First Mercury Financial Corporation (a Delaware Corporation) 3,301,260 Shares1 Common Stock ($0.01 par value ) Underwriting Agreement
EXHIBIT 1.1
First Mercury Financial Corporation
(a Delaware Corporation)
(a Delaware Corporation)
3,301,260 Shares1
Common Stock
($0.01 par value )
Common Stock
($0.01 par value )
June ___, 2007
| ▇.▇. ▇▇▇▇▇▇ Securities Inc. | ||||
| ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ | ||||
| As Representatives of the several Underwriters listed in Schedule 1 hereto |
||||
| c/o | ▇.▇. ▇▇▇▇▇▇ Securities Inc. | |||
| ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
| and | ||||
| c/o | Keefe, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ | |||
| ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ | ||||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||||
Ladies and Gentlemen:
First Mercury Financial Corporation, a Delaware corporation (the “Company”), proposes
to issue and sell to the several Underwriters listed in Schedule 1 hereto (the
“Underwriters”), for whom you are acting as representatives (the
“Representatives”), an aggregate of 200,000 shares of common stock, par value $0.01 per
share (the “Common Stock”), of the Company and, at the option of the Underwriters, up to an
additional 495,189 shares of Common Stock of the Company, and Glencoe Capital, LLC, ▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively, the “Selling Stockholders”) propose
to sell to the Underwriters an aggregate of 3,101,260 shares of Common Stock of the Company. The
aggregate of 3,301,260 shares of Common Stock of the Company to be sold by the Company and the
Selling Stockholders are herein referred to as the “Underwritten Shares” and the aggregate
of 495,189 shares of Common Stock of the Company to be sold by the Company at the option of the
Underwriters are herein referred to as the “Option Shares.” The Underwritten Shares and
the Option Shares are herein referred to as the “Shares.” The shares of Common Stock of
the Company to be outstanding after giving effect to the sale of the Shares are herein referred to
as the “Stock.”
The Company and the Selling Stockholders hereby confirm their agreement with the several
Underwriters concerning the purchase and sale of the Shares, as follows:
| 1 | Plus an option to purchase from the Company up to 495,189 additional Shares to cover over-allotments. |
1. Registration Statement. The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the “Securities
Act”), a registration statement (File No. 333-143306) including a prospectus, relating to the
Shares. Such registration statement, as amended at the time it becomes effective, including the
information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part
of the registration statement at the time of its effectiveness (“Rule 430 Information”), is
referred to herein as the “Registration Statement”; and as used herein, the term
“Preliminary Prospectus” means each prospectus included in such registration statement (and
any amendments thereto) before it becomes effective, any prospectus filed with the Commission
pursuant to Rule 424(a) under the Securities Act and the prospectus included in the Registration
Statement at the time of its effectiveness that omits Rule 430 Information, and the term
“Prospectus” means the prospectus in the form first used (or made available upon request of
purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales
of the Shares. Capitalized terms used but not defined herein shall have the meanings given to such
terms in the Registration Statement and the Prospectus. References herein to the Registration
Statement, the Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein.
At or prior to the time when sales of the Shares were first made (the “Time of
Sale”), the Company had prepared the following information (collectively with the pricing
information set forth on Annex A, the “Time of Sale Information”): a Preliminary Prospectus
dated June 8, 2007, and each “free-writing prospectus” (as defined pursuant to Rule 405 under the
Securities Act) listed on Annex B hereto.
2. Purchase of the Shares by the Underwriters.
(a) The Company agrees to issue and sell, and each of the Selling Stockholders agrees,
severally and not jointly, to sell, the Underwritten Shares to the several Underwriters as provided
in this Agreement, and each Underwriter, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth herein, agrees, severally and
not jointly, to purchase from the Company and the Selling Stockholders the respective number of
Underwritten Shares set forth opposite such Underwriter’s name in Schedule 1 hereto at a price per
share (the “Purchase Price”) of $[ ].
In addition, the Company agrees to issue and sell the Option Shares to the several
Underwriters as provided in this Agreement, and the Underwriters, on the basis of the
representations, warranties and agreements set forth herein and subject to the conditions set forth
herein, shall have the option to purchase, severally and not jointly, from the Company the Option
Shares at the Purchase Price.
If any Option Shares are to be purchased, the number of Option Shares to be purchased by each
Underwriter shall be the number of Option Shares which bears the same ratio to the aggregate number
of Option Shares being purchased as the number of Underwritten Shares set forth opposite the name
of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 10
hereof) bears to the aggregate number of Underwritten Shares being
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purchased from the Company and the Selling Stockholders by the several Underwriters, subject,
however, to such adjustments to eliminate any fractional Shares as the Representatives in their
sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares at any time in whole,
but not more than twice, on or before the thirtieth day following the date of this Agreement, by
written notice from the Representatives to the Company. Such notice shall set forth the aggregate
number of Option Shares as to which the option is being exercised and the date and time when the
Option Shares are to be delivered and paid for which may be the same date and time as the Closing
Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than the
tenth full business day (as hereinafter defined) after the date of such notice (unless such time
and date are postponed in accordance with the provisions of Section 10 hereof). Any such notice
shall be given at least two Business Days prior to the date and time of delivery specified
therein. The option with respect to the Option Shares may only be exercised to cover
over-allotments in the sale of the Underwritten Shares by the Underwriters.
(b) The Company and the Selling Stockholders understand that the Underwriters intend to make a
public offering of the Shares as soon after the effectiveness of this Agreement as in the judgment
of the Representatives is advisable, and initially to offer the Shares on the terms set forth in
the Prospectus. Each of the Company and the Selling Stockholders acknowledges and agrees that the
Underwriters may offer and sell Shares to or through any affiliate of an Underwriter and that any
such affiliate may offer and sell Shares purchased by it to or through any Underwriter.
(c) Payment for the Shares shall be made by wire transfer in immediately available funds to
the respective accounts specified by the Company and the Selling Stockholders to the
Representatives in the case of the Underwritten Shares, at the offices of ▇▇▇▇▇▇▇▇▇ Will & ▇▇▇▇▇
LLP at [ ] Chicago time on June [ ], 2007, or at such other time or place on the same or such
other date, not later than the fifth business day thereafter, as the Representatives and the
Company may agree upon in writing or, in the case of the Option Shares, on the date and at the time
and place specified by the Representatives in the written notice of the Underwriters’ election to
purchase such Option Shares. The time and date of such payment for the Underwritten Shares is
referred to herein as the “Closing Date” and the time and date for such payment for the
Option Shares, if other than the Closing Date, is herein referred to as the “Additional Closing
Date.”
Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as
the case may be, shall be made against delivery to the Representatives for the respective accounts
of the several Underwriters of the Shares to be purchased on such date, in definitive form
registered in such names and in such denominations as the Representatives shall request in writing
not later than two full business days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the sale of the Shares duly
paid by the Company or the Selling Stockholders. The certificates for the Shares will be made
available for inspection and packaging by the Representatives at the office of ▇.▇. ▇▇▇▇▇▇
Securities Inc. (“JPMorgan”) set forth above not later than 1:00 P.M., New York City time,
on the business day prior to the Closing Date or the Additional Closing Date, as the case may be.
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(d) Each of the Company and the Selling Stockholders acknowledges and agrees that the
Underwriters are acting solely in the capacity of an arm’s length contractual counterparty to the
Company and the Selling Stockholders with respect to the offering of Shares contemplated hereby
(including in connection with determining the terms of the offering) and not as a financial advisor
or a fiduciary to, or an agent of, the Company, the Selling Stockholders or any other person.
Additionally, neither the Representatives nor any other Underwriter is advising the Company, any of
the Selling Stockholders or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company and the Selling Stockholders shall consult
with their own advisors concerning such matters and shall be responsible for making its own
independent investigation and appraisal of the transactions contemplated hereby, and the
Underwriters shall have no responsibility or liability to the Company or any of the Selling
Stockholders with respect to advising the Company or any of the Selling Stockholders as to tax,
investment, accounting or regulation matters in any jurisdiction. Any review by the Underwriters of
the Company, the transactions contemplated hereby or other matters relating to such transactions
will be performed solely for the benefit of the Underwriters and shall not be on behalf of the
Company or any of the Selling Stockholders.
