CALIFORNIA WATER SERVICE
GROUP
ROBERT W. BAIRD
& CO. INCORPORATED
A.G. Edwards & Sons, Inc.
Edward D. Jones & Co., L.P.
J.J.B. Hilliard, W.C. Lyons, Inc.
Stifel, Nicolaus & Company Incorporated
As Representatives of the Several Underwriters
Identified in Schedule I Annexed
Hereto
c/o Robert W. Baird & Co. Incorporated
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
California Water
Service Group, a Delaware corporation (the “ Company
”), proposes to issue and sell to the several Underwriters
named in Schedule I hereto (the “ Underwriters
”) 2,000,000 shares of the Common Stock, par value $0.01 per
share, of the Company (the “ Firm Shares
”).
The Company also
proposes to issue and sell to the several Underwriters up to an
additional 300,000 shares of Common Stock, par value $0.01 per
share, of the Company (the “ Additional Shares
”), if and to the extent that you, Robert W. Baird & Co.
Incorporated (“ Baird ”) and A.G. Edwards &
Sons, Inc., Edward D. Jones & Co., L.P., J.J.B. Hilliard, W.C.
Lyons, Inc. and Stifel, Nicolaus & Company Incorporated
(“ Managers ”), as managers of the offering,
shall have determined to exercise, on behalf of the Underwriters,
the right to purchase such shares of common stock granted to the
Underwriters in Section 2 hereof. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the
“ Shares .” The shares of Common Stock, par
value $0.01 per share, of the Company to be outstanding prior to
giving effect to the sales contemplated hereby are hereinafter
referred to as the “ Common Stock .”
The Company has
prepared and filed, in accordance with the Securities Act of 1933,
as amended (the “ Securities Act ”), and the
rules and regulations thereunder, with the Securities and Exchange
Commission (the “ Commission ”) a registration
statement on Form S-3 (file number 333-136844), including a
prospectus, relating to the Shares, which registration statement
and prospectus incorporate or are deemed to incorporate by
reference documents that the Company has filed, or will file, with
the Commission in accordance with the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”), and the
rules and regulations thereunder. The registration statement as
amended at the time it becomes effective for purposes of
Section 11 of the Securities Act (as such section applies to
the Underwriters), including the documents filed as part thereof
and information contained or incorporated by reference in the
prospectus (the “ Incorporated Documents ”) or
otherwise deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A or Rule 430B
under the Securities Act, is
hereinafter
referred to as the “ Registration Statement .”
If the Company files an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the “ Rule 462 Registration
Statement ”), then any reference herein to the term
“ Registration Statement ” shall be deemed to
include such Rule 462 Registration Statement. The Company has
also filed with, or transmitted for filing to, or shall promptly
after the date of this Agreement file with or transmit for filing
to, the Commission a prospectus supplement (in the form first used
to confirm sales of the Shares (or in the form first made available
to the Underwriters by the Company to meet requests of purchasers
pursuant to Rule 173 under the Securities Act), the “
Prospectus Supplement ”) pursuant to Rule 424
under the Securities Act. The term “ Base Prospectus
” means the prospectus dated September 27, 2006,
relating to the Shares, in the form in which it has most recently
been filed with the Commission as part of the Registration
Statement on or prior to the date of this Agreement. The term
“ Prospectus ” means the Base Prospectus as
supplemented by the Prospectus Supplement. The term “
Preliminary Prospectus ” means any preliminary form of
Prospectus (including without limitation the preliminary Prospectus
Supplement dated September 27, 2006, filed with the Commission
pursuant to Rule 424).
