DTC 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 to the Representatives by the
Company upon at least forty-eight hours' prior notice. The Company will cause
the certificates representing the Option Shares to be made available for
checking and packaging at least twenty-four hours prior to the Option Closing
Time with respect thereto at the Designated Office. The Option Closing Time
shall be 9:30 a.m., New York City time, on the date specified by the
Representatives in the notice given by the Representatives to the Company of the
Underwriters' election to purchase such Option Shares or on such other time and
date as the Company and the Representatives may agree upon in writing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY:
The Company represents and warrants to the Underwriters that:
(a) the Company has an authorized capitalization as set forth in both
the Prospectus and the Disclosure Package; the outstanding shares of capital
stock of the Company and each subsidiary of the Company (each, a "Subsidiary"
and together, the "Subsidiaries") have been duly and validly authorized and
issued and are fully paid and non-assessable, and all of the outstanding shares
of capital stock of the Subsidiaries are directly or indirectly owned of record
and beneficially by the Company; except as disclosed in both the Prospectus and
the Disclosure Package, there are no outstanding (i) securities or obligations
of the Company or any of the Subsidiaries convertible into or exchangeable for
any capital stock of the Company or any such Subsidiary, (ii) warrants, rights
or options to subscribe for or purchase from the Company or any such Subsidiary
any such capital stock or any such convertible or exchangeable securities or
obligations, or (iii) obligations of the Company or any such Subsidiary to issue
any shares of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options; the description of the
Company's stock option and stock purchase plans and the options or other rights
granted and exercised thereunder set forth in the Prospectus accurately and
fairly presents the information required by the Securities Act and the
Securities Act Regulations to be shown with respect to such plans, options and
rights;
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(b) each of the Company and the Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation with full corporate power and authority
to own its respective properties and to conduct its respective businesses as
described in each of the Registration Statement, the Prospectus and the
Disclosure Package, and, in the case of the Company, to execute and deliver this
Agreement and to consummate the transactions contemplated herein;
(c) the Company and each of the Subsidiaries is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which it
conducts its respective business or in which it owns or leases real property or
otherwise maintains an office and in which the failure, individually or in the
aggregate, to be so qualified would not have a material adverse effect on the
assets, business, operations, earnings, properties or condition (financial or
otherwise), present or prospective, of the Company and the Subsidiaries taken as
a whole (any such effect or change, where the context so requires, is
hereinafter called a "Material Adverse Effect" or "Material Adverse Change");
(d) the Company and each Subsidiary holds such licenses, certificates,
permits, consents, orders, approvals, accreditations and other authorizations
from governmental authorities (including, without limitation, from the insurance
regulatory agencies of the various jurisdictions where it conducts business)
("Permits") and has made all necessary filings required under any federal, state
or local law, regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, required in order to conduct their
respective businesses as described in both the Prospectus and the Disclosure
Package, except where the failure to hold any Permit or make such filings
required under any federal, state or local law, regulation or rule or obtain
such authorizations, consents and approvals from other persons would not
reasonably be expected to result in a Material Adverse Effect; each such Permit
is valid and in full force and effect; neither the Company nor any of the
Subsidiaries is in violation of, in default under, or has received any written
notice regarding or alleging a violation of or default under or revocation of
any such Permit or a violation of any federal, state or local law, regulation or
rule or any decree, order or judgment applicable to the Company or any of the
Subsidiaries the effect of which, in each case, would reasonably be expected to
result in a Material Adverse Effect; except as disclosed in both the Prospectus
and the Disclosure Package, the authority of each Subsidiary to write or produce
the classes and lines of insurance authorized by such Permit is unrestricted and
no such Permit contains a materially burdensome restriction that is not
adequately disclosed in both the Prospectus and the Disclosure Package; and
neither the Company nor any of the Subsidiaries is a party to any agreement,
formal or informal, with any regulatory official or other person limiting the
ability of the Company or any Subsidiary from making full use of the Permits
issued to it;
(e) except as disclosed in both the Prospectus and the Disclosure
Package, no Subsidiary is prohibited or restricted, directly or indirectly, from
paying dividends to the Company, or from making any other distribution with
respect to such Subsidiary's capital stock or from repaying to the Company or
any other Subsidiary any amounts which may from time to time become due under
any loans or advances to such Subsidiary from the Company or such other
Subsidiary, or from transferring any such Subsidiary's property or assets to the
Company or to any other Subsidiary; other than as disclosed in both the
Prospectus and the Disclosure Package, the Company does not own, directly or
indirectly, more than 5% of any capital stock or other equity securities of any
other corporation or any ownership interest of more than 5% in any partnership,
joint venture or other association;
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(f) the Company and each Subsidiary is in compliance with all
applicable laws, rules, regulations, orders, decrees and judgments, including
those relating to transactions with affiliates, except where such
non-compliance, individually or in the aggregate, would not have a Material
Adverse Effect;
(g) except as disclosed in both the Prospectus and the Disclosure
Package, none of the Company, Tower Insurance Company of New York ("TICNY") and
Tower National Insurance Company ("TNIC"; TICNY and TNIC are referred to herein
as the "Insurance Subsidiaries") has made any material change in its insurance
reserving practices since December 31, 2005;
(h) all reinsurance treaties and arrangements to which the Company or
any Subsidiary is a party are in full force and effect and neither the Company
nor any Subsidiary is in violation of, or in default in the performance,
observance or fulfillment of, any obligation, agreement, covenant or condition
contained therein, except where the failure of such reinsurance treaties and
arrangements to be in full force and effect or where such violation or default
would not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect; neither the Company nor any Subsidiary has received any
notice from any of the other parties to such treaties, contracts or agreements
that such other party intends not to perform such treaty and, to the knowledge
of the Company and the Subsidiaries, none of the other parties to such treaties
or arrangements is in breach of any such treaty or arrangement except to the
extent adequately and properly reserved for in the audited historical financial
statements of the Company included in both the Prospectus and the Disclosure
Package, except where such breach would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect;
(i) the statutory financial statements of each of the Insurance
Subsidiaries from which certain ratios and other statistical data filed as part
of the Registration Statement, the Prospectus or the Disclosure Package have
been derived (i) have been prepared for each relevant period in conformity with
statutory accounting principles or practices required or permitted by the
National Association of Insurance Commissioners and by the New York State
Insurance Department, applied on a consistent basis throughout the periods
involved, except as may otherwise be indicated therein or in the notes thereto,
and (ii) present fairly in all material respects the statutory financial
position of each of the Insurance Subsidiaries as of the dates thereof and the
statutory basis results of operations of each of the Insurance Subsidiaries for
the periods covered thereby;
(j) neither the Company nor any Subsidiary is in breach of or in
default under (nor has any event occurred which with notice, lapse of time, or
both would constitute a breach of, or default under) its respective
organizational documents, or in the performance or observance of any obligation,
agreement, covenant or condition contained in any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or their
respective properties is bound, except for such breaches or defaults which would
not have a Material Adverse Effect;
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(k) the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not (A) conflict with,
or result in any breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time, or both would constitute a breach of, or
default under): (i) any provision of the organizational documents of the Company
or any Subsidiary, (ii) any provision of any license, indenture, mortgage, deed
of trust, loan or credit agreement or other agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them or their respective
properties may be bound or affected, or under any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable to
the Company or any Subsidiary, or (B) result in the creation or imposition of
any lien, charge, claim or encumbrance upon any property or asset of the Company
or the Subsidiaries, except, in the case of clauses (A)(ii) and (B), for such
conflicts, breaches, defaults, liens, charges, claims or encumbrances that would
not have a Material Adverse Effect;
(l) this Agreement has been duly authorized, executed and delivered by
the Company and this Agreement is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and to general equitable principles (regardless of whether
such principles are considered in a proceeding at law or in equity), and except
to the extent that the indemnification and contribution provisions of Section 9
hereof may be limited by federal or state securities laws and public policy
considerations in respect thereof;
(m) no approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency is required in connection with the Company's
execution, delivery and performance of this Agreement, its consummation of the
transactions contemplated herein, and its sale and delivery of the Shares to be
sold by it hereunder, other than (A) such as have been obtained, or will have
been obtained at the Closing Time or the Option Closing Time, as the case may
be, under the Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (B) such approvals as have been obtained in connection
with the approval of the listing of the Shares on the Nasdaq Global Select
Market, (C) any necessary qualifications under the securities or blue sky laws
of the various jurisdictions in which the Shares are being offered by the
Underwriters, and (D) written confirmation from the National Association of
Securities Dealers, Inc. (the "NASD") that it has decided to raise no objections
with respect to the fairness and reasonableness of the underwriting terms and
arrangements;