3. Representations and Warranties of the Company. The Company represents and warrants
to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of
filing thereof, complied in all material respects with the Securities Act and did not contain any
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; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in any Preliminary Prospectus.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and
at the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading; provided that the Company makes no representation and warranty with respect to
any statements or omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through the Representatives
expressly for use in such Time of Sale Information. No statement of material fact included in the
Prospectus has been omitted from the Time of Sale Information and no statement of material fact
included in the Time of Sale Information that is required to be included in the Prospectus has been
omitted therefrom.
(c) Issuer Free Writing Prospectus. Other than the Preliminary Prospectus and the Prospectus,
the Company (including its agents and representatives, other than the Underwriters in their
capacity as such) has not made, used, prepared, authorized, approved or referred to and
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will not prepare, make, use, authorize, approve or refer to any “written communication” (as
defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of
an offer to buy the Shares (each such communication by the Company or its agents and
representatives (other than a communication referred to in clause (i) below) an “Issuer Free
Writing Prospectus”) other than (i) any communication not constituting a prospectus pursuant to
Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or (ii) the
documents listed on Annex B hereto and other written communications approved in writing in advance
by the Representatives. Each such Issuer Free Writing Prospectus complied in all material respects
with the Securities Act, has been filed in accordance with the Securities Act (to the extent
required thereby) and, when taken together with the Preliminary Prospectus accompanying, or
delivered prior to delivery of, such Issuer Free Writing Prospectus, did not, and at the Closing
Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company makes no representation and warranty with respect to any
statements or omissions made in each such Issuer Free Writing Prospectus in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use in any Issuer Free Writing Prospectus.
(d) Registration Statement and Prospectus. The Registration Statement has been declared
effective by the Commission. No order suspending the effectiveness of the Registration Statement
has been issued by the Commission and no proceeding for that purpose or pursuant to Section 8A of
the Securities Act against the Company or related to the offering of the Shares has been initiated
or threatened by the Commission; as of the applicable effective date of the Registration Statement
and any amendment thereto, the Registration Statement complied and will comply in all material
respects with the Securities Act, and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and as of the applicable date of the Prospectus and
any amendment or supplement thereto and as of the Closing Date and as of the Additional Closing
Date, as the case may be, the Prospectus (as amended or supplemented as of such date) will not
contain any 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; provided that the Company makes
no representation and warranty with respect to any statements or omissions made in reliance upon
and in conformity with information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use in the Registration Statement and
the Prospectus and any amendment or supplement thereto.
(e) Incorporated Documents. The documents incorporated by reference in the Registration
Statement and the Prospectus, when filed with the Commission, conformed in all material respects
with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and did not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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(f) Financial Statements. The financial statements and the related notes thereto of the
Company and its consolidated subsidiaries included or incorporated by reference in the Registration
Statement, the Time of Sale Information and the Prospectus comply in all material respects with the
applicable requirements of the Securities Act and present fairly in all material respects the
financial position of the Company and its subsidiaries as of the dates indicated and the results of
their operations and the changes in their cash flows for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting principles applied
on a consistent basis throughout the periods covered thereby (except as expressly set forth
therein), and the supporting schedules included or incorporated by reference in the Registration
Statement present fairly in all material respects the information required to be stated therein;
and the other financial information included or incorporated by reference in the Registration
Statement, the Time of Sale Information and the Prospectus has been derived from the accounting
records of the Company and its subsidiaries and presents fairly in all material respects the
information shown thereby; and the pro forma financial information and the related notes thereto
included or incorporated by reference in the Registration Statement, the Time of Sale Information
and the Prospectus comply in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and the assumptions underlying such pro forma
financial information are reasonable and are set forth or incorporated by reference in the
Registration Statement, the Time of Sale Information and the Prospectus.
(g) No Material Adverse Change. Since the date of the most recent financial statements of the
Company included or incorporated by reference in the Registration Statement, the Time of Sale
Information and the Prospectus, (i) there has not been any material change in the capital stock or
long-term debt of the Company or any of its subsidiaries except as described in the Prospectus, or
any dividend or distribution of any kind declared, set aside for payment, paid or made by the
Company on any class of capital stock, or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the business, properties, management,
financial position, stockholders’ equity, results of operations or prospects of the Company and its
subsidiaries taken as a whole; (ii) neither the Company nor any of its subsidiaries has entered
into any transaction or agreement that is material to the Company and its subsidiaries taken as a
whole or incurred any liability or obligation, direct or contingent, that is material to the
Company and its subsidiaries taken as a whole; and (iii) neither the Company nor any of its
subsidiaries has sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or
regulatory authority, except in each case as otherwise disclosed in the Registration Statement, the
Time of Sale Information and the Prospectus.
(h) Organization and Good Standing. The Company and each of its subsidiaries have been duly
organized and are validly existing and in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified or have such power or authority would not, individually
or in the aggregate, have a material adverse effect on the business, properties, management,
financial position, stockholders’ equity, results of operations
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or prospects of the Company and its subsidiaries taken as a whole (a “Material Adverse
Effect”). The Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in Exhibit 21 to the Registration
Statement.
(i) Capitalization. On the Closing Date, the Company shall have the authorized capitalization
as set forth in the Registration Statement, the Time of Sale Information and the Prospectus under
the heading “Capitalization”; all the outstanding shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and non-assessable and are not subject to
any pre-emptive or similar rights, except as set forth in the Prospectus; except as described in or
expressly contemplated by the Time of Sale Information and the Prospectus, there are no outstanding
rights (including, without limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital stock or other equity
interest in the Company or any of its subsidiaries, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any capital stock of the
Company or any such subsidiary, any such convertible or exchangeable securities or any such rights,
warrants or options; the capital stock of the Company conforms in all material respects to the
description thereof contained in the Registration Statement, the Time of Sale Information and the
Prospectus; all the outstanding shares of capital stock or other equity interests of each
subsidiary of the Company have been duly and validly authorized and issued, are fully paid and
non-assessable and, except as described in the Registration Statement, the Time of Sale Information
and the Prospectus, are owned directly or indirectly by the Company, free and clear of any lien,
charge, encumbrance, security interest, restriction on voting or transfer or any other claim of any
third party, except for transfer restrictions imposed by the Securities Act or state securities
law.
(j) Due Authorization. The Company has full right, power and authority to execute and deliver
this Agreement and to perform its obligations hereunder; and all action required to be taken for
the due and proper authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated thereby has been duly and validly taken.
(k) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered
by the Company.
(l) The Shares. The Shares to be issued and sold by the Company hereunder have been duly
authorized by the Company and, when issued and delivered and paid for as provided herein, will be
duly and validly issued and will be fully paid and nonassessable and will conform to the
descriptions thereof in the Time of Sale Information and the Prospectus; and the issuance of the
Shares is not subject to any preemptive or similar rights. The Shares are approved for listing on
the New York Stock Exchange, subject to official notice of issuance.
(m) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in default, and no
event has occurred that, with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or
to which any of the property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or
arbitrator
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or governmental or regulatory authority, except, in the case of clauses (ii) and (iii) above,
for any such default or violation that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(n) No Conflicts. The execution, delivery and performance by the Company of each of this
Agreement, the issuance and sale of the Shares and the consummation by the Company of the
transactions contemplated by this Agreement will not (i) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the
provisions of the charter or by-laws or similar organizational documents of the Company or any of
its subsidiaries or (iii) result in the violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in
the case of clauses (i) and (iii) above, for any such conflict, breach, violation, default, lien,
charge or encumbrance that would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
(o) No Consents Required. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority is
required for the execution, delivery and performance by the Company of this Agreement, the issuance
and sale of the Shares and the consummation by the Company of the transactions contemplated hereby,
except for the registration of the Shares under the Securities Act and such consents, approvals,
authorizations, orders and registrations or qualifications as may be required under applicable
state securities laws or the New York Stock Exchange in connection with the purchase and
distribution of the Shares by the Underwriters and for such consents that have been obtained.