For purposes of
this Agreement, “ free writing prospectus ” has
the meaning set forth in Rule 405 under the Securities Act; “
Time of Sale Prospectus ” means the Base Prospectus
and the Preliminary Prospectus, together with the free writing
prospectuses, if any, each identified in Schedule II hereto
(each, a “ Permitted Free Writing Prospectus ”),
and other information conveyed to purchasers of the Shares at or
prior to the Time of Sale as set forth in Schedule II hereto;
“ Time of Sale ” means 8:00 p.m. (Central Time)
on the date of this Agreement; and “ road show ”
has the meaning set forth in Rule 433(h)(4) under the
Securities Act. As used herein, the terms “Registration
Statement,” “Base Prospectus,” “Preliminary
Prospectus,” “Time of Sale Prospectus” and
“Prospectus” shall include the Incorporated Documents,
including, unless the context otherwise requires, the documents, if
any, filed as exhibits to such Incorporated Documents. The terms
“supplement,” “amendment” and
“amend” as used herein with respect to the Registration
Statement, the Base Prospectus, the Time of Sale Prospectus, any
Preliminary Prospectus, the Prospectus or any free writing
prospectus shall include all documents subsequently filed by the
Company with the Commission pursuant to the Exchange Act that are
deemed to be incorporated by reference therein.
1.
Representations and Warranties of the Company . The Company
represents and warrants to and agrees with each of the Underwriters
on the date hereof, on the Closing Date (as defined in Section 4)
and on each Option Closing Date (as defined in Section 2), if
any, that:
(a) The
Registration Statement has become effective under the Securities
Act; no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary
Prospectus or the Prospectus is in effect, and to the
Company’s knowledge, no proceedings for such purpose are
pending before or threatened by the Commission. For purposes of
this Agreement,
2
“
knowledge ” means the actual knowledge of the
executive officers and directors of the Company following
reasonable inquiry.
(b) The Base
Prospectus and any Preliminary Prospectus filed as part of the
registration statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, complied when so filed in all material respects
with the Securities Act and the rules and regulations thereunder
(including, without limitation, Rule 430B(a) or
430A(b)).
(c) (i) Each
document, if any, filed or to be filed pursuant to the Exchange Act
and incorporated by reference in the Time of Sale Prospectus or the
Prospectus complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder; (ii) each part of
the Registration Statement, when such part became effective, did
not contain and each such part, as amended or supplemented up to
the Closing Date (as defined in Section 4) or any Option
Closing Date (as defined in Section 2), if applicable, will
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; (iii) the
Registration Statement complies and, as amended or supplemented, if
applicable, will comply in all material respects with the
Securities Act; the conditions to the use of Form S-3 in connection
with the offering and sale of the Shares as contemplated hereby
have been satisfied; the Registration Statement meets, and the
offering and sale of the Shares as contemplated hereby complies
with, the requirements of Rule 415 under the Securities Act
(including without limitation Rule 415(a)(5)); (iv) at no
time during the period that began on the earlier of the date of the
Preliminary Prospectus and the date on which the Preliminary
Prospectus was filed with the Commission and ended immediately
prior to the execution of this Agreement did any Preliminary
Prospectus contain any untrue statement of a material fact or, when
considered with the Incorporated Documents, omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; (v) the Time of Sale Prospectus does not, and at
the Applicable Time, at the Closing Date (as defined in
Section 4) and, if applicable, each Option Closing Date (as
defined in Section 5), the Time of Sale Prospectus, as then
amended or supplemented by the Company, if applicable, will not,
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; (vi) each Permitted Free Writing Prospectus does
not conflict with the information contained in the Registration
Statement, the Time of Sale Prospectus or the Prospectus;
(vii) each road show, when considered together with the Time
of Sale Prospectus, does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; and (viii) the
Prospectus, as of the date it is filed with the Commission pursuant
to Rule 424, at the Closing Date and at each Option Closing
Date, if any, will comply in all material respects with the
Securities Act (including without limitation Section 10(a) of the
Securities Act) and will not contain any untrue statement of a
material fact or omit to state a material fact
3
necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided,
however , that the representations and warranties set forth in
this Section 1(c) do not apply to statements or omissions in the
Registration Statement, the Time of Sale Prospectus, any
Preliminary Prospectus, any Permitted Free Writing Prospectus, any
road show Prospectus or any amendments or supplements thereto based
upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Managers
expressly for use therein, it being agreed that the only
information furnished by the Underwriters to the Company expressly
for use therein are the names of the Underwriters on the front
cover, back cover and in the “Plan of Distribution”
section of the Prospectus Supplement (and preliminary Prospectus
Supplement), and the statements contained in the “Discounts
and Commissions” and “Stabilization” sections of
the “Plan of Distribution” section of the Prospectus
Supplement (and preliminary Prospectus Supplement).