(n) the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and the Company has
complied to the Commission's satisfaction with any request on the part of the
Commission for additional information;
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(o) the Preliminary Prospectus when filed and the Registration
Statement as of the time each part thereof became effective and as of the date
hereof complied or will comply, and the Prospectus and any further amendments or
supplements to the Registration Statement, the Preliminary Prospectus or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, comply, in all material respects with the requirements of the
Securities Act and the Securities Act Regulations;
(p) each part of the Registration Statement as of the time such part
became effective and as of the date hereof does not and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
the Preliminary Prospectus does not as of the date hereof and will not as of the
applicable filing date and the Prospectus or any amendment or supplement thereto
will not, as of the applicable filing date, the date thereof, the Closing Time
and on each Option Closing Time (if any), 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 light of the circumstances under
which they were made, not misleading; provided, however, that the Company makes
no warranty or representation with respect to any statement contained in or
omitted from the Registration Statement, the Preliminary Prospectus or the
Prospectus in reliance upon and in conformity with the information concerning
the Underwriters and furnished in writing by or on behalf of the Underwriters
through the Representatives to the Company expressly for use therein (that
information being limited to that described in the last sentence of the first
paragraph of Section 9(b) hereof);
(q) as of the date hereof, the Company (i) is subject to the
requirement to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act, (ii) has filed all reports and other materials required to be
filed by Sections 13(a), 14 or 15(d) of the Exchange Act or the rules and
regulations thereunder (the "Exchange Act Regulations") during the preceding 12
months, (iii) is not, and during the past three years was not (nor was any
predecessor), (a) a blank check company as defined in Rule 419(a)(2), (b) a
shell company, other than a business combination related shell company, each as
defined in Rule 405, or (c) a registrant for an offering of ▇▇▇▇▇ stock as
defined in Rule 3a51-1 of the Exchange Act, or the Exchange Act Regulations, and
(iv) makes its periodic and current reports filed pursuant to Section 13 or
Section 15(d) of the Exchange Act readily available and accessible on a web site
maintained by or for the Company and containing information about the Company;
each document incorporated by reference in the Prospectus and the Disclosure
Package, when it became effective or was filed with the Commission, as
applicable, conformed in all material respects to the requirements of the
Securities Act and the Securities Act Regulations, or the Exchange Act and the
Exchange Act Regulations, as applicable, and none of such documents when filed
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by reference in
the Prospectus and the Disclosure Package or any further amendment or supplement
thereto, when such documents become effective or are filed with the Commission,
as applicable, will conform in all material respects to the requirements of the
Securities Act and the Securities Act Regulations, or the Exchange Act and the
Exchange Act Regulations, as applicable, and will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
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(r) as of 5:30 p.m. (Eastern time) on the date of this Agreement (the
"Initial Sale Time"), the Disclosure Package did not, and at the time of each
sale of Shares and at the Closing Time and each Option Closing Time, the
Disclosure Package will not, contain 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; as of its issue date or date of first use and at all subsequent
times through the Initial Sale Time, each Issuer Free Writing Prospectus did
not, and at the time of each sale of Shares and at the Closing Time and each
Option Closing Time, each such Issuer Free Writing Prospectus will not, contain
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 the Company makes no warranty or representation with respect to any
statement contained in or omitted from the Disclosure Package in reliance upon
and in conformity with the information concerning the Underwriters and furnished
in writing by or on behalf of the Underwriters through the Representatives to
the Company expressly for use therein (that information being limited to that
described in the last sentence of the first paragraph of Section 9(b) hereof);
(s) each Issuer Free Writing Prospectus, as of its issue date and at
all subsequent times through the completion of the public offer and sale of the
Shares did not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the Registration
Statement, including any document incorporated by reference therein that has not
been superseded or modified;
(t) the Company is eligible to use Free Writing Prospectuses in
connection with this offering pursuant to Rules 164 and 433 under the Securities
Act; any Free Writing Prospectus that the Company is required to file pursuant
to Rule 433(d) under the Securities Act Regulations has been, or will be, filed
with the Commission in accordance with the requirements of the Securities Act
and the Securities Act Regulations; and each Free Writing Prospectus that the
Company has filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act Regulations or that was prepared by or on behalf of or used by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the Securities Act Regulations;
(u) except for the Issuer Free Writing Prospectuses identified in
Schedule III hereto, and any electronic road show relating to the public
offering of shares contemplated herein, the Company has not prepared, used or
referred to, and will not, without the prior consent of the Representatives,
prepare, use or refer to, any Free Writing Prospectus;
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(v) the Preliminary Prospectus, the Prospectus and any Issuer Free
Writing Prospectuses (to the extent any such Issuer Free Writing Prospectus was
required to be filed with the Commission) delivered to the Underwriters for use
in connection with the public offering of the Shares contemplated herein have
been and will be identical to the versions of such documents transmitted to the
Commission for filing via the Electronic Data Gathering Analysis and Retrieval
System ("▇▇▇▇▇"), except to the extent permitted by Regulation S-T or Rule 424
of the Securities Act Regulations;
(w) the Company filed the Registration Statement with the Commission
before using any Issuer Free Writing Prospectus; and each Issuer Free Writing
Prospectus was preceded or accompanied by the most recent Preliminary Prospectus
satisfying the requirements of Section 10 under the Securities Act;
(x) except as disclosed in the Prospectus, there are no actions, suits,
proceedings, inquiries or investigations pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary or any of their
respective officers and directors or to which the properties, assets or rights
of any such entity are subject, at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority, arbitral panel or agency which would reasonably be expected to result
in a judgment, decree, award or order having a Material Adverse Effect;
(y) the consolidated financial statements, including the notes thereto,
of the Company and the Subsidiaries and of Preserver Group, Inc. ("Preserver")
and its subsidiaries, respectively, included in (or incorporated by reference
into) each of the Registration Statement, the Prospectus and the Disclosure
Package present fairly in all material respects the consolidated financial
position of the Company and the Subsidiaries and of Preserver and its
subsidiaries, respectively, as of the dates indicated and the consolidated
results of operations and changes in financial position and cash flows of the
Company and the Subsidiaries and of Preserver and its subsidiaries,
respectively, for the periods specified, except as may be otherwise indicated
therein or in the notes thereto; such financial statements have been prepared in
conformity with generally accepted accounting principles as applied in the
United States and on a consistent basis during the periods involved and in
accordance with Regulation S-X promulgated by the Commission; the financial
statement schedules included in (or incorporated by reference into) the
Registration Statement and the amounts in both the Prospectus and the Disclosure
Package under the captions "Prospectus Summary - Summary Consolidated Financial
Information" and "Selected Consolidated Financial Information" fairly present
the information shown therein and have been compiled on a basis consistent with
the financial statements included in each of the Registration Statement, the
Prospectus and the Disclosure Package; no other financial statements or
supporting schedules are required to be included in the Registration Statement,
the Prospectus or the Disclosure Package; the unaudited pro forma financial
information (including the related notes) included in (or incorporated by
reference into) each of the Registration Statement, the Prospectus and the
Disclosure Package complies as to form in all material respects with the
applicable accounting requirements of the Securities Act and the Securities Act
Regulations, and management of the Company believes that the assumptions
underlying the pro forma adjustments are reasonable; such pro forma adjustments
have been properly applied to the historical amounts in the compilation of the
information and such information fairly presents with respect to the Company and
the Subsidiaries, the financial position, results of operations and other
information purported to be shown therein at the respective dates and for the
respective periods specified; and no other pro forma financial information is
required to be included in (or incorporated by reference into) the Registration
Statement, the Prospectus or the Disclosure Package;
-10-
(z) each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and BDO ▇▇▇▇▇▇▇, LLP, whose reports
on the consolidated financial statements of the Company and the Subsidiaries,
and of Preserver and its subsidiaries, respectively, are filed with the
Commission as part of each of the Registration Statement, the Prospectus and the
Disclosure Package, or are incorporated by reference therein, and any other
accounting firm that has certified Company financial statements and delivered
its reports with respect thereto, are, and were during the periods covered by
its reports, independent public accountants as required by the Securities Act
and the Securities Act Regulations are registered with the Public Company
Accounting Oversight Board;
(aa) subsequent to the respective dates as of which information is
given in the Registration Statement, the Prospectus and the Disclosure Package,
and except as may be otherwise stated in such documents, there has not been (A)
any Material Adverse Change or any development that could reasonably be expected
to result in a Material Adverse Change, whether or not arising in the ordinary
course of business, (B) any transaction or agreement in principle that is
material to the Company and the Subsidiaries taken as a whole, entered into by
the Company or any of the Subsidiaries, (C) any obligation, contingent or
otherwise, that is material to the Company and Subsidiaries taken as a whole,
directly or indirectly, incurred by the Company or any Subsidiary or (D) any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock;
(bb) the Shares conform in all material respects to the description