(p) Legal Proceedings. Except as described in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its subsidiaries is a party or
to which any property of the Company or any of its subsidiaries is subject that, individually or in
the aggregate, if determined adversely to the Company or any of its subsidiaries, would reasonably
be expected to have a Material Adverse Effect or materially and adversely affect the ability of the
Company to perform its obligations under this Agreement; no such investigations, actions, suits or
proceedings are, to the knowledge of the Company, threatened or contemplated by any governmental or
regulatory authority or threatened by others; and (i) there are no current or pending legal,
governmental or regulatory actions, suits or proceedings that are required under the Securities Act
to be described in the Registration Statement that are not so described in the Registration
Statement, the Time of Sale Information and the Prospectus and (ii) there are no statutes,
regulations or contracts or other documents that are required under the Securities Act to be filed
as exhibits to the Registration Statement or described in the Registration Statement or the
Prospectus that are not so filed as exhibits to the Registration Statement or described in the
Registration Statement, the Time of Sale Information and the Prospectus.
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(q) Independent Accountants. BDO ▇▇▇▇▇▇▇, LLP, which has certified certain financial
statements of the Company and its subsidiaries, is an independent registered public accounting firm
with respect to the Company and its subsidiaries within the applicable rules and regulations
adopted by the Commission and the Public Accounting Oversight Board and as required by the
Securities Act.
(r) Title to Real and Personal Property. The Company or its subsidiaries have good title in
fee simple to, or have valid rights to lease or otherwise use, all items of real and personal
property that are material to the respective businesses of the Company and its subsidiaries, in
each case free and clear of all liens, encumbrances, claims and defects and imperfections of title
except those that (i) do not materially interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries or (ii) would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
(s) Title to Intellectual Property. The Company or its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights, licenses and know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective businesses; and the conduct of
their respective businesses does not conflict in any material respect with any such rights of
others, and the Company and its subsidiaries have not received any notice of any claim of
infringement or conflict with any such rights of others, which, if the subject of an unfavorable
decision, ruling or finding, would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
(t) No Undisclosed Relationships. No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries, on the other, that
is required by the Securities Act to be described in the Registration Statement and the Prospectus
and that is not so described in such documents and in the Time of Sale Information.
(u) Investment Company Act. The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in the Registration
Statement, the Time of Sale Information and the Prospectus, will not be required to register as an
“investment company” or an entity “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, “Investment Company Act”).
(v) Taxes. The Company and its subsidiaries have paid all material federal, state, local and
foreign taxes and filed all material tax returns required to be paid or filed through the date
hereof, except for the payment of those taxes (i) currently payable without penalty or interest or
(ii) being contested in good faith and by appropriate proceedings and for which in either case,
adequate reserves have been established on the books and records of the Company; and except as
otherwise disclosed in the Registration Statement, the Time of Sale Information and the Prospectus,
there is no material tax deficiency that has been, or would reasonably be expected to be, asserted
against the Company or any of its subsidiaries or any of their respective properties or assets.
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(w) Licenses and Permits. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Registration Statement, the Time of Sale
Information and the Prospectus, except where the failure to possess or make the same would not
reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and
except as described in the Registration Statement, the Time of Sale Information and the Prospectus,
neither the Company nor any of its subsidiaries has received notice of any revocation or
modification of any such license, certificate, permit or authorization or has any reason to believe
that any such license, certificate, permit or authorization will not be renewed in the ordinary
course, except where the failure to renew such license, certificate, permit or authorization would
not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(x) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is contemplated or threatened.
(y) Compliance With Environmental Laws. The Company and its subsidiaries (i) are in
compliance with any and all applicable federal, state, local and foreign laws, rules, regulations,
decisions and orders relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants (collectively,
“Environmental Laws”); (ii) have received and are in compliance with all permits, licenses,
certificates or other authorizations or approvals required of them under applicable Environmental
Laws to conduct their respective businesses; and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except for any such failure to comply, or
failure to receive required permits, licenses or approvals, or cost or liability, as would not
reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
(z) Compliance With ERISA. Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
that is maintained, administered or contributed to by the Company or any of its affiliates for
employees or former employees of the Company and its affiliates has been maintained in compliance
with its terms and the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as amended (the
“Code”); no prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975 of the Code, has occurred with respect to any such plan excluding transactions effected
pursuant to a statutory or administrative exemption; and for each such plan that is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA, no “accumulated funding
deficiency” as defined in Section 412 of the Code has been incurred, whether or not waived, and the
fair market value of the assets of each such plan (excluding for these purposes accrued but unpaid
contributions) exceeds the present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions, except as would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
10
(aa) Compliance with Insurance Laws. Except where such violations or failures would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the
Company and each of its subsidiaries that is engaged in the business of insurance (each, an
“Insurance Subsidiary”) is duly licensed or registered as a holding company or as an
insurer, as the case may be, under the insurance laws (including laws that relate to companies that
control insurance companies) and the rules, regulations and interpretations of the insurance
regulator authorities thereunder (collectively, “Insurance Laws”), of each jurisdiction in
which the conduct of its business as described in the Registration Statement or the Prospectus
requires such licensing (each such license, an “Insurance License”) or registration. Each
of the Company and its Insurance Subsidiaries has made all required filings under applicable
Insurance Laws in each jurisdiction where such filings are required. Each Insurance Subsidiary has
all other necessary authorizations, approvals, orders, consents, certificates, permits,
registrations and qualifications of and from all insurance regulatory authorities (together with
the Insurance Licenses, the “Insurance Licenses and Authorizations”) necessary to conduct
its business as described in the Registration Statement and the Prospectus and all of the foregoing
are in full force and effect. Each Insurance Subsidiary has fulfilled and performed all
obligations necessary to maintain the Insurance Licenses and Authorizations. There is no pending
or, to the knowledge of the Company, threatened action, suit, proceeding or investigation that
would result in the revocation, termination or suspension of any of the Insurance Licenses and
Authorizations. None of the Company or any of its Insurance Subsidiaries has received any
notification from any insurance regulatory authority or other governmental authority to the effect
that any additional Insurance Licenses and Authorizations are needed to be obtained by either the
Company or any of its Insurance Subsidiaries.
(bb) Insurance Reserving. Except as disclosed in the Prospectus, the Company and its
Insurance Subsidiaries have made no material change in their insurance reserving practices since
December 31, 2006.
(cc) Reinsurance. All reinsurance treaties, contracts and arrangements to which any Insurance
Subsidiary is a party are in full force and effect and no Insurance Subsidiary is in violation of,
or in default in the performance, observance or fulfillment of, any obligation, agreement, covenant
or condition contained therein, except for such failures to be in full force and effect and such
violations or defaults which could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. No Insurance Subsidiary has received any notice that any of the
other parties to such treaties, contracts or arrangements intends not to, or will be unable to,
perform such treaty, contract or arrangement and, to the knowledge of the Company and the Insurance
Subsidiaries, none of the other parties to such treaties or arrangements will be unable to perform
such treaty, contract or arrangement except to the extent adequately and properly reserved for in
the audited historical financial statements of the Company included or incorporated by reference in
the Prospectus.
(dd) Statutory Financial Statements. All statutory financial statements of the Insurance
Subsidiaries from which certain ratios and other data contained in the Registration Statement and
the Prospectus have been derived have been prepared for each relevant period in conformity with
statutory accounting principles or practices required or permitted by the National Association of
Insurance Commissioners and by the Insurance Laws of the jurisdiction of domicile of each Insurance
Subsidiary (and the statutory financial statements of the Insurance
11
Subsidiaries are not required to be prepared pursuant to the Insurance Laws of any other
jurisdiction), and such statutory accounting practices have been applied on a consistent basis
throughout the periods involved, except as may otherwise be indicated therein or in the notes
thereto, and present fairly in all material respects the statutory financial position of the
Insurance Subsidiaries as of the dates thereof, and the statutory basis results of operations of
the Insurance Subsidiaries for the periods covered thereby.