(d) Prior to
the execution of this Agreement, the Company has not, directly or
indirectly, offered or sold any Shares by means of any
“prospectus” (within the meaning of the Securities Act)
or used any “prospectus” (within the meaning of the
Securities Act) in connection with the offer or sale of the Shares,
in each case other than the Preliminary Prospectus and/or the
Permitted Free Writing Prospectuses; the Company has not, directly
or indirectly, prepared, used or referred to any free writing
prospectuses, without the prior written consent of Baird, other
than the Permitted Free Writing Prospectuses and road shows
furnished or presented to the Managers before first use. Each
Permitted Free Writing Prospectus has been prepared, used or
referred to in compliance with Rules 164 and 433 under the
Securities Act; assuming that such Permitted Free Writing
Prospectus is so sent or given after the Registration Statement was
filed with the Commission (and after such Permitted Free Writing
Prospectus was, if required pursuant to Rule 433(d) under the
Securities Act, filed with the Commission), the sending or giving,
by any Underwriter, of any Permitted Free Writing Prospectus will
satisfy the provisions of Rule 164 and Rule 433 (without
reliance on subsections (b), (c) and (d) of
Rule 164); the conditions set forth in one or more of
subclauses (i) through (iv), inclusive, of Rule 433(b)(1)
under the Securities Act are satisfied, and the registration
statement relating to the offering of the Shares contemplated
hereby, as initially filed with the Commission, includes a
prospectus that, other than by reason of Rule 433 or
Rule 431 under the Securities Act, satisfies the requirements
of Section 10 of the Securities Act; neither the Company nor
the Underwriters are disqualified, by reason of subsection
(f) or (g) of Rule 164 under the Securities Act,
from using, in connection with the offer and sale of the Shares,
free writing prospectuses pursuant to Rules 164 and 433 under
the Securities Act; and each Permitted Free Writing Prospectus that
the Company has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act or that was used or referred to by
the Company complies or will comply in all material respects with
the requirements of the Securities Act.
(e) The
Company was, at the time of the Registration Statement was
initially filed and when it became effective, eligible to use Form
S-3 to register the offering of the Shares contemplated hereby. The
Company was not an “ineligible
4
issuer”
(as defined in Rule 405 under the Securities Act) as of the
eligibility determination date for purposes of Rules 164 and
433 under the Securities Act with respect to the offering of the
Shares contemplated by the Registration Statement.
(f) For
purposes of Rule 2710(b)(7)(C)(i) of the National Association
of Securities Dealers, Inc. (“NASD”) Conduct Rules, the
Shares have been registered with the Commission on Form S-3 under
the Securities Act pursuant to the standards for such Form S-3 in
effect prior to October 21, 1992.
(g) Shares of
Common Stock are listed on the New York Stock Exchange
(“NYSE”), and the Company has not received any notice
from the NYSE regarding the delisting of such shares from the NYSE.
The Shares are duly listed, and admitted and authorized for
trading, subject to official notice of issuance, on the NYSE. To
the Company’s knowledge, there are no affiliations or
associations between (i) any member of the NASD and
(ii) the Company or any of the Company’s officers,
directors or 5% or greater security holders or any beneficial owner
of the Company’s unregistered equity securities that were
acquired at any time on or after the 180th day immediately
preceding the date the Registration Statement was initially filed
with the Commission, except as disclosed in the Registration
Statement (excluding the exhibits thereto), the Time of Sale
Prospectus and the Prospectus.
(h) The
Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Time of
Sale Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not (i) have a material
adverse effect on the assets, business, condition (financial or
otherwise), results of operation or prospects of Company and its
Subsidiaries (as defined below), taken as a whole,
(ii) prevent or materially interfere with consummation of the
transactions contemplated hereby, or (iii) result in the
delisting of shares of Common Stock from the NYSE (the occurrence
of any such effect, prevention, interference or result described in
the foregoing clauses (i) (ii) or (iii) being herein
referred to as a material adverse effect ).