thereof contained in the Registration Statement, the Prospectus and the
Disclosure Package;
(cc) except as described in both the Prospectus and the Disclosure
Package, there are no persons with registration or other similar rights to have
any equity or debt securities, including securities which are convertible into
or exchangeable for equity securities, registered pursuant to the Registration
Statement or otherwise registered by the Company under the Securities Act;
(dd) the Shares to be sold by the Company as contemplated herein have
been duly authorized and, when issued and duly delivered against payment
therefor as contemplated by this Agreement, will be validly issued, fully paid
and non-assessable, free and clear of any pledge, lien, encumbrance, security
interest or other claim, and the issuance and sale of the Shares by the Company
is not subject to preemptive or other similar rights arising by operation of
law, under the organizational documents of the Company or under any agreement to
which the Company or any Subsidiary is a party or otherwise; and no further
approval or authority of the stockholders or the board of directors of the
Company will be required for the issuance and sale of the Shares to be sold by
the Company as contemplated herein;
-11-
(ee) the Company is in compliance in all material respects with all
applicable listing standards of the Nasdaq Global Select Market;
(ff) the Company has not taken, and will not take, directly or
indirectly, any action which is 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 Shares;
(gg) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act, or the rules and regulations thereunder (the "Exchange Act
Regulations"), or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the By-Laws and the applicable rules of the NASD) any member
firm of the NASD;
(hh) the Company has not relied upon the Representatives or legal
counsel for the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(ii) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, any
applicable requirements of the organizational documents of the Company and the
requirements of the Nasdaq Global Select Market;
(jj) the Company and the Subsidiaries have good and marketable title in
fee simple to all real property, if any, and good title to all personal property
owned by them, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as are
disclosed in the Prospectus or such as do not materially and adversely affect
the value of such property and do not interfere with the use made or proposed to
be made of such property by the Company and the Subsidiaries; and any real
property and buildings held under lease by the Company or any Subsidiary are
held under valid, existing and enforceable leases, with such exceptions as are
disclosed in both the Prospectus and the Disclosure Package or are not material
and do not interfere with the use made or proposed to be made of such property
and buildings by the Company or such Subsidiary;
(kk) the descriptions in each of the Registration Statement, the
Prospectus and the Disclosure Package of the legal or governmental proceedings,
contracts, leases and other legal documents therein described present fairly the
information required to be described by the Securities Act or by the Securities
Act Regulations, and there are no legal or governmental proceedings, contracts,
leases, or other documents of a character required to be described in the
Registration Statement, the Prospectus or the Disclosure Package or required to
be filed as exhibits to the Registration Statement by the Securities Act or by
the Securities Act Regulations which are not described or filed; all agreements
between the Company or one or more of its Subsidiaries and third parties
expressly referenced in both the Prospectus and the Disclosure Package have been
duly authorized, executed and delivered by the Company or one or more of its
Subsidiaries and are legal, valid and binding obligations of the Company or one
or more of its Subsidiaries, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and to general equitable principles
(regardless of whether such principles are considered in a proceeding at law or
in equity), and are in full force and effect on the date hereof, except where
the failure of any such agreement to be duly authorized, executed and delivered,
enforceable and in full force and effect would not, individually or in the
aggregate, have a Material Adverse Effect; and neither the Company nor any of
its Subsidiaries nor, to the Company's knowledge, any other party thereto, is in
breach of or default under any of such contracts, except for such breaches or
defaults that would not result in a Material Adverse Change;
-12-
(ll) the Company and each Subsidiary owns or possesses adequate
licenses or other rights to use all patents, trademarks, service marks, trade
names, copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively
"Intangibles") necessary to entitle the Company and each Subsidiary to conduct
its business as described in both the Prospectus and the Disclosure Package, and
neither the Company nor any Subsidiary has received notice of any infringement
of or conflict with and the Company does not know of any such infringement of or
conflict with asserted rights of others with respect to any Intangibles which
would have a Material Adverse Effect;
(mm) the Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a 15(e) under the Exchange Act),
which (i) are designed to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to the Company's
principal executive officer and its principal financial officer by others within
those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared, (ii) have been evaluated for
effectiveness as of the end of the last fiscal period covered by the
Registration Statement, and (iii) are effective in all material respects to
perform the functions for which they were established, and (y) the Company is
not aware of (a) any significant deficiency or material weakness in the design
or operation of its internal controls over financial reporting which is
reasonably likely to adversely affect the Company's ability to record, process,
summarize and report financial information to management and the Board of
Directors, or (b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal control
over financial reporting. Since the most recent evaluation of the Company's
disclosure controls and procedures described above, there have been no
significant changes in internal control over financial reporting or in other
factors that could significantly affect internal control over financial
reporting;
(nn) the Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
-13-
(oo) each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof, each of which has been
true and correct in all material respects, and has paid all taxes shown as due
thereon; and no tax deficiency has been asserted against any such entity, nor
does any such entity know of any tax deficiency which is likely to be asserted
against any such entity which, if determined adversely to any such entity, would
have a Material Adverse Effect; all tax liabilities are adequately provided for
on the respective books of such entities;
(pp) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and the Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect; it being understood
that no representation is made in this subsection (pp) as to the reinsurance
ceded by the Company and the Subsidiaries;
(qq) neither the Company nor any of the Subsidiaries is in violation
of, or has received written notice of any violation with respect to, any
applicable environmental, safety or similar law applicable to the business of
the Company or any of the Subsidiaries; the Company and the Subsidiaries have
received all permits, licenses or other approvals required of them under
applicable federal and state occupational safety and health and environmental
laws and regulations to conduct their respective businesses, and the Company and
the Subsidiaries are in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law or regulation,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
which would not, individually or in the aggregate, result in a Material Adverse
Change;
(rr) neither the Company nor any Subsidiary is in violation of or has
received written notice of any violation with respect to any federal or state
law relating to discrimination in the hiring, promotion or pay of employees, nor
any applicable federal or state wages and hours law, nor any applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder, the
violation of any of which would have a Material Adverse Effect;
(ss) neither the Company nor any of the Subsidiaries nor any officer or
director purporting to act on behalf of the Company or any of the Subsidiaries
has at any time (i) made any contributions to any candidate for political
office, or failed to disclose fully any such contributions, in violation of law;
(ii) made any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable law; (iii) engaged in any
transactions, maintained any bank account or used any corporate funds except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Company and the Subsidiaries; or
(iv) otherwise made any payment of funds of the Company or of any Subsidiary or
received or retained any funds in violation of any law, rule or regulation or of
a character required to be disclosed in the Prospectus;
-14-
(tt) except as otherwise disclosed in both the Prospectus and the
Disclosure Package, there are no outstanding loans or advances or material
guarantees of indebtedness by the Company or any of the Subsidiaries to or for
the benefit of any of the officers or directors of the Company or any of the
Subsidiaries or any of the members of the families of any of them;
(uu) all securities issued by the Company, any of the Subsidiaries or
any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance with (i) all applicable federal and state securities laws,
(ii) the laws of the applicable jurisdiction of incorporation of the issuing
entity and, (iii) to the extent applicable to the issuing entity, the
requirements of the Nasdaq Global Select Market;
(vv) in connection with the offering contemplated hereby, the Company
has not offered and will not offer its Common Stock or any other securities
convertible into or exchangeable or exercisable for Common Stock in a manner in
violation of the Securities Act or the Securities Act Regulations; the Company
has not distributed and will not distribute any offering material in connection
with the offer and sale of the Shares except for the Preliminary Prospectus, the
Prospectus, any Issuer Free Writing Prospectus or the Registration Statement;
(ww) except as otherwise contemplated by this Agreement, the Company
has not incurred any liability for any finder's fees or similar payments in
connection with the transactions herein contemplated;
(xx) no relationship, direct or indirect, exists and no transaction has
occurred between or among the Company or any of the Subsidiaries on the one
hand, and the directors, officers, stockholders, customers or suppliers of the
Company or any of the Subsidiaries on the other hand, which is required by the
Securities Act and the Securities Act Regulations to be described in the
Registration Statement, the Prospectus and the Disclosure Package, which is not
so described;
(yy) neither the Company nor any of the Subsidiaries is or, after
giving effect to the offering and sale of the Shares, will be an "investment
company" or an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act");
(zz) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of the
Subsidiaries which are likely to have, individually or in the aggregate, a
Material Adverse Effect; and
(aaa) the Company is in compliance in all material respects with all
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and
regulations of the Commission promulgated pursuant thereto.