(ee) Insurance Ratings. The Company has no knowledge of any threatened or pending downgrading
of the Company’s or any of its subsidiary’s financial strength rating by A.M. Best Company, Inc.,
or any other “nationally recognized statistical rating organization,” as such term is defined by
the Commission for purposes of Rule 436(g)(2) under the Securities Act, that rates the claims
paying ability or financial strength of the Company or any of its subsidiaries.
(ff) Disclosure Controls. The Company and its subsidiaries maintain an effective system of
“disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is
designed to ensure that information that will be required to be disclosed by the Company in reports
that it will be required to file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission’s rules and forms,
including controls and procedures designed to ensure that such information is accumulated and
communicated to the Company’s management as appropriate to allow timely decisions regarding
required disclosure.
(gg) Accounting Controls. The Company and its subsidiaries maintain a system of internal
controls that provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted
accounting principles, including, but not limited to internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting principles and
to maintain asset accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus, the Company and its subsidiaries are not aware of any material
weakness in such internal controls.
(hh) Insurance. The Company and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business interruption insurance, which
insurance is in amounts and insures against such losses and risks in such amounts as are customary
in the businesses in which they are engaged; and neither the Company nor any of its subsidiaries
has (i) received notice from any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to continue such insurance or (ii)
any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may
be necessary to continue its business.
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(ii) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, illegal rebate, payoff,
influence payment, kickback or other unlawful payment.
(jj) Compliance with Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering
Laws is pending or, to the knowledge of the Company, threatened.
(kk) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge
of the Company, any director, officer, agent, employee or Affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering of the Shares hereunder, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities of any person currently subject
to any U.S. sanctions administered by OFAC.
(ll) No Restrictions on Subsidiaries. Except as set forth in the Prospectus, no subsidiary of
the Company is currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, from paying any dividends to the Company, from
making any other distribution on such subsidiary’s capital stock, from repaying to the Company any
loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s
properties or assets to the Company or any other subsidiary of the Company.
(mm) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finder’s fee or like payment in connection with the offering and sale of the
Shares.
(nn) No Registration Rights. No person has the right to require the Company or any of its
subsidiaries to register any securities for sale under the Securities Act by reason of the filing
of the Registration Statement with the Commission or the issuance and sale of the Shares, except
for such rights of Glencoe Capital, LLC and ▇▇▇▇▇▇ ▇▇▇▇ as have been effectively waived.
13
(oo) No Stabilization. The Company has not taken, directly or indirectly, any action designed
to or that would reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Shares.
(pp) Business With Cuba. The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(qq) Margin Rules. Neither the issuance, sale and delivery of the Shares nor the application
of the proceeds thereof by the Company as described in the Registration Statement, the Time of Sale
Information and the Prospectus will violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board of Governors.
(rr) Forward-Looking Statements. No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration
Statement, the Time of Sale Information and the Prospectus has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.
(ss) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data included in the
Registration Statement, the Time of Sale Information and the Prospectus is not based on or derived
from sources that are reliable and accurate in all material respects.
(tt) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. There is and has been no failure on the part of the Company or any
of the Company’s directors or officers, in their capacities as such, to comply in all material
respects with any applicable provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and
regulations promulgated in connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”), including
Section 402 related to loans.
(uu) Status under the Securities Act. The Company is not an ineligible issuer as defined
under the Securities Act, in each case at the times specified in the Securities Act in connection
with the offering of the Shares.
4. Each of the Selling Stockholders represents and warrants, as to itself only, to each
Underwriter and the Company that:
(a) Required Consents; Authority. All consents, approvals, authorizations and orders necessary
for the execution and delivery by such Selling Stockholder of this Agreement, the Power of Attorney
(the “Power of Attorney”) and the Custody Agreement (the “Custody Agreement”)
hereinafter referred to and for the sale and delivery of the Shares to be sold by the Selling
Stockholder hereunder, have been obtained; and the Selling Stockholder has full right, power and
authority to enter into this Agreement, the Power of Attorney and the Custody Agreement and to
sell, assign, transfer and deliver the Shares to be sold by the Selling Stockholder hereunder; this
Agreement, the Power of Attorney and the Custody Agreement have each been duly authorized, executed
and delivered by or on behalf of the Selling Stockholder.
(b) No Conflicts. The execution, delivery and performance by or on behalf of the Selling
Stockholder of this Agreement, the Power of Attorney and the Custody Agreement, the
14
sale of the Shares to be sold by the Selling Stockholder and the consummation by the Selling
Stockholder of the transactions herein and therein contemplated will not (i) conflict with or
result in a breach or violation of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Selling Stockholder pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Selling Stockholder is a party or by which
the Selling Stockholder is bound or to which any of the property or assets of the Selling
Stockholder is subject, (ii) result in any violation of the provisions of the charter or by-laws or
similar organizational documents of the Selling Stockholder or (iii) result in the violation of any
law or statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory agency.
(c) Title to Shares. Such Selling Stockholder has good and valid title to the Shares to be
sold at the Closing Date by the Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or adverse claims; the Selling Stockholder will have, immediately prior to
the Closing Date good and valid title to the Shares to be sold at the Closing Date by the Selling
Stockholder, free and clear of all liens, encumbrances, equities or adverse claims; and, upon
delivery of the certificates representing such Shares and payment therefor pursuant hereto, good
and valid title to such Shares, free and clear of all liens, encumbrances, equities or adverse
claims, will pass to the several Underwriters.
(d) No Stabilization. The Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to or that could reasonably be expected to cause or result in any
stabilization or manipulation of the price of the Shares.
(e) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and
at the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading; provided that the Selling Stockholder’s representation and warranty in this
sentence is made only with respect to those statements or omissions made in reliance upon and in
conformity with any information relating to such Selling Stockholder furnished in writing by such
Selling Stockholder to the Company or the Representatives expressly for use in the Time of Sale
Information (it being understood that the information regarding the Selling Stockholder set forth
under the caption “Principal and Selling Stockholders” in the Time of Sale Information constitutes
the only such information furnished by the Selling Stockholder). No statement of material fact
included in the Prospectus has been omitted from the Time of Sale Information and no statement of
material fact included in the Time of Sale Information that is required to be included in the
Prospectus has been omitted therefrom; provided that the Selling Stockholder’s
representation and warranty in this sentence is made only with respect to those statements or
omissions made in reliance upon and in conformity with any information relating to such Selling
Stockholder furnished in writing by such Selling Stockholder to the Company or the Representatives
expressly for use in the Time of Sale Information or the Prospectus (it being understood that the
information regarding the Selling Stockholder set forth under the caption “Principal and Selling
Stockholders” in the Time of Sale Information and Prospectus constitutes the only such information
furnished by the Selling Stockholder).
15
(f) Free Writing Prospectus. Other than the Preliminary Prospectus and the Prospectus, the
Selling Stockholder (including its agents and representatives, other than the Underwriters in their
capacity as such) has not made, used, prepared, authorized, approved or referred to and will not
prepare, make, use, authorize, approve or refer to any free writing prospectus, other than (i) any
document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or
Rule 134 under the Securities Act or (ii) the documents listed on Annex B hereto and other written
communications approved in writing in advance by the Company and the Representatives.