(i) Each
significant subsidiary (as defined in Rule 405) (each, a
“ Subsidiary ” and together, the “
Subsidiaries ”) of the Company has been duly
organized, is validly existing as a corporation or limited
liability company in good standing under the laws of the
jurisdiction of its organization, has the corporate power and
authority to own its property and to conduct its business as
described in the Time of Sale Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect; all of the issued shares of capital stock
of each Subsidiary of the Company have been duly
5
and validly
authorized and issued, are fully paid and non-assessable and are
owned directly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(j) This
Agreement has been duly authorized, executed and delivered by the
Company.
(k) The
authorized and outstanding capitalization of the Company is as set
forth in its condensed consolidated balance sheet as of
June 30, 2006, incorporated into the Time of Sale Prospectus
and will be as set forth in the condensed consolidated balance
sheet as of June 30, 2006, subject, in each case, to the
issuance of shares of Common Stock upon exercise of stock options
and warrants disclosed as outstanding in the Time of Sale
Prospectus, the Prospectus or the Incorporated Documents, as the
case may be, and the grant of options under existing stock option
plans described in the Time of Sale Prospectus, the Prospectus or
the Incorporated Documents. The authorized capital stock of the
Company conforms and will conform as to legal matters to the
description thereof contained in the Time of Sale Prospectus, the
Prospectus and the Incorporated Documents.
(l) The
shares of Common Stock outstanding prior to the issuance of the
Shares have been duly authorized, are validly issued, fully paid
and non-assessable, have been issued in compliance with applicable
securities laws and were not issued in violation of any preemptive
or similar rights.
(m) The
Shares have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar
rights.
(n) Neither
the execution and delivery by the Company of, nor the performance
by the Company of its obligations under, this Agreement will
conflict with, contravene, result in a breach or violation of, or
imposition of any lien, charge or encumbrance upon any assets of
the Company or any of its Subsidiaries pursuant to, or constitute a
default under (i) any statute, law, rule, regulation,
judgment, order or decree of any governmental body, regulatory or
administrative agency or court having jurisdiction over the Company
or any Subsidiary; (ii) the certificate of incorporation or
bylaws of the Company or any of its Subsidiaries; or (iii) any
contract, agreement, obligation, covenant or instrument to which
the Company or any of its Subsidiaries (or any of their respective
assets) is subject or bound, except in the case of clauses
(i) and (iii) to the extent such conflicts,
contraventions, breaches, violations, liens, charges and
encumbrance, if any, would not have a material adverse
effect.
(o) No
approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or of or with any
self-regulatory organization or other non-governmental regulatory
authority, or approval of the Company’s stockholders, is
required in connection with the issuance and sale of the Shares or
the consummation
6
of the
transactions contemplated hereby, other than (i) registration
of the Shares under the Securities Act, which has been effected
(or, with respect to any Rule 462 Registration Statement, will
be effected in accordance Rule 462(b) under the Securities Act),
(ii) the supplemental listing application to be filed with the
NYSE to list the Shares, or (iii) any necessary qualification
under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the
Underwriters.
(p) There are
no actions, suits, claims, investigations or proceedings pending
or, to the Company’s knowledge, threatened to which the
Company or any of its Subsidiaries or any of their respective
directors or officers (in their capacity as a director or officer
of the Company or a Subsidiary) is a party or of which any of their
respective properties is or would be subject at law or in equity,
before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or before
or by any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, the NYSE)
(i) other than any such action, suit, claim, investigation or
proceeding accurately described in the Time of Sale Prospectus and
the Incorporated Documents which, if resolved adversely to the
Company or any of its Subsidiaries, would not, individually or in
the aggregate, have a material adverse effect or (ii) that are
required to be described in the Time of Sale Prospectus and are not
so described. There are no statutes, regulations, contracts or
other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits
to the Registration Statement that are not described or filed as
required.