-15-
4. CERTAIN COVENANTS BY THE COMPANY:
The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions (both domestic and foreign) as the
Representatives may designate and to maintain such qualifications in effect as
long as requested by the Representatives for the distribution of the Shares,
provided that the Company shall not be required to qualify as a foreign
corporation, to subject itself to taxation or to consent to the service of
process under the laws of any such jurisdiction (except service of process with
respect to the offering and sale of the Shares);
(b) to advise the Representatives promptly, and (if requested by
Representatives) to confirm such advice in writing, when the Registration
Statement becomes effective under the Securities Act Regulations; if, at the
time this Agreement is executed and delivered, it is necessary for a
post-effective amendment to the Registration Statement to be declared effective
before the offering of the Shares may commence, the Company will endeavor to
cause such post-effective amendment to become effective as soon as possible and
will advise the Representatives promptly and, if requested by the
Representatives, will confirm such advice in writing, when such post-effective
amendment has become effective under the Securities Act Regulations;
(c) to prepare the Prospectus in a form approved by the Underwriters
and file such Prospectus with the Commission pursuant to Rule 424(b) under the
Securities Act not later than 10:00 a.m. (New York City time), on the day
following the execution and delivery of this Agreement or on such other day as
the parties may mutually agree and to furnish promptly (and with respect to the
initial delivery of such Prospectus, not later than 10:00 a.m. (New York City
time) on the day following the execution and delivery of this Agreement, or on
such other day as the parties may mutually agree), to the Underwriters copies of
the Prospectus (or of the Prospectus as amended or supplemented if the Company
shall have made any amendments or supplements thereto after the effective date
of the Registration Statement) in such quantities and at such locations as the
Underwriters may reasonably request for the purposes contemplated by the
Securities Act Regulations, which Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the versions created
to be transmitted to the Commission for filing via ▇▇▇▇▇, except to the extent
permitted by Regulation S-T and Rule 424;
(d) to advise the Representatives promptly and (if requested by the
Representatives) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(e) to furnish a copy of each proposed Free Writing Prospectus to the
Representatives and counsel for the Underwriters and obtain the consent of the
Representatives prior to referring to, using or filing with the Commission any
Free Writing Prospectus pursuant to Rule 433(d) under the Securities Act, other
than the Issuer Free Writing Prospectuses, if any, identified in Schedule III
hereto;
-16-
(f) to comply with the requirements of Rules 164 and 433 of the
Securities Act Regulations applicable to any Issuer Free Writing Prospectus,
including timely filing with the Commission, legending and record keeping, as
applicable;
(g) to advise the Representatives immediately, confirming such advice
in writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement, the
Preliminary Prospectus, the Prospectus or any Free Writing Prospectus, or for
additional information with respect thereto, or (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any Preliminary
Prospectus, the Prospectus or any Issuer Free Writing Prospectus, or of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes and, if the Commission or any other government agency or authority
should issue any such order, to make every reasonable effort to obtain the
lifting or removal of such order as soon as possible; to advise the
Representatives promptly of any proposal to amend or supplement the Registration
Statement, the Preliminary Prospectus, the Prospectus or any Free Writing
Prospectus and to file no such amendment or supplement to which the
Representatives shall reasonably object;
(h) to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of shares of
Common Stock in their capacity as such, (ii) as soon as practicable after the
filing thereof, copies of all reports filed by the Company with the Commission,
the Nasdaq Global Select Market or any securities exchange and (iii) such other
information as the Underwriters may reasonably request regarding the Company and
the Subsidiaries, provided that (A) such information may be given legally
pursuant to Regulation FD and Rule 10b-5 promulgated under the Exchange Act, (B)
such information will be subject to such confidentiality and use restrictions as
the Company may reasonably impose, and (C) the obligations of the Company under
this paragraph (h) shall be deemed satisfied by the placement of such
information on the Company's internet website and timely notification to the
Representatives of such placement;
(i) to advise the Underwriters promptly of the happening of any event
or development known to the Company within the time during which a Prospectus
relating to the Shares (or in lieu thereof the notice referred to in Rule 173(a)
under the Securities Act Regulations) is required to be delivered under the
Securities Act Regulations which, in the judgment of the Company or in the
reasonable opinion of the Representatives or counsel for the Underwriters, (i)
would require the making of any change in the Prospectus or the Disclosure
Package so that the Prospectus or the Disclosure Package would not include 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, (ii) as a result
of which any Issuer Free Writing Prospectus conflicted or would conflict with
the information contained in the Registration Statement relating to the Shares,
or (iii) if it is necessary at any time to amend or supplement the Prospectus or
the Disclosure Package to comply with any law and, during such time, to promptly
prepare and furnish to the Underwriters copies of the proposed amendment or
supplement before filing any such amendment or supplement with the Commission
and thereafter promptly furnish at the Company's own expense to the Underwriters
and to dealers, copies in such quantities and at such locations as the
Representatives may from time to time reasonably request of an appropriate
amendment or supplement to the Prospectus or the Disclosure Package so that the
Prospectus or the Disclosure Package as so amended or supplemented will not, in
the light of the circumstances when it (or in lieu thereof the notice referred
to in Rule 173(a) under the Securities Act Regulations) is so delivered, be
misleading or , in the case of any Issuer Free Writing Prospectus, conflict with
the information contained in the Registration Statement, or so that the
Prospectus or the Disclosure Package will comply with the law;
-17-
(j) to file promptly with the Commission any amendment or supplement to
the Registration Statement, the Preliminary Prospectus, the Prospectus or any
Issuer Free Writing Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(k) prior to filing with the Commission any amendment or supplement to
the Registration Statement, the Preliminary Prospectus, the Prospectus or any
Issuer Free Writing Prospectus, to furnish a copy thereof to the Representatives
and counsel for the Underwriters and obtain the consent of the Representatives
to the filing;
(l) to furnish promptly to each Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representatives may reasonably request;
(m) to file during the period referred to in paragraph (h) above, all
documents required to be filed with the Commission pursuant to Section 13, 14,
or 15(d) of the Exchange Act in the manner and within the time periods required
by the Exchange Act and the Exchange Act Regulations;
(n) to apply the net proceeds of the sale of the Shares in accordance
with its statements under the caption "Use of Proceeds" in the Prospectus and
the Disclosure Package;
(o) to make generally available to its security holders and to deliver
to the Representatives as soon as practicable, but in any event not later than
the end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement an earnings statement complying
with the provisions of Section 11(a) of the Securities Act (in form, at the
option of the Company, complying with the provisions of Rule 158 of the
Securities Act Regulations) covering a period of 12 months beginning after the
effective date of the Registration Statement;
(p) to use its best efforts to maintain the listing of the Shares on
the Nasdaq Global Select Market and to file with the Nasdaq Global Select Market
all documents and notices required thereby of companies that have securities
that are traded and quotations for which are reported by the Nasdaq Global
Select Market;
-18-
(q) to maintain, at its expense, a registrar and transfer agent for the
Shares;
(r) except with respect to the Shares to be sold hereunder, during the
period commencing on the date hereof and ending on the 90-day anniversary of the
date of the Prospectus, (1) not to offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for any shares of Common Stock,
and (2) not to enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise; provided, however, that notwithstanding the foregoing the
Company shall be permitted to grant options to purchase Common Stock or issue
shares of restricted stock pursuant to the Company's benefit plans described in
the Registration Statement, and may issue shares of Common Stock upon the
exercise of outstanding options, provided that in the event any holder of such
shares would become a 1% or greater stockholder as a result of such issuance,
the Company shall cause such holder to furnish to the Representatives a letter
substantially in the form of Exhibit A hereto;
(s) not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
(t) to cause each officer and director of the Company to furnish to the
Representatives, prior to the Closing Time, a letter or letters substantially in
the form of Exhibit A hereto, pursuant to which each such person shall agree not
to (1) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for any shares of Common Stock (whether such shares
or any such securities are now owned by such person or are hereafter acquired),
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise, in each case for a period commencing on the date hereof and ending on
the 90-day anniversary of the date of the Prospectus, without the prior written
consent of the Representatives on behalf of the Underwriters;
(u) during the 30-day period after the Registration Statement becomes
effective, the Company will provide the Representatives the opportunity to
review any press release or other public statement within a reasonable time
prior to its release;
-19-
(v) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement; and
(w) that the Company will provide proper notice to the holder of the
outstanding shares of the Company's Series A-1 Preferred Stock that such shares
shall be redeemed in accordance with the terms of the Company's Certificate of
Designations of Series A-1 Preferred Stock, effective as of the Closing Time,
and at the Closing Time the Company shall redeem such shares by paying to the
holder thereof the sum of $40,000,000 plus the amount of any declared and unpaid
dividends payable with respect to such shares.
5. PAYMENT OF EXPENSES:
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any
amendments or supplements thereto, and the printing and furnishing of copies of
each thereof to the Underwriters and to dealers (including costs of mailing and
shipment), (ii) the preparation, issuance and delivery of the certificates for
the Shares to the Underwriters, including any stock or other transfer taxes or
duties payable upon the sale of the Shares to the Underwriters, (iii) the
printing of this Agreement and any dealer agreements and furnishing of copies of
each to the Underwriters and to dealers (including costs of mailing and
shipment), (iv) the qualification of the Shares for offering and sale under
state and foreign laws that the Company and the Representatives have mutually
agreed are appropriate and the determination of their eligibility for investment
under such laws as aforesaid, including the legal fees and filing fees and other
disbursements of counsel for the Underwriters assuming that the Common Stock is
approved for listing on the Nasdaq Global Select Market, and the printing and
furnishing of copies of any blue sky or foreign securities law surveys or legal
investment surveys to the Underwriters and to dealers, (v) filing for review of
the public offering of the Shares by the NASD (including the filing fees and
other disbursements of counsel for the Underwriters relating thereto), (vi) the
fees and expenses of any transfer agent or registrar for the Shares and
miscellaneous expenses referred to in the Registration Statement, (vii) the fees
and expenses incurred in connection with the inclusion of the Shares for listing
on the Nasdaq Global Select Market, (viii) the expenses of FBR and Company
personnel in making road show presentations with respect to the offering of the
Shares, (ix) preparing and distributing bound volumes of transaction documents
for the Representatives and its legal counsel and (x) the performance of the
Company's other obligations hereunder. Upon the request of the Representatives,
the Company will provide funds in advance for filing fees.
(b) In addition to the expenses to be paid or reimbursed by the Company
under subsection (a) above, the Company agrees to reimburse FBR for its
reasonable out-of-pocket expenses in connection with the performance of its
activities under this Agreement, including, but not limited to, the fees and
expenses of the Underwriters' outside legal counsel and any other advisors,
accountants, appraisers, etc., provided that the amount of reimbursement under
this subsection (b) shall not be greater than $500,000.
-20-
(c) If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company also shall reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (such as printing, facsimile, courier
service, direct computer expenses, accommodations, travel and the fees and
disbursements of Underwriters' counsel and any other advisors, accountants,
appraisers, etc.) reasonably incurred by such Underwriters in connection with
this Agreement or the transactions contemplated herein.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS:
(a) The obligations of the Underwriters hereunder to purchase Shares at
the Closing Time or at each Option Closing Time, as applicable, are subject to
the accuracy of the representations and warranties on the part of the Company
hereunder on the date hereof and at the Closing Time and at each Option Closing
Time, as applicable, the performance by the Company of its obligations hereunder
and the satisfaction of the following further conditions at the Closing Time or
at each Option Closing Time, as applicable.
