EXHIBIT 1.2
QUANTA CAPITAL HOLDINGS LTD.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
December 14, 2005
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
as Representative of the several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Quanta Capital Holdings Ltd., a Bermuda exempted company (the
"Company") confirms its agreement with each of the Underwriters listed on
Schedule I hereto (collectively, the "Underwriters"), for whom Friedman,
Billings, ▇▇▇▇▇▇ & Co., Inc. is acting as representative (in such capacity, the
"Representative"), with respect to (i) the sale by the Company of 11,423,340
shares (the "Initial Shares") of Common Shares, par value $0.01 per share, of
the Company ("Common Shares"), and the purchase by the Underwriters, acting
severally and not jointly, of the respective number of shares of Common Shares
set forth opposite the names of the Underwriters in Schedule I hereto, and (ii)
the grant of the option described in Section 1(b) hereof to purchase all or any
part of 1,713,501 additional shares of Common Shares to cover over-allotments
(the "Option Shares"), if any, from the Company to the Underwriters, acting
severally and not jointly, in the respective proportion as set forth opposite
the names of the Underwriters in Schedule I hereto. The 11,423,340 shares of
Common Shares to be purchased by the Underwriters and all or any part of the
1,713,501 shares of Common Shares 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. 333-130115) and a
related preliminary prospectus for the registration of 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 preliminary 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 430A 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 462(b) Registration Statement. Each prospectus included in the
Registration Statement before it was declared effective by the Commission under
the Securities Act, and any preliminary form of prospectus filed with the
Commission by the Company with the consent of the Underwriters pursuant to Rule
424(a) of the Securities Act Regulations, including all information incorporated
by reference in either such prospectus, is hereinafter called the "Preliminary
Prospectus." The term "Prospectus" means the final prospectus, as first filed
with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Securities Act Regulations, and any amendments thereof or supplements thereto
including in either case all information incorporated by reference therein.
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 II hereto, and (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.
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.
The Company and the Underwriters agree 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 $4.48875, the Company agrees to sell to the Underwriters 11,423,340 Initial
Shares and each Underwriter agrees, severally and not jointly, to purchase from
the Company the number of Initial Shares set forth in Schedule I 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 9 hereof, subject in each case, to such
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adjustments among the Underwriters as the Representative in its 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 set forth in paragraph (a), the Company hereby grants an option
to the Underwriters, acting severally and not jointly, to purchase from the
Company, all or any part of the Option Shares, plus any additional number of
Option Shares which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 9 hereof. The option hereby granted will expire 30
days after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Shares upon notice
by the Representative to the Company 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 shall be determined by the Representative, 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 the total
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 I opposite the name of such Underwriter bears to the total
number of Initial Shares, subject in each case to such adjustments among the
Underwriters as the Representative in its sole discretion shall make to
eliminate any sales or purchases of fractional shares.
2. Payment and Delivery:
(a) Initial Shares. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representative 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 Representative, including, at the option of the
Representative, 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 Representative by the Company
upon at least forty-eight hours' prior notice. The Company will cause the
certificates 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 office
of Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at the office of DTC or its designated custodian, as the case
may be (the "Designated Office"). The time and date of such delivery and payment
shall be 9:30 a.m., New York City time, on the fourth business day after the
date hereof (unless another time and date shall be agreed to by the
Representative and the
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Company). The time at which such payment and delivery of both Initial Shares and
Option Shares are actually made is hereinafter sometimes called the "Closing
Time" and the date of delivery of both Initial Shares and Option Shares is
hereinafter sometimes called the "Date of Delivery."
(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 Representative 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 Representative, including, at the option of the
Representative, 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 Representative 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 Date of Delivery with respect thereto at the Designated
Office. The time and date of such delivery and payment shall be 9:30 a.m., New
York City time, on the date specified by the Representative in the notice given
by the Representative to the Company of the Underwriters' election to purchase
such Option Shares or on such other time and date as the Company and the
Representative 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 material subsidiary of the Company (each, a
"Subsidiary") that is a corporation 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 that are corporations are directly or
indirectly owned of record and beneficially by the Company and all of the
membership interests in each Subsidiary that is a limited liability company have
been duly and validly authorized and issued and fully paid, and all of the
outstanding membership interests in each Subsidiary that is a limited liability
company 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 or
membership interests 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 membership interests 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 or
membership interests, any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options;
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(b) each of the Company and the Subsidiaries (all Subsidiaries of which are
named in Exhibit 21 to the Company's Annual Report for 2004 on Form 10-K) has
been duly incorporated or formed and is validly existing as a corporation or
limited liability company, as applicable, in good standing under the laws of its
respective jurisdiction of organization with full corporate or limited liability
company, as applicable, 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 all of the Subsidiaries are duly qualified or licensed
and are in good standing in each jurisdiction in which they conduct their
respective businesses or in which they own or lease real property or otherwise
maintain an office and in which the failure, individually or in the aggregate,
to be so qualified or licensed would reasonably be expected to have a material
adverse effect on the assets, business, operations, earnings, prospects,
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"); except as disclosed in both the Prospectus and the
Disclosure Package, no Subsidiary is prohibited or restricted, directly or
indirectly, in any material respect 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, any capital stock or other equity
securities of any other corporation or any ownership interest in any
partnership, joint venture or other association;
(d) the Company and the Subsidiaries are in compliance in all material
respects with all applicable laws, rules, regulations, orders, decrees and