(g) Registration Statement and Prospectus. As of the applicable effective date of the
Registration Statement and any amendment thereto, the Registration Statement did not and will not
contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not misleading; and as of the
date of the Prospectus and any amendment or supplement thereto and as of the Closing Date and as of
the Additional Closing Date, as the case may be, the Prospectus will not contain any 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; provided that the Selling Stockholder’s representation and
warranty in this sentence is made only with respect to those statements or omissions made in
reliance upon and in conformity with any information relating to such Selling Stockholder furnished
in writing by such Selling Stockholder to the Company or the Representatives expressly for use in
the Registration Statement or the Prospectus or any amendment or supplement thereto (it being
understood that the information regarding the Selling Stockholder set forth under the caption
“Principal and Selling Stockholders” in the Registration Statement and Prospectus constitutes the
only such information furnished by the Selling Stockholder).
(h) Material Information. As of the date hereof, as of the Closing Date and as of the
Additional Closing Date, as the case may be, the sale of the Shares by the Selling Stockholder is
not and will not be prompted by any material information concerning the Company which is not set
forth in the Registration Statement, the Time of Sale Information or the Prospectus.
Each of the Selling Stockholders represents and warrants that certificates in negotiable form
representing all of the Shares to be sold by such Selling Stockholder hereunder have been placed in
custody under a Custody Agreement relating to such Shares, in the form heretofore furnished to you,
duly executed and delivered by such Selling Stockholder to American Stock Transfer & Trust Company,
as custodian (the “Custodian”), and that such Selling Stockholder has duly executed and
delivered a Power of Attorney, in the form heretofore furnished to you, appointing the person or
persons indicated therein, and each of them, as such Selling Stockholder’s Attorneys-in-Fact (the
“Attorneys-in-Fact” or any one of them the “Attorney-in Fact”) with authority to
execute and deliver this Agreement on behalf of such Selling Stockholder, to determine the purchase
price to be paid by the Underwriters to the Selling Stockholders as provided herein, to authorize
the delivery of the Shares to be sold by such Selling Stockholder hereunder and otherwise to act on
behalf of such Selling Stockholder in connection with the transactions contemplated by this
Agreement and the Custody Agreement.
Each of the Selling Stockholders specifically agrees that the Shares represented by the
certificates held in custody for such Selling Stockholder under the Custody Agreement are
16
subject to the interests of the Underwriters hereunder, and that the arrangements made by such
Selling Stockholder for such custody, and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable. Each of the Selling
Stockholders specifically agrees that the obligations of such Selling Stockholder hereunder shall
not be terminated by operation of law, whether by the death or incapacity of any individual Selling
Stockholder, or, in the case of an estate or trust, by the death or incapacity of any executor or
trustee or the termination of such estate or trust, or in the case of a partnership, corporation or
similar organization, by the dissolution of such partnership, corporation or organization, or by
the occurrence of any other event. If any individual Selling Stockholder or any such executor or
trustee should die or become incapacitated, or if any such estate or trust should be terminated, or
if any such partnership, corporation or similar organization should be dissolved, or if any other
such event should occur, before the delivery of the Shares hereunder, certificates representing
such Shares shall be delivered by or on behalf of such Selling Stockholder in accordance with the
terms and conditions of this Agreement and the Custody Agreement, and actions taken by the
Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as if such death,
incapacity, termination, dissolution or other event had not occurred, regardless of whether or not
the Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of such death,
incapacity, termination, dissolution or other event.
5. Further Agreements of the Company. The Company covenants and agrees with each
Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act,
will file any Issuer Free Writing Prospectus to the extent required by Rule 433 under the
Securities Act; and the Company will furnish copies of the Prospectus and each Issuer Free Writing
Prospectus (to the extent not previously delivered) to the Underwriters in New York City prior to
10:00 A.M., New York City time, on the business day next succeeding the date of this Agreement in
such quantities as the Representatives may reasonably request.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representatives,
two signed copies of the Registration Statement as originally filed and each amendment thereto, in
each case including all exhibits and consents filed therewith; and (ii) to each Underwriter (A) a
conformed copy of the Registration Statement as originally filed and each amendment thereto
(without exhibits) and (B) during the Prospectus Delivery Period (as defined below), as many copies
of the Prospectus (including all amendments and supplements thereto) and each Issuer Free Writing
Prospectus as the Representatives may reasonably request. As used herein, the term “Prospectus
Delivery Period” means such period of time after the first date of the public offering of the
Shares as in the opinion of counsel for the Underwriters a prospectus relating to the Shares is
required by law to be delivered (or required to be delivered but for Rule 172 under the Securities
Act) in connection with sales of the Shares by any Underwriter or dealer.
(c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before preparing, using,
authorizing, approving, referring to or filing any Issuer Free Writing Prospectus, and before
filing any amendment or supplement to the Registration Statement or the Prospectus, the Company
will furnish to the Representatives and counsel for the Underwriters a
17
copy of the proposed Issuer Free Writing Prospectus, amendment or supplement for review and
will not prepare, use, authorize, approve, refer to or file any such Issuer Free Writing Prospectus
or file any such proposed amendment or supplement to which the Representatives reasonably objects.
(d) Notice to the Representatives. The Company will advise the Representatives promptly, and
confirm such advice in writing, (i) when the Registration Statement has become effective; (ii) when
any amendment to the Registration Statement has been filed or becomes effective; (iii) when any
supplement to the Prospectus or any Issuer Free Writing Prospectus or any amendment to the
Prospectus has been filed; (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the receipt of any
comments from the Commission relating to the Registration Statement or any other request by the
Commission for any additional information; (v) of the issuance by the Commission of any order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or the initiation or threatening of any proceeding for
that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event
within the Prospectus Delivery Period as a result of which the Prospectus, the Time of Sale
Information or any Issuer Free Writing Prospectus as then amended or supplemented would include any
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 existing
when the Prospectus, the Time of Sale Information or any such Issuer Free Writing Prospectus is
delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice
with respect to any suspension of the qualification of the Shares for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company
will use its reasonable best efforts to prevent the issuance of any such order suspending the
effectiveness of the Registration Statement, preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification of the Shares and, if any such
order is issued, will obtain as soon as possible the withdrawal thereof.
(e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event shall occur
or condition shall exist as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it
is necessary to amend or supplement the Prospectus to comply with law, the Company will promptly
notify the Representatives thereof and forthwith prepare and, subject to paragraph (c) above, file
with the Commission and furnish to the Underwriters and to such dealers as the Representatives may
designate, such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus will comply with law and (2) if at any time prior to the Closing Date (i) any event
shall occur or condition shall exist as a result of which the Time of Sale Information as then
amended or supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the circumstances,
not misleading or (ii) it is necessary to amend or supplement the Time of Sale Information to
comply with law, the Company will promptly notify the
18
Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file with the
Commission (to the extent required) and furnish to the Underwriters and to such dealers as the
Representatives may reasonably designate, such amendments or supplements to the Time of Sale
Information as may be necessary so that the statements in the Time of Sale Information as so
amended or supplemented will not, in the light of the circumstances, be misleading or so that the
Time of Sale Information will comply with law.
(f) Blue Sky Compliance. The Company will qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request
and will continue such qualifications in effect so long as required for distribution of the Shares;
provided that the Company shall not be required to (i) qualify as a foreign corporation or
other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be
required to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so
subject.
(g) Earning Statement. The Company will make generally available to its security holders and
the Representatives as soon as practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering
a period of at least twelve months beginning with the first fiscal quarter of the Company occurring
after the “effective date” (as defined in Rule 158) of the Registration Statement.
(h) Clear Market. For a period of 90 days after the date hereof, the Company will not (i)
offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any shares of Stock or any
securities convertible into or exercisable or exchangeable for Stock or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic consequences of ownership
of the Stock, whether any such transaction described in clause (i) or (ii) above is to be settled
by delivery of Stock or such other securities, in cash or otherwise, without the prior written
consent of the Representatives, other than the Shares to be sold hereunder and any shares of Stock
of the Company issued upon the exercise of options granted under existing employee stock option
plans or the granting of any options to purchase Common Stock under employee stock option plans
described in the Prospectus and the exercise thereof. Notwithstanding the foregoing, if (1) during
the last 17 days of the 90-day restricted period, the Company issues an earnings release or
material news or a material event relating to the Company occurs; or (2) prior to the expiration of
the 90-day restricted period, the Company announces that it will release earnings results during
the 16-day period beginning on the last day of the 90-day period, the restrictions imposed by this
Agreement shall continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or material event.