(b) The Company shall furnish to the Underwriters at the Closing Time
and at each Option Closing Time an opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Senior
Vice President and General Counsel for the Company and the Subsidiaries,
addressed to the Underwriters and dated the Closing Time and at each Option
Closing Time, in form and substance satisfactory to Lord, Bissell & Brook LLP,
counsel for the Underwriters, as set forth in Exhibit B attached hereto.
(c) The Company shall furnish to the Underwriters at the Closing Time
and at each Option Closing Time an opinion of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, counsel for the Company and the Subsidiaries, addressed to the Underwriters
and dated the Closing Time and at each Option Closing Time, in form and
substance satisfactory to Lord, Bissell & Brook LLP, counsel for the
Underwriters, as set forth in Exhibit C attached hereto.
(d) The Representatives shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
and BDO ▇▇▇▇▇▇▇, LLP, respectively, letters dated as of the date of this
Agreement, the Closing Time and each Option Closing Time, as the case may be,
addressed to the Representatives, in form and substance satisfactory to the
Representatives, relating to the financial statements of the Company and the
Subsidiaries, in the case of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., and of Preserver and its
subsidiaries in the case of BDO ▇▇▇▇▇▇▇, LLP, and such other matters customarily
covered by comfort letters issued in connection with registered public
offerings. In the event that the letters referred to above set forth any change
in the capital stock, increase in long-term debt or any decreases in
stockholders' equity, operating income or net income of the Company or
Preserver, as applicable, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation of the Company or Preserver, as applicable, as to the significance
thereof, unless the Representatives deems such explanation unnecessary, and (B)
such changes, decreases or increases do not, in the sole judgment of the
Representatives, make it impractical or inadvisable to proceed with the purchase
and delivery of the Shares as contemplated by the Registration Statement.
-21-
(e) The Representatives shall have received at the Closing Time and at
each Option Closing Time the favorable opinion of Lord, Bissell & Brook LLP,
dated the Closing Time or such Option Closing Time, addressed to the
Representatives and in form and substance satisfactory to the Representatives.
(f) No amendment or supplement to the Registration Statement, the
Prospectus or any document in the Disclosure Package shall have been filed to
which the Underwriters shall have objected in writing.
(g) Prior to the Closing Time and each Option Closing Time (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of the Prospectus or any document in the
Disclosure Package has been issued, and no proceedings for such purpose shall
have been initiated or threatened, by the Commission, and no suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or the
initiation or threatening of any proceedings for any of such purposes, shall
have occurred; (ii) all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representatives; (iii) the Registration Statement or any amendment thereto, in
each case as of their respective effective dates, shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
(iv) none of the Prospectus, the Disclosure Package or any Issuer Free Writing
Prospectus shall 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 light of the circumstances under which they were made,
not misleading.
(h) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Time shall have been made
within the applicable time period prescribed for such filing by such Rule.
(i) Between the time of execution of this Agreement and the Closing
Time or the relevant Option Closing Time, there shall not have been any Material
Adverse Change and no transaction which is material and unfavorable to the
Company shall have been entered into by the Company or any of the Subsidiaries,
in each case, which in the Representatives' sole judgment, makes it
impracticable or inadvisable to proceed with the public offering of the Shares
as contemplated by the Registration Statement.
(j) All required filings with respect to the Shares shall have been
made with the Nasdaq Global Select Market.
(k) The NASD shall have confirmed in writing that it has decided to
raise no objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements and shall not have raised any such objection
after the date of such confirmation.
-22-
(l) The Representatives shall have received lock-up agreements from
each officer and director of the Company in the form of Exhibit A attached
hereto, and such letter agreements shall be in full force and effect.
(m) The Company will, at the Closing Time and at each Option Closing
Time, deliver to the Underwriters a certificate of its Chief Executive Officer
and Chief Financial Officer to the effect that:
(i) the representations and warranties of the
Company in this Agreement are true and
correct, as if made on and as of the Closing
Time or any Option Closing Time, and the
Company has complied with all the agreements
and satisfied all the conditions on its part
to be performed or satisfied at or prior to
the Closing Time or any Option Closing Time,
as applicable;
(ii) no stop order suspending the effectiveness
of the Registration Statement or any
post-effective amendment thereto and no
order directed at any document incorporated
by reference therein ("Incorporated
Document") has been issued and no
proceedings for that purpose have been
instituted or are pending or threatened
under the Securities Act;
(iii) when the Registration Statement became
effective and at all times subsequent
thereto up to the Closing Time or any Option
Closing Time, as applicable, the
Registration Statement and the Prospectus
and the Preliminary Prospectus, and any
amendments or supplements thereto and any
Incorporated Documents, when such
Incorporated Documents became effective or
were filed with the Commission, contained
all material information required to be
included therein by the Securities Act or
the Exchange Act and the applicable rules
and regulations of the Commission
thereunder, as the case may be, and in all
material respects conformed to the
requirements of the Securities Act or the
Exchange Act and the applicable rules and
regulations of the Commission thereunder, as
the case may be; the Registration Statement
and any amendments thereto did not and, as
of the Closing Time or any Option Closing
Time, as applicable, do not contain an
untrue statement of a material fact or omit
to state a material fact required to be
stated therein or necessary to make the
statements therein not misleading and the
Prospectus and the Disclosure Package, and
any amendments or supplements thereto, did
not and as of the Closing Time or any Option
Closing Time, as applicable, do not include
any untrue statement of a material fact or
omit to state a material fact required to be
stated therein or necessary to make the
statements therein, in the light of the
circumstances under which they were made,
not misleading; and, since the effective
date of the Registration Statement, there
has occurred no event required to be set
forth in an amendment or supplement to the
Prospectus or the Disclosure Package which
has not been so set forth; and
-23-
(iv) subsequent to the respective dates as of
which information is given in the
Registration Statement, the Prospectus and
the Disclosure Package, there has not been
(a) any Material Adverse Change, (b) any
transaction that is material to the Company
and the Subsidiaries considered as one
enterprise, except transactions entered into
in the ordinary course of business, (c) any
obligation, direct or contingent, that is
material to the Company and the Subsidiaries
considered as one enterprise, incurred by
the Company or the Subsidiaries, except
obligations incurred in the ordinary course
of business, (d) any change in the capital
stock or outstanding indebtedness of the
Company or any Subsidiary that is material
to the Company and the Subsidiaries
considered as one enterprise, (e) any
dividend or distribution of any kind
declared, paid or made on the capital stock
of the Company or any Subsidiary, or (f) any
loss or damage (whether or not insured) to
the property of the Company or any
Subsidiary which has been sustained or will
have been sustained which has or would be
likely to have a Material Adverse Effect,
other than losses occurring under policies
of insurance or reinsurance agreements
issued by TICNY or TNIC.
(n) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement, the Prospectus and the Disclosure Package, the
representations, warranties and statements of the Company contained herein, and
the performance by the Company of its covenants contained herein, and the
fulfillment of any conditions contained herein, as of the Closing Time and any
Option Closing Time, as the Underwriters may reasonably request.
7. TERMINATION:
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representatives, at any time
prior to the Closing Time or any Option Closing Time, (i) if any of the
conditions specified in Section 6 shall not have been fulfilled when and as
required by this Agreement to be fulfilled, or (ii) if there has been since the
respective dates as of which information is given in the Registration Statement,
the Prospectus or the Disclosure Package, any Material Adverse Change, or any
material change in management of the Company or any Subsidiary, whether or not
arising in the ordinary course of business, or (iii) if there has occurred any
outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic, political or other conditions the
effect of which on the United States financial markets is such as to make it, in
the judgment of the Representatives, impracticable to market the Shares or
enforce contracts for the sale of the Shares, or (iv) if trading in any
securities of the Company has been suspended by the Commission or by the Nasdaq
Global Select Market, or if trading generally on the New York Stock Exchange or
in the Nasdaq over-the-counter market has been suspended (including an automatic
halt in trading pursuant to market-decline triggers, other than those in which
solely program trading is temporarily halted), or limitations on prices for
trading (other than limitations on hours or numbers of days of trading) have
been fixed, or maximum ranges for prices for securities have been required, by
such exchange or the NASD or the over-the-counter market or by order of the
Commission or any other governmental authority, or (v) if there has been any
downgrade in the ratings of the Company or any of its Subsidiaries or Preserver
or any of its subsidiaries by A.M. Best Company, Fitch or Standard & Poor's, or
(vi) any federal or state statute, regulation, rule or order of any court or
other governmental authority has been enacted, published, decreed or otherwise
promulgated which, in the reasonable opinion of the Representatives, materially
adversely affects or will materially adversely affect the business or operations
of the Company.