judgments, including those relating to transactions with affiliates, except
where the failure to comply would not reasonably be expected to have a Material
Adverse Effect;
(e) 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
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect;
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(f) 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, or (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, except in the case of this clause
(ii) for such breaches or defaults which would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect; or (B) result
in the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company or any Subsidiary;
(g) this Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company enforceable
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and by general equitable principles, and except to the extent
that the indemnification and contribution provisions of Section 10 hereof may be
limited by federal or state securities laws and public policy considerations in
respect thereof;
(h) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency, domestic or foreign, 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, other than (A) such as have been obtained, or will have been
obtained at the Closing Time or the relevant Date of Delivery, as the case may
be, under the Securities Act and the Securities Exchange Act of 1934 (the
"Exchange Act"), (B) such approvals as have been obtained in connection with the
approval of the quotation of the Shares on NASDAQ, (C) any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriters, (D) such approvals,
authorizations, consents, orders or filings under the rules and regulations of
the NASD and (E) such filings and approvals as may be required in such
jurisdictions outside the United States where the Underwriters choose to market
the Shares and such as may be required and have been obtained from the Bermuda
Monetary Authority;
(i) each of the Company and the Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state or local law, regulation or rule, domestic or
foreign, 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
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Package, except to the extent that any failure to have any such licenses,
authorizations, consents or approvals, to make any such filings or to obtain any
such authorizations, consents or approvals would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect; neither the
Company nor any of the Subsidiaries is required by any applicable law to obtain
accreditation or certification from any governmental agency or authority in
order to provide the products and services which it currently provides or which
it proposes to provide as set forth in both the Prospectus and the Disclosure
Package, except for such accreditations or certifications that the failure of
which to obtain would not reasonably be expected to individually or in the
aggregate, have a Material Adverse Effect; neither the Company nor any of the
Subsidiaries 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 or any federal, state, domestic or foreign
law, regulation or rule or any decree, order or judgment, domestic or foreign,
applicable to the Company or any of the Subsidiaries the effect of which would
reasonably be expected to result in a Material Adverse Change;
(j) each of 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 contemplated or 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;
(k) the Preliminary Prospectus and the Prospectus when filed and the
Registration Statement as of each effective date 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;
(l) the Registration Statement, as of each effective date and as of the
date hereof, did not, 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; and the Preliminary
Prospectus does not, and the Prospectus as supplemented by any Issuer Free
Writing Prospectus or any amendment or supplement thereto will not, as of the
applicable filing date and at the Closing Time and on each Date of Delivery (if
any), contain an untrue statement of a material fact or omit to state a material
fact necessary 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 Registration Statement, the Preliminary Prospectus or the
Prospectus in reliance upon and in conformity with the information concerning
the Underwriters and
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furnished in writing by or on behalf of the Underwriters through the
Representative to the Company expressly for use therein (that information being
limited to that described in the last sentence of the first paragraph of Section
10(b) hereof);
(m) each document incorporated by reference in the Prospectus and the
Disclosure Package, when it became effective or was filed with the Commission,
as the case may be, conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and the Securities Act
Regulations and the Exchange Act Regulations, and none of such documents
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 the case may be, will conform in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and the Securities Act
Regulations and the rules and regulations under the Exchange Act (the "Exchange
Act Regulations") 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;
(n) as of 6:00 p.m. (Eastern time) on the date of this Agreement (the
"Initial Sale Time"), the Disclosure Package did not, and at each 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; 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 Representative to the Company expressly for use therein
(that information being limited to that described in the last sentence of the
first paragraph of Section 10(b) hereof);
(o) 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;
(p) 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 Securities Act Regulations; and each Free
Writing Prospectus that the Company
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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;
(q) except for the Issuer Free Writing Prospectuses, if any, identified in
Schedule II hereto, and any electronic road show relating to the offering, the
Company has not prepared, used or referred to, and will not, without the prior
consent of the Representative, prepare, use or refer to, any Free Writing
Prospectus;
(r) 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 this offering 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;
(s) the Company filed the Registration Statement with the Commission before
using any Issuer Free Writing Prospectus;
(t) 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 not reasonably be expected to result in a judgment, decree, award or order
having a Material Adverse Effect;
(u) the financial statements, including the notes thereto, included in (or
incorporated by reference into) each of the Registration Statement, the
Prospectus and the Disclosure Package present fairly the consolidated financial
position of the entities to which such financial statements relate (the "Covered
Entities") as of the dates indicated and the consolidated results of operations
and changes in financial position and cash flows of the Covered Entities for the
periods specified; 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 the Registration Statement and the amounts in both the Prospectus
and the Disclosure Package under the captions "Prospectus Summary - Summary
Historical Consolidated Financial Information" and "Selected Historical
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; the amounts in both the Prospectus and the Disclosure
Package in the table under the caption "Prospectus Summary - Recent
Developments" and under the caption "Capitalization" fairly present in
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all material respects 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;
(v) to the best of the Company's knowledge, PricewaterhouseCoopers LLP,
whose reports on the consolidated financial statements of the Company and the
Subsidiaries 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 their reports, independent registered public
accounting firms as required by the Securities Act and the Securities Act
Regulations registered with the Public Company Accounting Oversight Board;