(q) 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 Prospectus will not be, required to register as an
“investment company” as such term is defined in the
Investment Company Act of 1940, as amended.
(r) The
financial statements included in the Registration Statement, the
Time of Sale Prospectus, the Prospectus and the Incorporated
Documents, together with the related notes and schedules, present
fairly the consolidated financial position of the Company and its
Subsidiaries as of the dates indicated and the consolidated results
of operations, cash flows and changes in stockholders’ equity
of the Company for the periods specified and have been prepared in
compliance with the requirements of the Securities Act and Exchange
Act and in conformity with U.S. generally accepted accounting
principles applied on a consistent basis during the periods
involved; the other financial and statistical data contained in the
Registration Statement, the Time of Sale Prospectus, the Prospectus
and Incorporated Documents, are accurately and fairly presented and
prepared on a basis consistent with the financial statements and
books and records of the Company; there are no financial statements
(historical or pro forma) that are required to be included or
incorporated by reference in the Registration Statement, the Time
of Sale Prospectus or the Prospectus that are not included or
incorporated by reference as required; and the Company and its
Subsidiaries do not have any material liabilities or
obligations,
7
direct or
contingent (including any off-balance sheet obligations), not
described in the Time of Sale Prospectus, the Prospectus or the
Incorporated Documents.
(s) All
statistical or market-related data included in the Time of Sale
Prospectus, the Prospectus, the Permitted Free Writing Prospectuses
and Incorporated Documents, are based on or derived from sources
that the Company reasonably believes to be reliable and accurate,
and the Company has obtained the written consent to the use of such
data from such sources to the extent required. Each
“forward-looking statement” (within the meaning of
Section 27A of the Securities Act or Section 21E of the
Exchange Act) contained in the Registration Statement, the Time of
Sale Prospectus, the Prospectus, the Permitted Free Writing
Prospectuses and Incorporated Documents, has been made or
reaffirmed with a reasonable basis and in good faith.
(t) The
Company and its Subsidiaries (i) are in compliance with any
and all applicable federal, state and local laws and regulations
relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants
or contaminants (“ Environmental Laws ”),
(ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with
all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not have a material adverse effect. There are no
costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities
to third parties) which would have a material adverse
effect.
(u) There are
no contracts, agreements or understandings between the Company and
any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect
to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement.
(v) Subsequent
to the respective dates as of which information is given in each of
the Registration Statement, the Time of Sale Prospectus, the
Prospectus and the Incorporated Documents, (i) there has not
occurred any material adverse change, or any development involving
a prospective material adverse change, in the assets, business,
condition (financial or otherwise), management, operations or
earnings of the Company and its Subsidiaries, taken as a whole (the
occurrence of any such change being herein referred to as a
material adverse change ); (ii) the Company and its
Subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material
transaction; (iii) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other
than ordinary
8
and customary
dividends; and (iv) there has not been any material change in
the capital stock, short-term debt or long-term debt of the Company
and its Subsidiaries, except in each case as described in each of
the Registration Statement, the Time of Sale Prospectus, the
Prospectus and the Incorporated Documents.
(w) The
Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all
personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of
all liens, encumbrances and defects except such as are described in
the Time of Sale Prospectus or Incorporated Documents, or such as
do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property by the Company and its Subsidiaries; and any real
property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company and its Subsidiaries, in each
case except as described in the Time of Sale Prospectus or
Incorporated Documents.
(x) Each of
the Company and its Subsidiaries owns or possesses all inventions,
patent applications, patents, trademarks (both registered and
unregistered), trade names, service names, copyrights, trade
secrets and other proprietary information described in the
Registration Statement, the Time of Sale Prospectus, the Prospectus
and the Incorporated Documents, as being owned or licensed by it or
which is necessary for the conduct of, or material to, its
businesses (collectively, the “ Intellectual Property
”), and the Company has no knowledge of any claim to the
contrary or any challenge by any other person to the rights of the
Company or any of its Subsidiaries with respect to the Intellectual
Property. To its knowledge, neither the Company nor any of its
Subsidiaries has infringed or is infringing the intellectual
property of a third party, and neither the Company nor any of its
Subsidiaries has received notice of a claim by a third party to the
contrary.