(i) No Stabilization. The Company will not take, directly or indirectly, any action designed
to or that would reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Shares.
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(j) Exchange Listing. The Company will use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange.
(k) Reports. For two years after the date hereof, the Company will furnish to the
Representatives, as soon as they are available, copies of all reports or other communications
(financial or other) furnished to holders of the Shares, and copies of any reports and financial
statements furnished to or filed with the Commission or any national securities exchange or
automatic quotation system, provided that this covenant shall be satisfied by any filing or
furnishing to the Commission of a document which is publicly available.
(l) Record Retention. The Company will, pursuant to reasonable procedures developed in good
faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission
in accordance with Rule 433 under the Securities Act.
6. Further Agreements of the Selling Stockholders. Each Selling Stockholder covenants
and agrees with each Underwriter that:
(a) Clear Market. For a period of 90 days after the date hereof, such Selling Stockholder will
not (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of, directly or indirectly, any shares of Stock or any
securities convertible into or exercisable or exchangeable for Stock or (ii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic consequences of ownership
of the Stock, whether any such transaction described in clause (i) or (ii) above is to be settled
by delivery of Stock or such other securities, in cash or otherwise or (iii) make any demand for or
exercise any right with respect to the registration of any shares of Stock or any security
convertible into or exercisable or exchangeable for Stock without the prior written consent of the
Representatives, in each case other than the Shares to be sold by such Selling Stockholder
hereunder. Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day restricted
period, the Company issues an earnings release or material news or a material event relating to the
Company occurs; or (2) prior to the expiration of the 90-day restricted period, the Company
announces that it will release earnings results during the 16-day period beginning on the last day
of the 90-day period, the restrictions imposed by this Agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence
of the material news or material event.
(b) Tax Form. It will deliver to the Representatives prior to or at the Closing Date a
properly completed and executed United States Treasury Department Form W-9 (or other applicable
form or statement specified by the Treasury Department regulations in lieu thereof) in order to
facilitate the Underwriters’ documentation of their compliance with the reporting and withholding
provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions
herein contemplated.
(c) Expenses. Such Selling Stockholder agrees to pay the fees and disbursements of counsel
for such Selling Stockholder and other persons retained by the Selling Stockholder. Except as
otherwise provided in any indemnification provision herein contained, the Selling Stockholder shall
have no financial obligation to the Underwriter or any party acting by or
20
through them in connection with the transactions contemplated in this Agreement. This
paragraph shall not affect or modify any separate, valid agreement relating to the allocation of
payment of expenses between the Company on the one hand and the Selling Stockholder on the other
hand.
7. Certain Agreements of the Underwriters. Each Underwriter hereby represents and
agrees that:
(a) It has not and will not use, authorize use of, refer to, or participate in the planning
for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act (which
term includes use of any written information furnished to the Commission by the Company and not
incorporated by reference into the Registration Statement and any press release issued by the
Company) other than (i) a free writing prospectus that contains no “issuer information” (as defined
in Rule 433(h)(2) under the Securities Act) that was not included (including through incorporation
by reference) in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus,
(ii) any Issuer Free Writing Prospectus listed on Annex B or prepared pursuant to Section 3(c) or
Section 5(c) above, or (iii) any free writing prospectus prepared by such underwriter and approved
by the Company in advance in writing (each such free writing prospectus referred to in clauses (i)
or (iii), an “Underwriter Free Writing Prospectus”).
(b) It has not and will not distribute any Underwriter Free Writing Prospectus referred to in
clause (a)(i) in a manner reasonably designed to lead to its broad unrestricted dissemination.
(c) It has not and will not, without the prior written consent of the Company, use any free
writing prospectus that contains the final terms of the Shares unless such terms have previously
been included in a free writing prospectus filed with the Commission; provided that Underwriters
may use a term sheet substantially in the form of Annex A hereto without the consent of the
Company; provided further that any Underwriter using such term sheet shall notify the Company, and
provide a copy of such term sheet to the Company, prior to, or substantially concurrently with, the
first use of such term sheet.
(d) It will, pursuant to reasonable procedures developed in good faith, retain copies of each
free writing prospectus used or referred to by it, in accordance with Rule 433 under the Securities
Act.
(e) It is not subject to any pending proceeding under Section 8A of the Securities Act with
respect to the offering (and will promptly notify the Company if any such proceeding against it is
initiated during the Prospectus Delivery Period).
8. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to
purchase the Underwritten Shares on the Closing Date or the Option Shares on the Additional Closing
Date, as the case may be, as provided herein is subject to the performance by the Company of its
covenants and other obligations hereunder and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose or pursuant to
Section 8A under the Securities Act shall be pending before or threatened by the Commission;
21
the Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the
Commission under the Securities Act (in the case of an Issuer Free Writing Prospectus, to the
extent required by Rule 433 under the Securities Act) and in accordance with Section 5(a) hereof;
and all requests by the Commission for additional information shall have been complied with to the
reasonable satisfaction of the Representatives.
(b) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct on the date hereof and on and as of the Closing Date or
the Additional Closing Date, as the case may be; and the statements of the Company and its officers
made in any certificates delivered pursuant to this Agreement shall be true and correct on and as
of the Closing Date or the Additional Closing Date, as the case may be.
(c) No Downgrade. Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in (A) the rating accorded any securities or preferred stock of or
guaranteed by the Company or any of its subsidiaries by any “nationally recognized statistical
rating organization,” as such term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act or (B) the Company’s or any subsidiary’s financial strength rating by A.M.
Best Company, Inc. or claims paying ability rating any such rating organization and (ii) no such
organization shall have publicly announced that it has under surveillance or review, or has changed
its outlook with respect to, its rating of any securities or preferred stock of or guaranteed by
the Company or any of its subsidiaries or any such financial strength or claims paying ability
rating (other than an announcement with positive implications of a possible upgrading).
(d) No Material Adverse Change. No event or condition of a type described in Section 3(f)
hereof shall have occurred or shall exist, which event or condition is not described in the Time of
Sale Information (excluding any amendment or supplement thereto) and the Prospectus (excluding any
amendment or supplement thereto) and the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares
on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the
manner contemplated by this Agreement, the Time of Sale Information and the Prospectus.
(e) Certificates.
(i) The Representatives shall have received on and as of the Closing Date or
the Additional Closing Date, as the case may be, a certificate of the chief
financial officer and chief accounting officer of the Company (i) confirming that
such officers have reviewed the Registration Statement, the Time of Sale Information
and the Prospectus and, to the knowledge of such officers, the representations set
forth in Sections 3(b) and 3(d) hereof are true and correct, (ii) confirming, to
their knowledge, that the other representations and warranties of the Company in
this Agreement are true and correct and that the Company has complied in all
material respects with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date
22
or Additional Closing Date, as the case may be, and (iii) to the effect set
forth in paragraphs (a), (c) and (d) above.
(ii) The Representatives shall have received on and as of the Closing Date a
certificate of each Selling Stockholder (or an executive office thereof, in the case
of Glencoe Capital, LLC) (i) confirming that such Selling Stockholder has reviewed
the Registration Statement, the Time of Sale Information and the Prospectus and, to
the knowledge of such Selling Stockholder, the representations set forth in Sections
4(e) and 4(g) hereof are true and correct, and (ii) confirming, to the knowledge of
such Selling Stockholder, that the other representations and warranties of such
Selling Stockholder in this Agreement are true and correct and that the Selling
Stockholder has complied in all material respects with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date or Additional Closing Date, as the case may be.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date or the Additional
Closing Date, as the case may be, BDO ▇▇▇▇▇▇▇, LLP shall have furnished to the Representatives, at
the request of the Company, letters, dated the respective dates of delivery thereof and addressed
to the Underwriters, in form and substance reasonably satisfactory to the Representatives,
containing statements and information of the type customarily included in accountants’ “comfort
letters” to underwriters with respect to the financial statements and certain financial information
contained or incorporated by reference in the Registration Statement, the Time of Sale Information
and the Prospectus; provided, that the letter delivered on the Closing Date or the Additional
Closing Date, as the case may be, shall use a “cut-off” date no more than three business days prior
to such Closing Date or such Additional Closing Date, as the case may be.