(w) subsequent to the respective dates as of which information is given in
each of 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 that is material to the Company and the
Subsidiaries taken as a whole, contemplated or entered into by the Company or
any of the Subsidiaries other than in the ordinary course of business, (C) any
obligation, contingent or otherwise, directly or indirectly incurred by the
Company or any Subsidiary outside the ordinary course that is material to the
Company and Subsidiaries taken as a whole or (D) any dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock;
(x) the Shares conform in all material respects to the description thereof
contained in the Registration Statement, the Prospectus and the Disclosure
Package;
(y) 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 in connection with the sale of the Shares or otherwise registered by
the Company under the Securities Act, except for those registration or similar
rights which have been waived with respect to the offering contemplated by this
Agreement, all of which registration or similar rights are fairly summarized in
the Prospectus;
(z) the Shares 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 (except as set forth in the
Company's Bye-laws), and the issuance and sale of the Shares by the Company is
not subject to preemptive or other similar rights arising
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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;
(aa) the Shares have been approved for listing on NASDAQ, subject to
official notice of issuance;
(bb) 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;
(cc) 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 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 of the National Association of
Securities Dealers, Inc. (the "NASD")) any member firm of the NASD;
(dd) the Company has not relied upon the Representative or legal counsel
for the Representative for any legal, tax or accounting advice in connection
with the offering and sale of the Shares;
(ee) any certificate signed by any officer of the Company or any Subsidiary
delivered to the Representative 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;
(ff) the form of certificate used to evidence the Common Shares complies in
all material respects with all applicable statutory requirements, with any
applicable requirements of the organizational documents of the Company and the
requirements of the NASDAQ;
(gg) 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 both the Prospectus and the Disclosure Package 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 to the Company and its Subsidiaries as a whole and
do not interfere with the use made or proposed to be made of such property and
buildings by the Company or such Subsidiary;
-11-
(hh) 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 in all
material respects the information required to be shown, 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 to be filed as exhibits to the Registration
Statement which are not described or filed as required; all agreements between
the Company or any of the Subsidiaries and third parties expressly referenced in
both the Prospectus and the Disclosure Package are legal, valid and binding
obligations of the Company or one or more of the Subsidiaries, enforceable in
accordance with their respective terms, except to the extent enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general equitable principles;
(ii) 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
except where the failure to own or possess, or to be able to acquire, such
Intangibles would reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any Subsidiary has received notice of infringement of or
conflict with (and the Company knows of no such infringement of or conflict
with) asserted rights of others with respect to any Intangibles which would
reasonably be expected to have a Material Adverse Effect;
(jj) (x) 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 quarter covered by the
Registration Statement, and (iii) are effective in all material respects to
perform the functions for which they were established, and (y) based on the
evaluation of the Company's disclosure controls and procedures described above,
the Company is not aware of (i) any significant deficiency or material weakness
in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the Company's ability to record,
process, summarize and report financial information, or (ii) 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;
-12-
(kk) the Company is not aware of any significant deficiency or material
weaknesses existing in the design or implementation of the internal controls
over financial reporting of the Company that adversely affects the Company's
ability to record, process, summarize and report to management or the Board of
Directors material financial information relating to the Company;
(ll) 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 and have paid all taxes shown as
due thereon other than those being contested in good faith and for which
adequate reserves have been provided or any of those currently payable without
penalty or interest; and no tax deficiency has been asserted against any such
entity, nor does any such entity know of any tax deficiency which has been
threatened against any such entity which, if determined adversely to any such
entity, could have a Material Adverse Effect; all tax liabilities are adequately
provided for on the respective books of such entities;
(mm) 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;
(nn) neither the Company nor any of the Subsidiaries is in violation, or
has received 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
reasonably be expected to, individually or in the aggregate, result in a
Material Adverse Change;
(oo) neither the Company nor any Subsidiary is in violation of or has
received 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 state law precluding
the denial of credit due to the neighborhood in which a property is situated,
the violation of any of which would reasonably be expected to have a Material
Adverse Effect;
-13-
(pp) the Company and each of the Subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any of the Subsidiaries would have any
liability; the Company and each of the Subsidiaries have not incurred and do not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder ("Code"); and each "pension plan" for
which the Company and each of its Subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification;
(qq) neither the Company nor any of the Subsidiaries nor, to the best of
the Company's knowledge, 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) made any payment outside the ordinary course of
business to any investment officer or loan broker or person charged with similar
duties of any entity to which the Company or any of the Subsidiaries sells or
from which the Company or any of the Subsidiaries buys loans or servicing
arrangements for the purpose of influencing such agent, officer, broker or
person to buy loans or servicing arrangements from or sell loans to the Company
or any of the Subsidiaries, or (iv) 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;
(rr) except as otherwise disclosed in both the Prospectus and the
Disclosure Package, there are no material outstanding loans, extensions of
credit 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;
(ss) 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;
-14-
(tt) in connection with this offering, the Company has not offered and will
not offer its Common Shares or any other securities convertible into or
exchangeable or exercisable for Common Shares in a manner in violation of the
Securities Act; and 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;
(uu) the Company has not incurred any liability for any finder's fees or
similar payments in connection with the issuance of the Shares contemplated
hereby;
(vv) no relationship, direct or indirect, exists 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 or
the Disclosure Package and which is not so described;
(ww) neither the Company nor any of the Subsidiaries is and, 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");
(xx) 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;
(yy) the Company, the Subsidiaries and any of the officers and directors of