(y) No
material labor dispute with the employees of the Company or any of
its Subsidiaries exists, except as described in the Time of Sale
Prospectus or Incorporated Documents, or, to the knowledge of the
Company, is threatened; and the Company has no knowledge of any
existing or threatened labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could
have a material adverse effect on the Company and its subsidiaries,
taken as a whole. Neither the Company nor any of its Subsidiaries
is in violation of any provision of the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations
promulgated thereunder, except for such violations as would not
have a material adverse effect.
(z) The
Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses
in which they are engaged; other than as described in the
Registration Statement, neither the Company nor any of
its
9
Subsidiaries
has been refused any insurance coverage sought or applied for,
except such as would not have a material adverse effect; and
neither the Company nor any of its Subsidiaries has any knowledge
that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue its business
at a cost that would not have a material adverse effect.
(aa) The
Company and its Subsidiaries possess all material certificates,
authorizations and permits issued by the appropriate federal, state
or regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse
effect.
(bb) Except
as otherwise would not have a material adverse effect, no
Subsidiary of the Company is subject to any material direct or
indirect prohibition on paying any dividends to the Company, on
making any other distribution on such Subsidiary’s capital
stock, on repaying to the Company any loans or advances to such
Subsidiary from the Company or on transferring any of such
Subsidiary’s property or assets to the Company or any other
Subsidiary of the Company, except as described in the Time of Sale
Prospectus.
(cc) The
Company maintains “internal control over financial
reporting” (as defined in Rules 13a-15 and 15d-15 under the
Exchange Act) in compliance with the requirements of the Exchange
Act. The Company’s internal control over financial reporting
has been designed by the Company’s principal executive
officer and principal financial officer, or under their
supervision, to 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 and it is effective in performing
the functions for which it was established. Except as described in
the Time of Sale Prospectus or Incorporated Documents, since the
end of the Company’s most recent audited fiscal year, there
has been (i) no significant deficiency or material weakness in
the design or operation of the Company’s internal control
over financial reporting (whether or not remediated) which is
reasonably likely to adversely affect the Company’s ability
to record, process, summarize and report financial information, and
(ii) no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting.
(dd) The
Company maintains “disclosure controls and procedures”
(as such term is defined in Rules 13a-15 and 15d-15 under the
Exchange Act); such disclosure controls and procedures are designed
to ensure that material information relating to the Company,
including its consolidated Subsidiaries, is made known to the
Company’s Chief Executive Officer and Chief Financial Officer
by others within those entities, and such disclosure controls and
procedures are effective in
10
performing the
functions for which they were established; the principal executive
officers (or their equivalents) and principal financial officers
(or their equivalents) of the Company have made all certifications
required by the Sarbanes-Oxley Act of 2002 and any related rules
and regulations promulgated by the Commission (the
“Sarbanes-Oxley Act”), and the statements made in each
such certification are accurate; the Company, its Subsidiaries and,
to its knowledge, its directors and officers are each in compliance
in all material respects with the applicable provisions of the
Sarbanes-Oxley Act.
(ee) Neither
the Company nor any of its Subsidiaries has sent or received any
communication regarding termination of, or intent not to renew, any
of the material contracts or agreements referred to or described in
the Time of Sale Prospectus or the Prospectus, or referred to or
described in, or filed as an exhibit to, the Registration
Statement, and no such termination or non-renewal has been
threatened by the Company or any of its Subsidiaries or, to the
Company’s knowledge, any other party to any such contract or
agreement, except as would not have a material adverse
effect.
(ff) All tax
returns required to be filed by the Company or any of its
Subsidiaries have been timely filed, and all taxes and other
assessments of a similar nature (whether imposed directly or
through withholding) including any interest, additions to tax or
penalties applicable thereto due or claimed to be due from such
entities have been timely paid, other than those being contested in
good faith and for which adequate reserves have been
provided.