(g) Opinion of Counsel for the Company. ▇▇▇▇▇▇▇▇▇ Will & ▇▇▇▇▇ LLP and ▇▇▇▇▇ and Lardner LLP,
each counsel for the Company, shall have furnished to the Representatives, at the request of the
Company, their written opinions, dated the Closing Date or the Additional Closing Date, as the case
may be, and addressed to the Underwriters, in form and substance reasonably satisfactory to the
Representatives, to the effect set forth in Annex C hereto.
(h) Opinion of Counsel for the Selling Stockholders. ▇▇▇▇▇▇▇▇▇ Will & ▇▇▇▇▇ LLP, counsel for
the Selling Stockholders, shall have furnished to the Representatives, at the request of the
Selling Stockholders, its written opinion, dated the Closing Date or the Additional Closing Date,
as the case may be, and addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representatives, to the effect set forth in Annex C hereto.
(i) Opinion of Counsel for the Underwriters. The Representatives shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of Mayer,
Brown, ▇▇▇▇ & Maw LLP, counsel for the Underwriters, with respect to such matters as the
Representatives may reasonably request, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such matters.
23
(j) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Shares; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of the Closing Date or
the Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares.
(k) Good Standing. The Representatives shall have received on and as of the Closing Date or
the Additional Closing Date, as the case may be, satisfactory evidence of the good standing of the
Company and its subsidiaries in their respective jurisdictions of organization and their good
standing as foreign entities in such other jurisdictions as the Representatives may reasonably
request, in each case in writing or any standard form of telecommunication from the appropriate
Governmental Authorities of such jurisdictions.
(l) Exchange Listing. The Shares to be delivered on the Closing Date or Additional Closing
Date, as the case may be, shall have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
(m) Lock-up Agreements. The “lock-up” agreements, each substantially in the form of Exhibit A
hereto, between you and certain shareholders, officers and directors of the Company relating to
sales and certain other dispositions of shares of Stock or certain other securities, delivered to
you on or before the date hereof, shall be full force and effect on the Closing Date or Additional
Closing Date, as the case may be.
(n) Additional Documents. On or prior to the Closing Date or the Additional Closing Date, as
the case may be, the Company shall have furnished to the Representatives such further certificates
and documents as the Representatives may reasonably request.
All opinions, letters, certificates and evidence mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to counsel for the Underwriters.
9. Indemnification and Contribution.
(a) Indemnification of the Underwriters by the Company. The Company agrees to indemnify and
hold harmless each Underwriter, its affiliates, directors and officers and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and liabilities (including,
without limitation, legal fees and other expenses reasonably incurred in connection with any suit,
action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or
several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or necessary in order to
make the statements therein, not misleading, (ii) or any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or supplement thereto),
any Issuer Free Writing Prospectus or any Time of Sale Information
24
(including any Time of Sale Information that has subsequently been amended), or caused by any
omission or alleged omission to state therein a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading, in
each case except insofar as such losses, claims, damages or liabilities arise out of, or are based
upon, any untrue statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with any information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use therein, it being
understood and agreed that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below.
(b) Indemnification of the Underwriters by the Selling Stockholders. Each of the Selling
Stockholders agrees, severally and not jointly, to indemnify and hold harmless each Underwriter,
its affiliates, directors and officers and each person, if any, who controls such Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the indemnity set forth in paragraph (a) above, in each case only to the extent such
losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in conformity with any
information relating to such Selling Stockholder furnished in writing by such Selling Stockholder
to the Company or the Representatives expressly for use in the Registration Statement, the
Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus or any Time
of Sale Information. Without limiting the extent of the Company’s agreement to indemnify each
Underwriter as herein provided, each Selling Stockholder’s obligations under the indemnity
agreements hereunder are limited so that it is liable only (i) for an amount not exceeding the net
proceeds received by such Selling Stockholder from the sale of Shares by such Selling Stockholder
and (ii) for such losses, claims, damages or liabilities that arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to such Selling Stockholder furnished in writing by such
Selling Stockholder to the Company or the Representatives expressly for use in the Registration
Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing
Prospectus or any Time of Sale Information.
(c) Indemnification of the Company and the Selling Stockholders. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers
who signed the Registration Statement and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each of the
Selling Stockholders to the same extent as the indemnity set forth in paragraph (a) above, but only
with respect to any losses, claims, damages or liabilities that arise out of, or are based upon,
any untrue statement or omission or alleged untrue statement or omission made in reliance upon and
in conformity with any information relating to such Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use in the Registration Statement,
the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus or any
Time of Sale Information, it being understood and agreed upon that the only such information
furnished by any Underwriter consists of the following information in the Prospectus furnished on
behalf of each Underwriter: the concession and reallowance figures
appearing in the second paragraph
under
25
the
caption “Underwriting” and the information contained in the
tenth, eleventh and twelfth paragraphs under the caption “Underwriting.”
(d) Notice and Procedures. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against any person in
respect of which indemnification may be sought pursuant to paragraph (a), (b) or (c) above, such
person (the “Indemnified Person”) shall promptly notify the person against whom such
indemnification may be sought (the “Indemnifying Person”) in writing; provided that
the failure to notify the Indemnifying Person shall not relieve it from any liability that it may
have under this Section 9 except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under this Section 9. If any
such proceeding shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably
satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified
Person, be counsel to the Indemnifying Person) to represent the Indemnified Person in such
proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to
the contrary or (ii) the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person. It is understood and agreed that the
Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid
or reimbursed as they are incurred.
(e) Any such separate firm for any Underwriter, its affiliates, directors and officers and any
control persons of such Underwriter shall be designated in writing by the Representatives, any such
separate firm for the Company, its directors, its officers who signed the Registration Statement
and any control persons of the Company shall be designated in writing by the Company, and any such
separate firm for a Selling Stockholder shall be designated in writing by such Selling Stockholder.
The Indemnifying Person shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final judgment for the
plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any
loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person
reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 60 days after receipt
by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of which any Indemnified
Person is or could have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release of such
Indemnified Person, in form and
26
substance reasonably satisfactory to such Indemnified Person, from all liability on claims
that are the subject matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.
(f) Contribution. If the indemnification provided for in paragraph (a), (b) or (c) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company or the
Selling Stockholders (as applicable), on the one hand, and the Underwriters, on the other, from the
offering of the Shares or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company or the Selling Stockholders
(as applicable), on the one hand, and the Underwriters, on the other, in connection with the
statements or omissions that resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative benefits received by the Company or the
Selling Stockholders (as applicable), on the one hand, and the Underwriters, on the other, shall be
deemed to be in the same respective proportions as the net proceeds (before deducting expenses)
received by the Company or the Selling Stockholders (as applicable) from the sale of the Shares and
the total underwriting discounts and commissions received by the Underwriters in connection
therewith, in each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate offering price of the Shares. The relative fault of the Company or the Selling
Stockholders (as applicable), on the one hand, and the Underwriters, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders or by the Underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(g) Limitation on Liability. The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Selling Stockholders and the Underwriters were
treated as one entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (f) above. The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages and liabilities
referred to in paragraph (f) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Person in connection
with any such action or claim. Notwithstanding the provisions of this Section 9, in no event shall
an Underwriter be required to contribute any amount in excess of the amount by which the total
underwriting discounts and commissions received by such Underwriter with respect to the offering of
the Shares exceeds the amount of any damages that such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters’ obligations to
27
contribute pursuant to this Section 9 are several in proportion to their respective purchase
obligations hereunder and not joint.