the Company and the Subsidiaries, in their capacities as such, are, and at the
Closing Time and any Date of Delivery will be, in compliance in all material
respects with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and
regulations promulgated thereunder;
(zz) nothing in this Agreement shall be deemed to create a partnership,
joint venture or agency relationship between the parties. The Representative
undertakes to perform such duties and obligations only as expressly set forth
herein. Such duties and obligations of the Representative with respect to the
Shares shall be determined solely by the express provisions of this Agreement,
and the Representative 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 Representative, on the other hand, and the Company is
capable of evaluating and understanding and understands and accepts 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 the Underwriters are and
-15-
have been acting solely as principals and are not financial advisors, agents or
fiduciaries of the Company or its respective affiliates, stockholders, creditors
or employees or any other party; (iii) the Representative has not assumed or
will not 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 the Representative has advised
or is currently advising the Company on other matters); and (iv) the
Representative and its affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Company and
that the Representative has no obligation to disclose any of such interests. The
Company acknowledges that the Representative disclaims any implied duties
(including any fiduciary duty), covenants or obligations arising from the
Representative's 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 Representative with
respect to any breach or alleged breach of agency or fiduciary duty; and
(aaa) the Company has not entered into any agreement to consummate any
amalgamation, merger or consolidation the result of which is that, immediately
after such transaction, the holders of all of the Company's outstanding common
shares immediately prior to such transaction hold 50% or less of the aggregate
voting power of the common shares of the entity surviving such transaction.
4. Certain Covenants:
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
Representative may designate and to maintain such qualifications in effect as
long as requested by the Representative for the distribution of the Shares,
provided that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares);
(b) 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 Representative promptly and, if requested by the
Representative, will confirm such advice in writing, when such post-effective
amendment has become effective;
(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
-16-
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 version transmitted to
the Commission for filing via ▇▇▇▇▇, except to the extent permitted by
Regulation S-T;
(d) to advise the Representative promptly and (if requested by the
Representative) 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
Representative and counsel for the Underwriters and obtain the consent of the
Representative 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 II
hereto;
(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 Representative 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 Issuer 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 the 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
Representative promptly of any proposal to amend or supplement the Registration
Statement, the Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus and to file no such amendment or supplement to which the
Representative shall reasonably object in writing;
(h) upon request, to furnish to the Underwriters for a period of three
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 stock of the Company, (ii) as soon as practicable after the
filing thereof, copies of all reports filed by
-17-
the Company with the Commission, the NASD or any securities exchange and (iii)
such other information as the Underwriters may reasonably request regarding the
Company and the Subsidiaries;
(i) to advise the Underwriters promptly of the happening of any event 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 Representative or counsel for the Underwriters, would require the making
of any change in the Prospectus or the Disclosure Package so that the Prospectus
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, or 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 afford the Representative a reasonable opportunity to comment on
any such proposed amendment or supplemental prior to 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 Representative may from time to time
reasonably request of an appropriate amendment or supplement to 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
so that the Prospectus or the Disclosure Package will comply with the law;
(j) to file promptly with the Commission any amendment or supplement to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any Issuer
Free Writing Prospectus that may, in the judgment of the Company or the
Representative, 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, any Preliminary Prospectus, the Prospectus or any Issuer
Free Writing Prospectus, with respect to the Shares to furnish a copy thereof to
the Representative and counsel for the Underwriters and obtain the consent of
the Representative (not to be unreasonably withheld) 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 Representative may reasonably request;
-18-
(m) to furnish promptly to each Representative, before filing with the
Commission, during the period referred to in paragraph (i) above, a copy of any
document proposed to be filed with the Commission pursuant to Section 13, 14, or
15(d) of the Exchange Act and during the period of three years hereafter to file
all such documents 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 Representative as soon as practicable, 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 cause the Shares to be listed on NASDAQ and
when so listed to use its best efforts to maintain the quotation of the Shares
on NASDAQ and to file with NASDAQ all documents and notices required by NASDAQ
of companies that have securities that are traded and quotations for which are
reported by NASDAQ;
(q) to engage and maintain, at its expense, a registrar and transfer agent
for the Shares;
(r) to refrain during a period of 90 days from the date of the Prospectus,
without the prior written consent of the Representative, from, directly or
indirectly, (i) offering, pledging, selling, contracting to sell, selling any
option or contract to purchase, purchasing any option or contract to sell,
granting any option for the sale of, or otherwise disposing of or transferring,
(or entering into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of), any common share or any securities convertible into or exercisable or
exchangeable for common shares, or filing any registration statement under the
Securities Act with respect to any of the foregoing, or (ii) entering into any
swap, option, future, derivative or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the common shares, whether any such swap, option, future,
derivative or transaction described in clause (i) or (ii) above is to be settled
by delivery of common shares or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to the Shares to be sold hereunder;
(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
-19-
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 person listed on Schedule III hereto to furnish to the
Representative, prior to the first Date of Delivery, a letter or letters,
substantially in the form of Exhibit A hereto, pursuant to which each such
person shall agree not to, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Shares or securities convertible
into or exchangeable for Common Shares or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common Shares,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Shares or other securities, in cash or otherwise,
in each case for a period from the date hereof until 90 days after the date of
the Prospectus, without the prior written consent of the Representative on
behalf of the Underwriters;
(u) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement.