-24-
If the Representatives elect to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile or e-mail.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. INCREASE IN UNDERWRITERS' COMMITMENTS:
If any Underwriter shall default at the Closing Time or on any Option
Closing Time in its obligation to take up and pay for the Shares to be purchased
by it under this Agreement on such date, the Representatives shall have the
right, within 36 hours after such default, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Shares which such Underwriter shall have agreed
but failed to take up and pay for (the "Defaulted Shares"). Absent the
completion of such arrangements within such 36-hour period, (i) if the total
number of Defaulted Shares does not exceed 10% of the total number of Shares to
be purchased on such date, each non-defaulting Underwriter shall take up and pay
for (in addition to the number of Shares which it is otherwise obligated to
purchase on such date pursuant to this Agreement) the portion of the total
number of Shares agreed to be purchased by the defaulting Underwriter on such
date in the proportion that its underwriting obligations hereunder bears to the
underwriting obligations of all non-defaulting Underwriters; and (ii) if the
total number of Defaulted Shares exceeds 10% of such total, the Representatives
may terminate this Agreement by notice to the Company, without liability of any
party to any other party except that the provisions of Sections 5 and 9 hereof
shall at all times be effective and shall survive such termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the
Representatives).
-25-
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Option Closing Time for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the same effect as
if such substituted Underwriter had originally been named in this Agreement.
9. INDEMNITY AND CONTRIBUTION BY THE COMPANY AND THE UNDERWRITERS:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the
respective directors, officers, employees and agents of each Underwriter from
and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, any such
Underwriter or controlling person may incur under the Securities Act, the
Exchange Act or otherwise, insofar as such loss, expense, liability, damage or
claim arises out of or is based upon (A) any breach of any representation,
warranty or covenant of the Company contained herein, (B) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post effective
amendment thereof), any Issuer Free Writing Prospectus, or the Prospectus (the
term Prospectus for the purpose of this Section 9 being deemed to include the
Base Prospectus, any Preliminary Prospectus and the Prospectus, as the same may
be amended or supplemented by the Company), (C) any application or other
document, or any amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction (domestic or foreign) in order to qualify the Shares under the
securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each an "Application"), (D) any
omission or alleged omission to state a material fact required to be stated in
any such Registration Statement, or necessary to make the statements made
therein not misleading, or (E) any omission or alleged omission from any Issuer
Free Writing Prospectus, Prospectus or any Application of a material fact
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading; except in the case of (B), (C), (D)
and (E) above only insofar as any such loss, expense, liability, damage or claim
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission of a material fact contained in and in
conformity with information furnished in writing by the Underwriters through the
Representatives to the Company expressly for use in such Registration Statement,
Prospectus or Application. The indemnity agreement set forth in this Section
9(a) shall be in addition to any liability which the Company may otherwise have.
-26-
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to
subsection (a) above, such Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses; provided, however, that any failure or delay to so notify the Company
will not relieve the Company of any obligation hereunder, except to the extent
that its ability to defend is actually impaired by such failure or delay. Such
Underwriter or controlling person shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such Underwriter or such controlling person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action, or the Company shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of the institution of such action is given by the
Underwriter or controlling person, or such indemnified party or parties shall
have reasonably concluded (based on the advice of counsel) that there may be
defenses available to it or them which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
Company and paid as incurred (it being understood, however, that the Company
shall not be liable for the expenses of more than one separate firm of attorneys
for the Underwriters or controlling persons in any one action or series of
related actions in the same jurisdiction (other than local counsel in any such
jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its consent.
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, the Company's directors, the Company's
officers that signed the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which the Company or any such
person may incur under the Securities Act, the Exchange Act or otherwise, but
only insofar as such loss, expense, liability, damage or claim arises out of or
is based upon (A) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment or part thereof),
any Issuer Free Writing Prospectus that the Company has filed or was required to
file with the Commission, or the Prospectus, or any Application, (B) any
omission or alleged omission to state a material fact required to be stated in
any such Registration Statement, or necessary to make the statements made
therein not misleading, or (C) any omission or alleged omission from any such
Issuer Free Writing Prospectus, Prospectus or any Application of a material fact
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, but in each case only insofar as
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, Issuer Free Writing
Prospectus, Prospectus or Application in reliance upon and in conformity with
information furnished in writing by the Underwriters through the Representatives
to the Company expressly for use therein. The concession and reallowance figures
appearing in the third paragraph and the statements set forth in the seventh,
eleventh and twelfth paragraphs under the caption "Underwriting" in the
Preliminary Prospectus and the Prospectus (to the extent such statements relate
to the Underwriters) constitute the only information furnished by or on behalf
of any Underwriter through the Representatives to the Company for purposes of
Section 3(p), Section 3(r) and this Section 9.
-27-
The indemnity agreement set forth in this Section 9(b) shall be in
addition to any liabilities that such Underwriter may otherwise have.
If any action is brought against the Company or any such person in
respect of which indemnity may be sought from any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Representatives in writing of the institution of such action and the
Representatives, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses, provided,
however, that any failure or delay to so notify the Representatives will not
relieve the Underwriters of any obligation hereunder, except to the extent that
their ability to defend is actually impaired by such failure or delay. The
Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless (i) the Representatives shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of the institution of such action is given by the
Company or such person, (ii) such indemnified party or parties shall have
reasonably concluded (based on the advice of counsel) that there may be defenses
available to it or them which are different from or additional to those
available to the Underwriters (in which case the Representatives shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties), or (iii) the employment of such counsel shall have been
authorized in writing by the Representatives in connection with the defense of
such action, in any of which events the counsel employed by the Company or such
person shall be reasonably acceptable to the Representatives, and the fees and
expenses shall be borne by such Underwriter and paid as incurred (it being
understood, however, that the Underwriters shall not be liable for the expenses
of more than one separate firm of attorneys in any one action or series of
related actions in the same jurisdiction (other than local counsel in any such
jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representatives.
(c) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) and (b) of this Section 9 in respect of any losses, expenses,
liabilities, damages or claims referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, expenses, liabilities, damages or claims (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Underwriters from the offering of the Shares or (ii) if (but only if) the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
of the Underwriters in connection with the statements or omissions which
resulted in such losses, expenses, liabilities, damages or claims, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Underwriters shall be deemed to be in the same proportion as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company bear to the
underwriting discounts and commissions received by the Underwriters. The
relative fault of the Company and of the Underwriters shall be determined by
reference to, among other things, whether the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any claim or action.
-28-
(d) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in subsection (c)(i) and, if applicable
(ii), above. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Shares purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
10. SURVIVAL:
The indemnity and contribution agreements contained in Section 9 and
the covenants, warranties and representations of the Company contained in
Sections 3, 4 and 5 of this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, or any
person who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and the respective directors,
officers, employees and agents of each Underwriter or by or on behalf of the
Company, its directors and officers or any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale
and delivery of the Shares. The Company and each Underwriter agree promptly to
notify the others of the commencement of any litigation or proceeding against it
and, in the case of the Company, against any of the Company's officers and
directors, in connection with the sale and delivery of the Shares, or in
connection with the Registration Statement or Prospectus.
-29-
11. DUTIES:
Nothing in this Agreement shall be deemed to create a partnership,
joint venture or agency relationship between the parties. The Underwriters
undertake to perform such duties and obligations only as expressly set forth
herein. Such duties and obligations of the Underwriters with respect to the
Shares shall be determined solely by the express provisions of this Agreement,
and the Underwriters shall not be liable except for the performance of such
duties and obligations with respect to the Shares as are specifically set forth
in this Agreement. The Company acknowledges and agrees that: (i) the purchase
and sale of the Shares pursuant to this Agreement, including the determination
of the public offering price of the Shares and any related discounts and
commissions, is an arm's-length commercial transaction between the Company, on
the one hand, and the several Underwriters, on the other hand, and the Company
is capable of evaluating and understanding and understand and accept the terms,
risks and conditions of the transactions contemplated by this Agreement; (ii) in
connection with each transaction contemplated hereby and the process leading to
such transaction each Underwriter is and has been acting solely as a principal
and is not the financial advisor, agent or fiduciary of the Company or its
affiliates, stockholders, creditors or employees or any other party; (iii) no
Underwriter has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Company with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Company on other matters);
and (iv) the several Underwriters and their respective affiliates may be engaged
in a broad range of transactions that involve interests that differ from those
of the Company. The Company acknowledges that the Underwriters disclaim any
implied duties (including any fiduciary duty), covenants or obligations arising
from the Underwriters' performance of the duties and obligations expressly set
forth herein. The Company hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company may have against the several
Underwriters with respect to any breach or alleged breach of agency or fiduciary
duty.
12. NOTICES:
Except as otherwise provided herein, all statements, requests, notices
and agreements shall be in writing and, if to the Underwriters, shall be
delivered or sent by mail or facsimile transmission in care of Friedman,
Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Syndicate Department; facsimile number ▇▇▇-▇▇▇-▇▇▇▇; or if to the
Company, shall be delivered or sent by mail or facsimile transmission to the
offices of the Company at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇; facsimile number ▇▇▇-▇▇▇-▇▇▇▇.
13. GOVERNING LAW; HEADINGS:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
-30-
14. PARTIES AT INTEREST:
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company and the controlling persons, directors
and officers referred to in Sections 9 and 10 hereof, and their respective
successors, assigns, executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from any
of the Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
15. CERTIFICATES:
Any certificate signed by any officer of the Company or any Subsidiary
delivered to the Representatives or to counsel for the Underwriters pursuant to
or in connection with this Agreement shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby.
16. COUNTERPARTS AND FACSIMILE SIGNATURES:
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
-31-
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below,
whereupon this Agreement shall constitute a binding agreement among the Company
and the Underwriters.
Very truly yours,
TOWER GROUP, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇
Chairman, President and Chief
Executive Officer
Accepted and agreed to as of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES LLC
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
KEYBANC CAPITAL MARKETS, A DIVISION OF MCDONALD INVESTMENTS, INC.