(h) Non-Exclusive Remedies. The remedies provided for in this Section 9 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any Indemnified Person
at law or in equity.
10. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
11. Termination. This Agreement may be terminated in the absolute discretion of the
Representatives, by notice to the Company and the Selling Stockholders, if after the execution and
delivery of this Agreement and prior to the Closing Date or, in the case of the Option Shares,
prior to the Additional Closing Date (i) trading generally shall have been suspended or materially
limited on or by any of the New York Stock Exchange, the American Stock Exchange or the Nasdaq
National Market; (ii) trading of any securities issued or guaranteed by the Company shall have been
suspended on any exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal or New York State authorities; or
(iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis, either within or outside the United States, that, in the
judgment of the Representatives, is material and adverse and makes it impracticable or inadvisable
to proceed with the offering, sale or delivery of the Shares on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement,
the Time of Sale Information and the Prospectus.
12. Defaulting Underwriter.
(a) If, on the Closing Date or the Additional Closing Date, as the case may be, any
Underwriter defaults on its obligation to purchase the Shares that it has agreed to purchase
hereunder on such date, the non-defaulting Underwriters may in their discretion arrange for the
purchase of such Shares by other persons satisfactory to the Company and the Selling Stockholders
on the terms contained in this Agreement. If, within 36 hours after any such default by any
Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Shares, then
the Company and the Selling Stockholders shall be entitled to a further period of 36 hours within
which to procure other persons satisfactory to the non-defaulting Underwriters to purchase such
Shares on such terms. If other persons become obligated or agree to purchase the Shares of a
defaulting Underwriter, either the non-defaulting Underwriters or the Company and the Selling
Stockholders may postpone the Closing Date or the Additional Closing Date, as the case may be, for
up to five full business days in order to effect any changes that in the opinion of counsel for the
Company, counsel for the Selling Stockholders or counsel for the Underwriters may be necessary in
the Registration Statement and the Prospectus or in any other document or arrangement, and the
Company agrees to promptly prepare any amendment or supplement to the Registration Statement and
the Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context otherwise requires, any person not
listed in Schedule 1 hereto that, pursuant to this Section 12, purchases Shares that a defaulting
Underwriter agreed but failed to purchase.
28
(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by the non-defaulting Underwriters, the Company and the Selling
Stockholders as provided in paragraph (a) above, the aggregate number of Shares that remain
unpurchased on the Closing Date or the Additional Closing Date, as the case may be does not exceed
one-eleventh of the aggregate number of Shares to be purchased on such date, then the Company and
the Selling Stockholders shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares that such Underwriter agreed to purchase hereunder on such date plus
such Underwriter’s pro rata share (based on the number of Shares that such Underwriter agreed to
purchase on such date) of the Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by the non-defaulting Underwriters, the Company and the Selling
Stockholders as provided in paragraph (a) above, the aggregate number of Shares that remain
unpurchased on the Closing Date or the Additional Closing Date, as the case may be, exceeds
one-eleventh of the aggregate amount of Shares to be purchased on such date, or if the Company and
the Selling Stockholders shall not exercise the right described in paragraph (b) above, then this
Agreement or, with respect to any Additional Closing Date, the obligation of the Underwriters to
purchase Shares on the Additional Closing Date, as the case may be, shall terminate without
liability on the part of the non-defaulting Underwriters. Any termination of this Agreement
pursuant to this Section 12 shall be without liability on the part of the Company or the Selling
Stockholders, except that the Company will continue to be liable for the payment of expenses as set
forth in Section 13 hereof and except that the provisions of Section 9 hereof shall not terminate
and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company, the Selling Stockholders or any non-defaulting Underwriter for damages caused
by its default.
13. Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay or cause to be paid all costs and expenses incident
to the performance of its obligations hereunder, including without limitation, (i) the costs
incident to the authorization, issuance, sale, preparation and delivery of the Shares and any taxes
payable in that connection; (ii) the costs incident to the preparation, printing and filing under
the Securities Act of the Registration Statement, the Preliminary Prospectus, any Issuer Free
Writing Prospectus, any Time of Sale Information and the Prospectus (including all exhibits,
amendments and supplements thereto) and the distribution thereof; (iii) the fees and expenses of
the Company’s counsel and independent accountants; (iv) the fees and expenses incurred in
connection with the registration or qualification and determination of eligibility for investment
of the Shares under the laws of such jurisdictions as the Representatives may designate and the
preparation, printing and distribution of a Blue Sky Memorandum, not to exceed $5,000; (v) the cost
of preparing stock certificates; (vi) the costs and charges of any transfer agent and any
registrar; (vii) all expenses and application fees incurred in connection with any filing with, and
clearance of the offering by, the National Association of Securities Dealers, Inc.; (viii) all
expenses incurred by the Company in connection with any “road show” presentation to potential
29
investors; (ix) all expenses and application fees related to the listing of the Shares on the
New York Stock Exchange and (x) all other costs and expenses incident to the performance of its
obligations hereunder that are not otherwise specifically provided for herein.
(b) If (i) this Agreement is terminated pursuant to clause (ii) of Section 11, (ii) the
Company or the Selling Stockholders fail to tender the Shares for delivery to the Underwriters
(other than due to the failure by the Underwriters to make payment for the Shares pursuant to
Section 2) or (iii) the Underwriters decline to purchase the Shares for any reason permitted under
this Agreement (other than pursuant to Section 12), the Company agrees to reimburse the
Underwriters for all out-of-pocket costs and expenses (including the fees and expenses reasonably
incurred by their counsel) reasonably incurred by the Underwriters in connection with this
Agreement and the offering contemplated hereby.
14. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and the officers
and directors and any controlling persons referred to in Section 9 hereof. Nothing in this
Agreement is intended or shall be construed to give any other person any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision contained herein. No
purchaser of Shares from any Underwriter shall be deemed to be a successor merely by reason of such
purchase.
15. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company, the Selling Stockholders and the Underwriters contained
in this Agreement or made by or on behalf of the Company, the Selling Stockholders or the
Underwriters pursuant to this Agreement or any certificate delivered pursuant hereto shall survive
the delivery of and payment for the Shares and shall remain in full force and effect, regardless of
any termination of this Agreement or any investigation made by or on behalf of the Company, the
Selling Stockholders or the Underwriters.
16. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act; (b) the term “business day” means any day other than a day on which banks are permitted or
required to be closed in New York City; and (c) the term “subsidiary” has the meaning set forth in
Rule 405 under the Securities Act.
17. Miscellaneous.
(a) Authority of the Representatives. Any action by the Underwriters hereunder may be taken
by JPMorgan on behalf of the Underwriters, and any such action taken by JPMorgan shall be binding
upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Underwriters shall be given to the Representatives c/o ▇.▇.
▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (fax: (▇▇▇) ▇▇▇-▇▇▇▇), Attention:
Equity Syndicate Desk and c/o Keefe, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (fax: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Equity
30
Capital Markets. Notices to the Company shall be given to it at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (fax: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Chief Financial Officer.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.
(f) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
31
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
| Very truly yours, | ||||||
| FIRST MERCURY FINANCIAL CORPORATION | ||||||
| By | ||||||
| Title: | ||||||
| SELLING STOCKHOLDERS | ||||||
| By | ||||||
| Title: | ||||||
| As Attorney-in-Fact acting on behalf of each of the Selling Stockholders. | ||||||
Accepted: ___________________, 2007
| ▇.▇. ▇▇▇▇▇▇ SECURITIES INC. | ||
| ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC. | ||
| For themselves and on behalf of the several Underwriters listed in Schedule 1 hereto. |
||
| BY: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC. | ||||
By |
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Name:
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Title: |
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| BY: ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC. | ||||
By |
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Name:
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Title: |
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