(v) the Company will use its commercially reasonable efforts to maintain,
and cause each of the Subsidiaries to maintain, in accordance with applicable
law 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;
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 (including costs of counsel and independent
accountants to the Company), 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
-20-
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 laws that the Company and the
Representative have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid (including the
legal fees and filing fees and other disbursements of counsel for the
Underwriters and the printing and furnishing of copies of any blue sky 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 legal
fees and 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 in NASDAQ, (viii) making road show presentations with respect to
the offering of the Shares, (ix) preparing and distributing one copy each of the
transaction documents for the Underwriters and its legal counsel and (x) the
performance of the Company's other obligations hereunder. Upon the request of
the Representative, the Company will provide funds in advance for filing fees.
(b) The Company agrees to reimburse the Representative for its reasonable
out-of-pocket expenses in connection with the performance of its activities
under this Agreement, including, but not limited to, costs such as printing,
facsimile, courier service, direct computer expenses, accommodations and travel,
the fees and expenses of the Underwriters' outside legal counsel and actuaries
and any other advisors, accountants, appraisers, etc. (including without
limitation, the fees and expenses of counsel with respect to state securities or
blue sky laws and obtaining the filing for review of the public offering of the
Shares by the NASD, all of which shall be reimbursed by the Company pursuant to
the provisions of subsection (a) above).
(c) The Company agrees with each Underwriter to pay (directly or by
reimbursement) all fees and expenses incident to the performance of their
obligations under this Agreement which are otherwise specifically provided for
herein.
6. Conditions of the Underwriters' Obligations:
(a) The obligations of the Underwriters hereunder to purchase Shares at the
Closing Time or on each Date of Delivery, 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 on each Date of
Delivery, as applicable, the performance by the Company of its obligations
hereunder and to the satisfaction of the following further conditions at the
Closing Time or on each Date of Delivery, as applicable:
(i) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
counsel for the Company and the Subsidiaries, addressed to the
Underwriters and dated the Closing Time and each Date of Delivery and
in
-21-
form and substance satisfactory to Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel for the Underwriters, to the effect reasonably requested by
the Representative.
(ii) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇,
Bermuda counsel for the Company and the Subsidiaries, addressed to the
Underwriters and dated the Closing Time and each Date of Delivery and
in form and substance satisfactory to Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel for the Underwriters, to the effect reasonably requested by
the Representative.
(iii) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ P.C.,
Colorado counsel for the Company and the Subsidiaries, addressed to
the Underwriters and dated the Closing Time and each Date of Delivery
and in form and substance satisfactory to Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
LLP, counsel for the Underwriters, to the effect reasonably requested
by the Representative.
(iv) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, Indiana
counsel for the Company and the Subsidiaries, addressed to the
Underwriters and dated the Closing Time and each Date of Delivery and
in form and substance satisfactory to Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel for the Underwriters, to the effect reasonably requested by
the Representative.
(v) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of A & L Goodbody Solicitors,
Irish counsel for the Company and the Subsidiaries, addressed to the
Underwriters and dated the Closing Time and each Date of Delivery and
in form and substance satisfactory to Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP,
counsel for the Underwriters, to the effect reasonably requested by
the Representative.
(vi) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of ▇▇▇▇▇▇'▇, United Kingdom
counsel for the Company and the Subsidiaries, addressed to the
Underwriters and dated the Closing Time and each Date of Delivery and
in form and substance satisfactory to Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP,
to the effect reasonably requested by the Representative.
(vii) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of internal counsel for
the
-22-
Company which is at least an associate general counsel, addressed to
the Underwriters and dated the Closing Time and each Date of Delivery
and in form and substance satisfactory to Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
LLP, to the effect reasonably requested by the Representative.
(viii) On the date of this Agreement and at each Date of Delivery, the
Representative shall have received from PricewaterhouseCoopers LLP
letters dated the respective Dates of Delivery thereof and addressed
to the Representative, in form and substance satisfactory to the
Representative, containing statements and information of the type
specified in AU Section 634 "Letters for Underwriters and Certain
other Requesting Parties" issued by the American Institute of
Certified Public Accountants with respect to the financial statements,
and certain financial information of the Company and the Subsidiaries
included or incorporated by reference in the Registration Statement,
the Prospectus and the Disclosure Package, and such other matters
customarily covered by comfort letters issued in connection with
registered public offerings.
(ix) The Representative shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ &
Wood LLP, dated the Closing Time or such Date of Delivery, addressed
to the Representative and in form and substance satisfactory to the
Representative.
(x) No amendment or supplement to the Registration Statement, the
Prospectus or any document in the Disclosure Package shall have been
filed to which the Representative shall have objected in writing.