(gg) Neither
the Company nor any of its Subsidiaries nor, to the knowledge of
the Company, any director, officer, agent, employee or affiliate of
the Company or any of its Subsidiaries is aware of or has taken any
action, directly or indirectly, that would result in a violation by
such persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder; and the Company
and its Subsidiaries have instituted and maintain policies and
procedures designed to ensure continued compliance therewith,
including without limitation a system of internal accounting
controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with
management’s general or specific authorization,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(hh) Except
as described in the Time of Sale Prospectus, the Company has not
sold, issued or distributed any shares of Common Stock during the
six-month period preceding the date hereof, including any sales
pursuant to Rule 144A under, or Regulation D or S of, the
Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock option plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
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(ii) Neither
the Company nor any of its Subsidiaries nor, to its knowledge, any
of their respective directors, officers, affiliates or controlling
persons has taken, directly or indirectly, any action designed, or
which has constituted or might reasonably be expected to cause or
result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
2.
Agreements to Sell and Purchase . The Company hereby agrees
to issue and sell 2,000,000 Firm Shares to the several Underwriters
at a price of $36.75 per share (the “ Purchase Price
”), and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the
conditions herein set forth, agrees, severally and not jointly, to
purchase from the Company at the Purchase Price the number of Firm
Shares set forth opposite the name of such Underwriter set forth in
Schedule I hereto.
Moreover, the
Company hereby agrees to issue and sell up to 300,000 Additional
Shares to the Underwriters at the Purchase Price, and the
Underwriters, upon the basis of the representations and warranties
contained herein, but subject to the terms and conditions herein
set forth, shall have the right (but not the obligation) to
purchase, severally and not jointly, the Additional Shares at the
Purchase Price. The Managers may exercise this right on behalf of
the Underwriters in whole or from time to time in part by giving
written notice not later than 30 days after the date of this
Agreement. Any exercise notice shall specify the number of
Additional Shares to be purchased by the Underwriters and the date
on which such shares are to be purchased. Each purchase date must
be at least one business day after the written notice is given and
may not be earlier than the Closing Date (as defined in
Section 4) or later than ten business days after the date of
such notice. Additional Shares may be purchased as provided in
Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm
Shares. On each day, if any, that Additional Shares are to be
purchased (an “ Option Closing Date ”), each
Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to
eliminate fractional shares as the Managers may determine) that
bears the same proportion to the total number of Additional Shares
to be purchased on such Option Closing Date as the number of Firm
Shares set forth in Schedule I hereto opposite the name of
such Underwriter bears to the total number of Firm Shares. No
Additional Shares shall be sold or delivered unless the Firm Shares
previously have been, or simultaneously are, sold and
delivered.
3. Terms
of Public Offering . The Company is advised by the Managers
that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after this Agreement have
become effective as in the Managers’ judgment is advisable.
The Company is further advised by the Managers that the Shares are
to be offered to the public initially at $36.75 per share (the
“ Public Offering Price ”) and to certain
dealers selected by the Managers at a price that represents a
concession not in excess of $0.825 per share under the Public
Offering Price, and that any Underwriter may allow, and such
dealers may reallow a
12
concession, not
in excess of $0.10 per share, to any Underwriter or to certain
other dealers.
4.
Payment and Delivery . Payment for the Firm Shares shall be
made to the Company in Federal (same day funds) by wire transfer to
an account at a bank acceptable to the Company and the
Underwriters, against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 9:00 a.m.,
Central Time, on October 12, 2006, or at such other time on
the same or such other date, not later than October 19, 2006,
as the Underwriters and the Company determine. The time and date of
such payment are hereinafter referred to as the “ Closing
Date .”
Payment for any
Additional Shares shall be made to the Company in federal (same day
funds) by wire transfer to an account at a bank acceptable to the
Company and the Underwriters, against delivery of such Additional
Shares for the respective accounts of the several Underwriters at
9:00 a.m., Central Time, on the date specified in the corresponding
notice described in Section 2 or at such other time on the
same or on such other date, in any event not later than
November&
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