Acting on behalf of themselves and as the Representatives of any other
Underwriters named on Schedule II hereto.
By: FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Managing Director
-32-
SCHEDULE I
NAME OF PARTY SELLING SHARES NUMBER OF INITIAL MAXIMUM NUMBER OF
SHARES TO BE SOLD OPTION SHARES TO BE
SOLD
TOWER GROUP, INC. 2,704,000 405,600
---------------------------------------------------- ------------------------
Total 2,704,000 405,600
SCHEDULE II
UNDERWRITER NUMBER OF INITIAL MAXIMUM NUMBER OF
SHARES TO BE OPTION SHARES TO BE
PURCHASED PURCHASED
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC. 1,554,800 233,220
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES LLC 676,000 101,400
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC. 270,400 40,560
KEYBANC CAPITAL MARKETS, A
DIVISION OF MCDONALD INVESTMENTS, 202,800 30,420
INC.
------------------------------------------------------------ ------------------
2,704,000 405,600
Total
SCHEDULE III
FREE WRITING PROSPECTUSES
None
SCHEDULE IV
PRICING INFORMATION
Number of Initial Shares: 2,704,000
Price Per Share: $31.25
4
EXHIBIT A
FORM OF LOCK-UP LETTER
January ___, 2007
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES LLC
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
KEYBANC CAPITAL MARKETS, A DIVISION OF MCDONALD INVESTMENTS, INC.
as Representatives of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that Friedman, Billings, ▇▇▇▇▇▇ & Co.,
Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities LLC, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. and
KeyBanc Capital Markets, a division of McDonald Investments Inc. (the
"Representatives") propose to enter into an Underwriting Agreement (the
"Underwriting Agreement"), as Representatives of several underwriters (the
"Underwriters"), with Tower Group, Inc., a Delaware corporation (the "Company")
providing for the public offering (the "Public Offering") by the Underwriters of
shares (the "Shares") of Common Stock of the Company (the "Common Stock").
To induce the Underwriters to continue their efforts in connection with
the Public Offering, the undersigned hereby irrevocably agrees that, without the
prior written consent of the Representatives, it will not, during the period
commencing on the date hereof and ending on the day that is 90 days after the
date of the final prospectus relating to the Public Offering (the "Prospectus"),
(1) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for any shares of Common Stock ("Other Securities")
(whether such shares or any such securities are now owned by the undersigned or
are hereafter acquired), or (2) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or such Other
Securities, in cash or otherwise, excluding any Shares to be sold under the
Underwriting Agreement. In addition, the undersigned agrees that, without prior
written consent of the Representatives, it will not, during the period
commencing on the date hereof and ending on the day that is 90 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration under the Securities Act of 1933, as amended (the
"Securities Act"), of any shares of Common Stock or any Other Securities.
-1-
In furtherance of the foregoing, the Company and its transfer agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
Notwithstanding the foregoing, the undersigned may transfer Common
Stock or Other Securities of the Company (i) as a bona fide gift or gifts,
provided that prior to such transfer the donee or donees thereof agree in
writing to be bound by the restrictions set forth herein, (ii) to any trust,
partnership, corporation or other entity formed for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned, provided
that prior to such transfer a duly authorized officer, representative or trustee
of such transferee agrees in writing to be bound by the restrictions set forth
herein, and provided further that any such transfer shall not involve a
disposition for value or (iii) if such transfer occurs by operation of law, such
as rules of descent and distribution, statutes governing the effects of a merger
or a qualified domestic order, provided that prior to such transfer the
transferee executes an agreement stating that the transferee is receiving and
holding the shares subject to the provisions of this Lock-Up Letter Agreement.
For purposes hereof, "immediate family" shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin.
The undersigned understands that the Company and the Underwriters will
proceed with the Public Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Representatives. The terms of this Lock-Up
Letter Agreement shall expire in the event the Public Offering of the firm
Shares is not consummated on or before February 14, 2007.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
Dated: _____________________
-------------------------------
(Signature)
-------------------------------
(Printed or Typed Name)
-2-
EXHIBIT B
FORM OF OPINION OF
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities LLC
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
KeyBank Capital Markets, a Division of
McDonald Investments, Inc.
As representatives of several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: TOWER GROUP, INC.
Ladies and Gentlemen:
I am Senior Vice President and General Counsel of Tower Group, Inc., a
Delaware corporation (the "Company"). This opinion is being delivered in
connection with the several sales to you by the Company of an aggregate of
2,704,000 shares (the "Shares") of its common stock, par value $0.01 per share
(the "Common Stock"), pursuant to the terms of the Underwriting Agreement, dated
January 22, 2007 (the "Underwriting Agreement") between the Company and you, as
Representatives of the underwriters named in Schedule II to the Underwriting
Agreement (the "Underwriters"). This letter is being delivered to you pursuant
to the provisions of Section 6(b) of the Underwriting Agreement. All capitalized
terms used herein without definition shall have the meanings ascribed to them in
the Underwriting Agreement.
In connection with the opinions expressed below, I have examined (A)
the Registration Statement on Form S-3 (File No. 333- 138749), as amended, filed
by the Company with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act") and the
rules and regulations thereunder (the "Securities Act Regulations"), relating to
the registration of the Shares, as it became effective under the Securities Act
on January 22, 2007 (such Registration Statement, as so amended, being
hereinafter referred to as the "Registration Statement"), (B) the Company's
preliminary prospectus dated January 11, 2007 (the "Preliminary Prospectus"),
the Company's final prospectus, dated January 22, 2007 relating to the Shares,
as filed in final form with the Commission on January 23, 2007, pursuant to Rule
424(b) under the Securities Act (the "Prospectus") and (D) an executed copy of
the Underwriting Agreement. In addition, I have examined originals (or copies
certified or otherwise identified to my satisfaction) of such other agreements,
instruments, certificates, documents and records, and I have made such
investigations of law, as I have deemed necessary or appropriate as a basis for
the opinions expressed below.
-1-
In such examination, I have assumed, without inquiry, the legal
capacity of all natural persons, the genuineness of all signatures on all
documents examined by me, the authenticity of all documents submitted to me as
originals, the conformity to the original documents of all documents submitted
to me as copies and the authenticity of the originals of such latter documents.
As to any facts material to my opinions, I have, when the relevant facts were
not independently established, relied upon the aforesaid agreements,
instruments, certificates, documents and records and upon statements,
representations, certificates and covenants of officers and representatives of
the Company and of public officials. I have assumed that such statements,
representations, certificates and covenants are and will continue to be true and
complete without regard to any qualification as to knowledge or belief.
Based upon and subject to the foregoing, and subject to the further
qualifications, assumptions and limitations stated below, I am of the opinion
that:
1. The Company has an authorized capitalization as set forth in the
Prospectus, and all of the outstanding shares of capital stock of the
Subsidiaries are directly or indirectly owned of record and beneficially by the
Company; except as disclosed in the Prospectus and the Disclosure Package, there
are no outstanding (i) securities or obligations of the Company or any of the
Subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such Subsidiary, (ii) warrants, rights or options to subscribe
for or purchase from the Company or any such Subsidiary any such capital stock
or any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or any such Subsidiary to issue any shares of capital
stock, any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options.
2. Each of the Company and the Subsidiaries (all of which are named in
an exhibit to the Registration Statement) is validly existing as a corporation
in good standing under the laws of its respective jurisdiction of incorporation
with the requisite corporate power and authority to own its respective
properties and to conduct its respective businesses as described in the
Registration Statement, the Prospectus and the Disclosure Package.
3. To my knowledge, except as disclosed in the Prospectus and the
Disclosure Package, there are no persons with registration or other similar
rights to have any equity or debt securities, including securities that are
convertible into or exchangeable for equity securities, registered pursuant to
the Registration Statement or otherwise registered by the Company under the
Securities Act.
4. To my knowledge, there are no actions, suits or proceedings,
inquiries, or investigations pending or threatened against the Company or any of
the Subsidiaries or any of their respective officers and directors or to which
the properties, assets or rights of any such entity are subject, at law or in
equity, before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority, arbitral panel or agency which
are required to be described in the Prospectus and the Disclosure Package but
are not so described.
-2-
5. To my knowledge, there are no contracts or documents of a character
which are required to be filed as exhibits to the Registration Statement or
required to be described in the Prospectus and the Disclosure Package by the
Securities Act and the Securities Act Regulations which have not been so filed,
summarized or described, and all such summaries and descriptions fairly
summarize, in all material respects, such contracts and documents.
6. To my knowledge, the Company and each of the Subsidiaries has
obtained all necessary licenses, authorizations, consents and regulatory
approvals required to conduct their respective businesses as described in both
the Prospectus and the Disclosure Package; to my knowledge, neither the Company
nor any Subsidiary is in violation of, in default under, or has received any
notice regarding a possible violation, default or revocation of any such
license, authorization, consent or approval, except any such violation, default
or revocation that would not, individually or in the aggregate, have a Material
Adverse Effect.