(xi) Prior to the Closing Time and each Date of Delivery (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 shall have been issued, and no
proceedings for such purpose shall have been initiated or threatened,
by the Commission or any other applicable regulatory authority, 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, has occurred; (ii) all requests for
additional information on the part of the Commission or any other
applicable regulatory authority shall have been complied with to the
reasonable satisfaction of the Representative; (iii) the Registration
Statement 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) the
Prospectus and the Disclosure Package shall not contain an untrue
statement of a material fact or omit to state a material fact
necessary to
-23-
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(xii) 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.
(xiii) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery 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
Representative's sole judgment, makes it impracticable or inadvisable
to proceed with the public offering of the Shares as contemplated by
the Registration Statement.
(xiv) The Shares shall have been approved for inclusion on NASDAQ.
(xv) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and
arrangements.
(xvi) The Company shall have furnished to the Representative, at the
Closing Time and on each Date of Delivery, a certificate of its
Interim Chief Executive Officer and Chief Financial Officer to the
effect that:
(A) the representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the date
hereof and such Date of Delivery, 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 date hereof
and such Date of Delivery;
(B) 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 or applicable blue sky laws of any
jurisdiction;
(C) the Registration Statement, the Prospectus and the Disclosure
Package, and any amendments or supplements thereto, did not and
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
-24-
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
(D) 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 a Material Adverse Effect.
(b) On or prior to the Closing Time related to the Initial Shares the
Company shall have issued and sold at least 3,000,000 shares of its Series A
Preferred Stock pursuant to that certain underwriting agreement between the
Company and the Underwriters.
(c) 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 or any
Date of Delivery, as the Representative may reasonably request.
7. Underwriter Representations and Covenants. Each Underwriter represents and
agrees that:
(a) In relation to each member state of the European Economic Area which
has implemented the Prospectus Directive (each, a "Relevant Member State"), with
effect from and including the date on which the Prospectus Directive is
implemented in each Relevant Member State ("Relevant Implementation Date"), it
has not made and will not make an offer of the Shares to the public in that
Relevant Member State, except that it may, with effect from and including the
Relevant Implementation Date, make an offer of the Shares to the public in that
Relevant Member State:
-25-
(i) at any time to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in securities;
(ii) at any time to any legal entity which has two or more of (1) an
average of at least 250 employees during the last financial year; (2)
a total balance sheet of more than (euro) 43,000,000 and (3) an annual
net turnover of more than (euro) 50,000,000, as shown in its last
annual or consolidated accounts; or
(iii) at any time in any other circumstances which do not require the
publication by the Company or a prospectus pursuant to Article 3 of
the Prospectus Directive.
For the purposes of this Section 7(a), the expression "offer of the Shares
to the public" in relation to any Shares in any Relevant Member State means
the communication in any form and by any means of sufficient information on
the terms of the offer and the Shares to be offered so as to enable an
investor to decide to purchase the Shares, as the same may be varied in
that Relevant Member State by any measure implementing the Prospectus
Directive in that Relevant Member State and the expression "Prospectus
Directive" means Directive 2003/71/EC of the European Economic Area and
includes any relevant implementing measure in each Relevant Member State.
(b) It is aware of the fact that no German sales prospectus
(Verkaufsprospekt) within the meaning of the Securities Sales Prospectus Act
(Wertpapier-Verkaufsprospektgesetz, the "Act") of the Federal Republic of
Germany has been or will been published with respect to the Shares, it will
comply with the Act and it has not engaged and will not engage in a public
offering (offentliches Angebot) within the meaning of the Act with respect to
any Shares otherwise than in accordance with the Act and all other applicable
legal and regulatory requirements.
(c) (i) It has not offered or sold and, prior to the expiry of a period
of six months from the Closing Time, will not offer or sell any
Shares to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public
in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995;
(ii) it has only communicated or caused to be communicated and will
only communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the meaning
of
-26-
section 21 of the Financial Services and Markets Act 2000 (the
"FSMA")) received by it in connection with the issue or sale of
any Shares in circumstances in which section 21(1) of the FSMA
does not apply to the Company; and
(iii) it has complied and will comply with all applicable provisions
of the FSMA with respect to anything done by it in relation to
the Shares in from or otherwise involving the United Kingdom.
8. Termination:
The obligations of the several Underwriters hereunder shall be subject to
termination in the absolute discretion of the Representative, at any time prior
to the Closing Time or any Date of Delivery, (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
development involving a prospective Material Adverse Change, or 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
financial markets of the United States is such as to make it, in the judgment of
the Representative, 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 NASDAQ, or if trading generally on the
New York Stock Exchange or in the NASDAQ National Market System 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 rating of any of the
Company's debt securities or common shares by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Act) or by A.M. Best Company, Inc., or (vi) any federal or state
statute, regulation, rule or order of any court or other governmental authority,
domestic or foreign, has been enacted, published, decreed or otherwise
promulgated which, in the reasonable opinion of the Representative, materially
adversely affects or will materially adversely affect the business or operations
of the Company, or (vii) any action has been taken by any federal, state or
local government or agency, domestic or foreign, in respect of its monetary or
fiscal affairs which, in the reasonable opinion of the Representative, has a
material adverse effect on the securities markets in the United States.