In the course of the preparation by the Company of the Registration
Statement and the Prospectus, I have participated in conferences with certain
officers and employees of the Company, with outside counsel to the Company, with
representatives of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., independent auditors for the Company,
and with representatives of the Underwriters and counsel to the Underwriters, at
which conferences the contents of the Registration Statement and the Prospectus
and related matters were discussed and at which I reviewed certain corporate
records, documents and proceedings. Although I am not passing upon and do not
assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement, the Prospectus or the
Disclosure Package (except as and to the extent stated in subparagraphs (4) and
(5) above), nothing has come to my attention which would lead me to believe that
(i) either the Registration Statement, any amendment thereto, or any document
deemed to be a part thereof, at the time of any effective date applicable
thereto, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements in the Registration Statement not misleading; or (ii) the Prospectus,
as of its date or at the Closing Time or any Option Closing Time, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; or (iii) the
Disclosure Package as of the Initial Sale Time 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 circumstances under which they were
made, not misleading (it being understood that I express no belief as to the
financial statements or schedules or other financial data derived therefrom,
included or incorporated by reference in the Registration Statement the
Prospectus, the Disclosure Package or any amendments or supplements thereto).
The opinions expressed above are subject to the following assumptions,
exceptions, and qualifications:
-3-
(a) I am admitted to practice in the Commonwealth of Pennsylvania and
the District of Columbia. The opinions expressed above are limited to the
internal laws of those jurisdictions.
(b) The expression "to my knowledge" or other similar phrase means my
current actual knowledge on the date hereof as derived from my rendering legal
services to the Company as General Counsel.
This opinion is limited to the matters stated herein, and no opinion is
implied or may be inferred beyond the matters expressly stated. This letter was
furnished to you solely for the benefit of the Underwriters in connection with
the offering of the Shares and may not be used by you for any other purpose.
This letter may not be circulated or delivered to or used, quoted, referred to
or relied upon in any manner by any other person or entity for any purpose,
without my prior express written consent.
My opinion is rendered as of the date hereof based on the laws and the
facts existing on the date hereof. I undertake no, and disclaim any, duty to
advise you regarding any changes in, or to otherwise communicate with you with
respect to, the matters and opinions set forth herein.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Senior Vice President & General Counsel
-4-
EXHIBIT C
FORM OF OPINION OF
LEBOEUF, LAMB, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
(i) the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement do not and will not (A) conflict with,
or result in any breach of, or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would
constitute a breach of or default under): (i) any provisions of the
articles or certificate of incorporation, charter or by-laws of the
Company or any Subsidiary, (ii) any provision of any license,
indenture, mortgage, deed of trust, loan, credit or other agreement or
instrument filed as an exhibit to the Registration Statement to which
the Company or any Subsidiary is a party or by which any of them or
their respective properties or assets may be bound or affected, (iii)
any federal or New York law, the Delaware General Corporation Law or
any rule or regulation of any federal or New York governmental agency
or body having jurisdiction over the Company or any Subsidiary or any
of their respective properties or assets, or (iv) any decree, judgment
or order applicable to the Company or any Subsidiary known to such
counsel; or (B) result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or assets of the Company
or the Subsidiaries, in the case of A(ii), A(iii), A(iv) and (B), the
effect of which conflicts, violations, defaults or breaches,
individually or in the aggregate, would reasonably be expected to have
a Material Adverse Effect;
(ii) the Company has the requisite corporate power to execute and deliver
this Agreement and to consummate the transactions described herein;
this Agreement has been duly authorized, executed and delivered by the
Company;
(iii) no approval, authorization, consent or order of or filing with any
federal or New York State governmental or regulatory commission, board,
body, authority or agency or any Delaware State governmental agency or
body acting pursuant to the Delaware General Corporation Law is
required in connection with the execution, delivery and performance of
this Agreement, the consummation of the transactions contemplated
herein, and the sale and delivery of the Shares by the Company as
contemplated herein, other than such as have been obtained or made
under the Securities Act and the Securities Act Regulations and the
Exchange Act and Exchange Act Regulations, and except that such counsel
need express no opinion as to any necessary qualification under the
state securities or blue sky laws of the various jurisdictions in which
the Shares are being offered by the Underwriters;
-1-
(iv) the Company is not required to register as an investment company under
the Investment Company Act and the transactions contemplated by this
Agreement will not cause the Company to be required to register as an
investment company under such Act;
(v) the Shares to be issued and sold by the Company have been duly
authorized and when such Shares have been issued and duly delivered
against payment therefor as contemplated by this Agreement, such Shares
will be validly issued, fully paid and non-assessable; upon payment for
the Shares to be sold by the Company pursuant to this Agreement,
delivery of such Shares, as directed by the Underwriters, to Cede & Co.
or such other nominee as may be designated by DTC, registration of such
Shares in the name of Cede & Co. or such other nominee and the
crediting of such Shares on the records of DTC to securities accounts
of the respective Underwriters, (A) DTC will be a "protected purchaser"
of such Shares within the meaning of Section 8-303 of the UCC if it has
no notice of any adverse claim with respect to such Shares within the
meaning of Section 8-105 of the UCC, (B) under Section 8-501 of the
UCC, the respective Underwriters will acquire a security entitlement in
respect of such Shares and (C) no action based on an adverse claim to
such security entitlement may be asserted against the respective
Underwriters, if the respective Underwriters have no notice of such
adverse claim within the meaning of Section 8-105 of the UCC;
(vi) the Shares to be issued and sold by the Company are not subject to
preemptive or other similar rights arising under the Delaware General
Corporation Law, under the certificate of incorporation, charter or
by-laws of the Company, or under any agreement known to such counsel to
which the Company or any of the Subsidiaries is a party;
(vii) the form of certificate used to evidence the Common Stock complies in
all material respects with all applicable requirements under the
Delaware General Corporation Law, with any applicable requirements of
the organizational documents of the Company and with the requirements
of the Nasdaq Global Select Market;
(viii) the Registration Statement has become effective under the Securities
Act and no stop order suspending the effectiveness of the Registration
Statement has been issued and, to such counsel's knowledge, no
proceedings with respect thereto have been commenced or threatened;
(ix) as of each effective date of the Registration Statement, the
Registration Statement and the Prospectus (except as to the financial
statements and other financial and statistical data contained therein,
as to which such counsel need express no opinion) complied as to form
in all material respects with the requirements of the Securities Act,
the Exchange Act, the Securities Act Regulations and the Exchange Act
Regulations; and each document filed pursuant to the Exchange Act and
incorporated or deemed to be incorporated by reference in the
Prospectus or the Disclosure Package complied when so filed as to form
in all material respects with the requirements of the Exchange Act and
the Exchange Act Regulations (it being understood that such counsel
need express no opinion as to the financial statements or schedules or
other financial data derived therefrom, included or incorporated by
reference therein);
-2-
(x) the statements in the Preliminary Prospectus and the Prospectus (i)
under the captions "Dividend Policy," "Capitalization," "Description of
Capital Stock," "Risk Factors - Risks Related to Our Business - We may
face substantial exposure to losses from terrorism and we are currently
required by law to provide coverage against such losses," "- The
regulatory system under which we operate, and potential changes
thereto, could have a material adverse effect on our business," "Risk
Factors - Risks Related to Our Common Stock and this Offering -
Applicable insurance laws may make it difficult to effect a change of
control of our company," "- Anti-takeover provisions in our amended and
restated certificate of incorporation and amended and restated by-laws
and under the laws of the State of Delaware could impede an attempt to
replace or remove our directors or otherwise effect a change in control
of our company, which could diminish the value of our common stock,"
the statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2005, as amended, under "Business Regulation" and
the statements under Item 15 in Part II of the Registration Statement
relating to federal, New York State or Delaware General Corporation Law
legal matters, proceedings and documents, and (ii) which describe the
Company's charter and by-laws, in each case fairly summarize in all
material respects such matters, proceedings or documents;
(xi) to such counsel's knowledge, (A) there are no contracts or documents of
a character which are required to be filed as exhibits to the
Registration Statement or required to be described in both the
Prospectus and the Disclosure Package by the Securities Act and the
Securities Act Regulations which have not been so filed, summarized or
described, and (B) all such summaries and descriptions, in all material
respects, fairly and accurately set forth the material provisions of
such contracts and documents; and
(xii) the redemption of 40,000 shares of Series A-1 Preferred Stock has been
duly authorized by all necessary corporate action by the Company and
the redemption of such shares has been completed in accordance with the
terms of the Company's Certificate of Designations of Series A-1
Preferred Stock, with the effect that on and after the date hereof the
Series A-1 Preferred Shares shall no longer be deemed outstanding, and
all rights with respect to the Series A-1 Preferred Shares shall
forthwith cease, except only the right of the holder thereof to receive
the amount payable on such redemption, without interest.
-3-
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company, representatives of the Representatives, at
which the contents of the Registration Statement, the Prospectus and the
documents constituting the Disclosure Package were discussed and, although such
counsel is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Prospectus or the Disclosure Package (except as and to the extent
stated in subparagraphs (x) and (xi) above), nothing has come to their attention
which would lead them to believe that (i) either the Registration Statement, any
amendment thereto, or any document deemed to be a part thereof, at the time of
any effective date applicable thereto, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements in the Registration Statement not
misleading; or (ii) the Prospectus, as of its date or at the Closing Time or any
Option Closing Time, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (iii) the Disclosure Package as of the Initial Sale
Time 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
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief as to the financial statements or
schedules or other financial data derived therefrom, included or incorporated by
reference in the Registration Statement the Prospectus, the Disclosure Package
or any amendments or supplements thereto).
-4-