-27-
If the Representative elects 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.
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 10 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 10 hereof) or to one another
hereunder.
9. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Time or on a Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date, the Representative 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 Representative 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 Representative with the approval of the
Company or selected by the Company with the approval of the Representative).
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 Date of Delivery 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.
-28-
The term "Underwriter" as used in this Agreement shall refer to and include
any Underwriter substituted under this Section 9 with the same effect as if such
substituted Underwriter had originally been named in this Agreement.
10. 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, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation), jointly or severally, which 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) 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 (the
term Prospectus for the purpose of this Section 10 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), (C) 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 (D) any
omission or alleged omission from the Disclosure Package 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 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 Representative to the Company expressly
for use in such Registration Statement, Prospectus or Application. The indemnity
agreement set forth in this Section 10(a) shall be in addition to any liability
which the Company may otherwise have.
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 or such indemnified party or parties shall
-29-
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 fees and 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 one local counsel
in any such jurisdiction) representing the indemnified parties who are parties
to such action). Anything in this paragraph to the contrary notwithstanding, (i)
the Company shall not be liable for any settlement of any such claim or action
effected without its consent and (ii) the foregoing indemnity with respect to
the any Issuer Free Writing Prospectus and the Prospectus shall not inure to the
benefit of the Underwriters to the extent that such loss, claim, damage,
liability or judgment arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained in any Issuer Free
Writing Prospectus and the Prospectus, or caused by the omission or alleged
omission to state in any Issuer Free Writing Prospectus and the Prospectus a
material fact required to be stated therein or necessary to make the statements
therein not misleading if: (x) the Company furnished to the Underwriters
sufficient copies of any Issuer Free Writing Prospectus or the Prospectus, as
amended or supplemented, on a timely basis to permit delivery of the Issuer Free
Writing Prospectus and the Prospectus by the Underwriters to all persons at or
prior to the delivery of the written confirmation of the sale of the Shares to
such persons; (y) the disclosure contained in the Issuer Free Writing Prospectus
and the Prospectus, as amended or supplemented, cured the defect in the Issuer
Free Writing Prospectus and the Prospectus giving rise to such loss, claim,
damage liability or judgment; and (z) a copy of the Issuer Free Writing
Prospectus and the Prospectus, as amended or supplemented, was not sent or given
by or on behalf of Underwriters to such person.
(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, jointly or severally,
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, (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 the
Disclosure Package or the Prospectus of a material fact necessary to make the
statements made therein, in the light of the circumstances under
-30-
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, Disclosure
Package or Prospectus in reliance upon and in conformity with information
furnished in writing by the Underwriters through the Representative to the
Company expressly for use therein. The statements set forth in the paragraph
identified by "Electronic Prospectus Delivery," the first paragraph under
"Commissions and Expenses," and the paragraphs identified by "Stabilization"
under the caption "Underwriting" in the Preliminary Prospectus, the Disclosure
Package 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 Representative to the Company for purposes of Sections
3(l), (m) and (n) and this Section 10.
If any action is brought against the Company or any such person in respect
of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company, or such person shall promptly notify the
Representative in writing of the institution of such action and the
Representative, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. 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 the employment of such counsel shall have been authorized
in writing by the Representative in connection with the defense of such action
or the Representative shall not have employed counsel to have charge of the
defense of such action within a reasonable time 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 Underwriters (in which case the
Representative 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 such Underwriter and paid as incurred (it being
understood, however, that the Underwriters shall not be liable for the fees and
expenses of more than one separate firm of attorneys in any one action or series
of related actions in the same jurisdiction (other than one 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 Representative.
(c) If the indemnification provided for in this Section 10 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a), (b)
and (c) of this Section 10 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
-31-
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.
(d) The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 10 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 (d)(i) and, if applicable
(ii), above. Notwithstanding the provisions of this Section 10, 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 10 are several in proportion to their respective underwriting
commitments and not joint.
11. Qualified Independent Underwriter:
The Company hereby confirms that at its request BB&T Capital Markets, a
division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. has without compensation acted as
"qualified independent underwriter" (in such capacity, the "QIU") within the
meaning of Rule 2720 of the Conduct Rules of the NASD in connection with the
offering of the Shares. The Company will indemnify and hold harmless the QIU
against any losses, expenses, liabilities, damages or claims to which the QIU
may become subject, under the Securities Act or otherwise, insofar as such
losses, expenses, liabilities, damages or claims (or actions in respect thereof)
arise out of or are based upon the QIU's acting (or alleged failing to act) as
such "qualified independent underwriter" and will reimburse the QIU for any
legal or other expenses reasonably incurred by the QIU in connection with
-32-
investigating or defending any such loss, expense, liability, damage or claim or
action as such expenses are incurred.
12. Survival:
The indemnity and contribution agreements contained in Section 10 and the
representations, warranties, covenants and agreements 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, 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.
13. Notices:
Except as otherwise herein provided, all statements, requests, notices and
agreements shall be in writing or by telegram and, if to the Underwriters, shall
be sufficient in all respects if delivered to Friedman, Billings, ▇▇▇▇▇▇ & Co.,
Inc., as Representative of the several Underwriters, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department; if to the Company,
shall be sufficient in all respects if delivered to the Company at the offices
of the Company at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇; HM 11; Attention:
Interim Chief Executive Officer.
14. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THAT WOULD APPLY ANY OTHER LAW. The section headings in this
Agreement have been inserted as a matter of convenience of reference and are not
a part of this Agreement.
15. 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 hereof, and their respective successors,
assigns, executors and administrators. No other person, partnership, association
or corporation (including a
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purchaser, as such purchaser, from any of the Underwriters) shall acquire or
have any right under or by virtue of this Agreement.
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.
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If the foregoing correctly sets forth the understanding among the Company
and the Underwriters, please so indicate in the space provided below for the
purpose, whereupon this Agreement shall constitute a binding agreement among the
Company and the Underwriters.
Very truly yours,
QUANTA CAPITAL HOLDINGS LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ III
------------------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ III
Title: Interim Chief Executive Officer and
President
Accepted and agreed to as of the date first above written:
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Senior Managing Director
For itself and as Representative of the other Underwriters named on Schedule I
hereto.
SCHEDULE I
Number of Initial
Underwriter Shares to be Purchased
----------- ----------------------
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. ................ 9,138,672
BB&T Capital Markets, a division of ▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. ............................... 2,284,668
Total .............................................. 11,423,340
==========
SCHEDULE II
ISSUER FREE WRITING PROSPECTUSES
The road show which is attached hereto.
SCHEDULE III
PERSONS SUBJECT TO LOCK-UP LETTERS
BEM Specialty Investments
HFR HE Beryllium Fund
RNR I, LLC
RNR II, LLC
RNR III, LP
RNR III Offshore, Ltd.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXHIBIT A
FORM OF LOCK-UP LETTER
__________ ___, 2005
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. and
(in such capacity, the "Representative") propose to enter into an Underwriting
Agreement (the "Underwriting Agreement"), as representatives of several
underwriters (the "Underwriters"), with Quanta Capital Holdings Ltd., a Bermuda
exempted company (the "Company"), providing for the public offering (the "Public
Offering") by (inter alia) the Underwriters of shares (the "Shares") of Common
Shares of the Company (the "Common Shares").
To induce the Underwriters to continue their efforts in connection with the
Public Offering, the undersigned hereby agrees that, without the prior written
consent of the Representative, the undersigned will not, during the period
commencing on the date hereof and ending on the 90-day anniversary of the date
of the final prospectus relating to the Public Offering (such period, the
"Lock-Up Period" and such prospectus, the "Prospectus"), (1) offer for sale,
sell, pledge or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Shares or securities
convertible into or exchangeable for Common Shares or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of Common
Shares, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Shares or other securities, in cash or
otherwise. The undersigned further agrees that it will not publicly disclose the
intention to make any such offer, sale, pledge or disposition or to enter into
any transaction described in the preceding sentence during the Lock-Up Period
without, in each case, the prior written consent of the Representatives.
Notwithstanding the foregoing, the undersigned may transfer any securities
of the Company (including, without limitation, Shares) as follows: (i) as a bona
fide gift or gifts, provided that the donee or donees thereof agree to be bound
in writing by the restrictions set forth herein; (ii) to any trust for the
direct or indirect benefit of the undersigned or the immediate family of the
undersigned, provided that the trustee of the trust agrees to be bound in
writing by the restrictions set forth herein; (iii) as a distribution to
shareholders, partners or members of the undersigned, provided that such
shareholder, partners or members agree to be bound in writing by the
restrictions set forth herein; (iv) any transfer
required under any benefit plans or bye-laws of the Company; (v) as collateral
for any loan, provided that the lender agrees in writing to be bound by the
restrictions set forth herein; (vi) with respect to sales of securities acquired
in the open market; (vii) to an entity directly or indirectly wholly owned by
the undersigned or the shareholders, member or partners of the undersigned or
(viii) in connection with any amalgamation, merger, consolidation or tender
offer the result of which is that, immediately after such transaction, the
holders of all of the Company's outstanding common shares immediately prior to
such transaction hold 50% or less of the aggregate voting power of the common
shares of the entity surviving such transaction. For purposes of this agreement,
"immediate family" shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin.
For the avoidance of doubt, nothing shall prevent the undersigned from, or
restrict the ability of the undersigned to, (i) purchase Shares on the open
market or (ii) exercise any options or other convertible securities granted
under any benefit plan of the Company.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer that could
constitute a violation or breach of this letter. This letter shall be binding on
the undersigned and the respective successors, heirs, personal representatives
and assigns of the undersigned.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into the Lock-Up Agreement, and that, upon
request, the undersigned will execute any additional documents necessary or
desirable in connection with the enforcement hereof. The undersigned understands
and agrees that this Lock-Up Agreement is irrevocable. All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any obligations of the undersigned shall be binding upon the
heirs, personal representatives, successors, and assigns of the undersigned.
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 the Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Representatives. The terms of this Lock-Up
letter shall expire in the event the Public Offering is not consummated on or
before December 31, 2005, or if the Underwriting Agreement is terminated.
Very truly yours,
----------------------------------------
Name:
Title: