<PAGE>
Exhibit 1.1
SEABRIGHT INSURANCE HOLDINGS, INC.
6,400,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
January 26, 2006
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
PIPER JAFFRAY & CO.
KEEFE, BRUYETTE & WOODS, INC.
COCHRAN, CARONIA & CO.
as
Representatives of the several Underwriters
c/o
Friedman, Billings, Ramsey & Co., Inc.
1001
19th Street North
Arlington, Virginia
22209
Dear
Sirs:
SeaBright Insurance Holdings, Inc., a Delaware corporation (the
"Company"), and certain stockholders of the Company listed on
Schedule I
hereto (the "Selling Stockholders"), each confirms its agreement
with each
of
the Underwriters listed on Schedule II hereto (collectively the
"Underwriters"), for whom Friedman, Billings, Ramsey & Co.,
Inc., Piper
Jaffray & Co., Keefe, Bruyette & Woods, Inc. and Cochran,
Caronia & Co. are
acting as Representatives (in such capacity, the
"Representatives"), with
respect to (i) the sale by the Company and the Selling Stockholders
of an
aggregate 6,400,000
shares of Common Stock, par value $0.01 per share, of
the
Company ("Common Stock") in the respective numbers of shares set
forth
opposite the names of the Company and each such Selling Stockholder
in
Schedule I hereto (the "Initial Shares"), and the purchase by
the
Underwriters, acting severally and not jointly, of the respective
number of
shares of Common Stock set forth opposite the names of the
Underwriters in
Schedule II hereto, and (ii) the grant of the option described in
Section
1(b)
hereof to purchase all or any part of 960,000 additional shares
of
Common Stock to cover over-allotments, if any, from the Company and
the
Selling Stockholders, in the respective numbers of shares of Common
Stock
set
forth opposite the names of the Company and the Selling
Stockholders in
Schedule I hereto (the "Option Shares"), to the Underwriters,
acting
severally and not jointly, in the respective numbers of shares of
Common
Stock set forth opposite the names of the Underwriters in Schedule
II
hereto. The Initial Shares and all or any part of the Option Shares
of
Common Stock subject to the option described in Section l(b) hereof
are
hereinafter called, collectively, the "Shares."
The Company understands that the Underwriters propose to make a
public offering of the Shares as soon as the Underwriters deem
advisable
after this Underwriting Agreement (the "Agreement") has been
executed and
delivered.
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The Company has filed with the Securities and Exchange
Commission
(the
"Commission"), a registration statement on Form S-1 (No.
333-130902)
and
a related preliminary prospectus for the registration of the
Shares
under the Securities
Act of 1933, as amended (the "Securities Act"), and
the
rules and regulations thereunder (the "Securities Act
Regulations").
The
Company has prepared and filed such amendments to the
registration
statement and such amendments or supplements to the related
preliminary
prospectus as may have been required to the date hereof, and will
file such
additional amendments or supplements as may hereafter be required.
The
registration statement has been declared effective under the
Securities Act
by
the Commission. The registration statement, as amended at the time
it
was
declared effective by the Commission (and, if the Company files
a
post-effective amendment to such registration statement which
becomes
effective prior to the Closing Time (as defined below), such
registration
statement as so amended) and including all information deemed to be
a part
of
the registration statement pursuant to incorporation by reference,
Rule
430A
of the Securities Act Regulations or otherwise, is hereinafter
called
the
"Registration Statement." Any registration statement filed pursuant
to
Rule
462(b) of the Securities Act Regulations is hereinafter called
the
"Rule 462(b) Registration Statement," and after such filing the
term
"Registration Statement" shall include the Rule 462(b)
Registration
Statement. The preliminary prospectus dated January 17, 2006
relating to
the
Shares, as filed with the Commission and as amended and
supplemented
prior to the date of the Prospectus, is hereinafter called the
"Preliminary
Prospectus." The term "Prospectus" means the final prospectus, as
first
filed with the Commission pursuant to Rule 424(b) of the Securities
Act
Regulations, and any amendments thereof or supplements thereto.
The Commission has not issued any order preventing or
suspending
the
use of the Preliminary Prospectus.
The term "Disclosure Package" means (i) the Preliminary
Prospectus, as most recently amended or supplemented immediately
prior to
the
Initial Sale Time (as defined herein), (ii) the Issuer Free
Writing
Prospectuses (as defined below), if any, identified in Schedule III
hereto,
and
(iii) any other Free Writing Prospectus (as defined below) that
the
parties hereto shall hereafter expressly agree to treat as part of
the
Disclosure Package.
The term "Issuer Free Writing Prospectus" means any issuer free
writing prospectus, as defined in Rule 433 of the Securities
Act
Regulations. The term "Free Writing Prospectus" means any free
writing
prospectus, as defined in Rule 405 of the Securities Act
Regulations.
The Company, each of the Selling Stockholders and the
Underwriters (as applicable) agree as follows:
1. Sale and
Purchase:
(a)
Initial Shares. Upon the basis of the warranties and
representations
and
other terms and conditions herein set forth, at the purchase price
per
share of Common Stock of
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$_____, the Company and the Selling Stockholders, severally and
not
jointly, agree to sell to the Underwriters the Initial Shares as
set forth
on
Schedule I opposite such party's name, and each Underwriter
agrees,
severally and not jointly, to purchase from the Company and the
Selling
Stockholders the number of Initial Shares set forth in Schedule II
opposite
such
Underwriter's name, plus any additional number of Initial Shares
which
such
Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof, subject in each case, to such
adjustments
among the Underwriters as the Representatives in their sole
discretion
shall make to eliminate any sales or purchases of fractional
shares.
(b)
Option Shares. In addition, upon the basis of the warranties
and
representations and other terms and conditions herein set forth, at
the
purchase price per share of Common Stock set forth in paragraph (a)
above,
the
Company and each Selling Stockholder, severally and not jointly,
hereby
grants an option to the Underwriters, acting severally and not
jointly, to
purchase all or any part of the Option Shares as set forth on
Schedule I
opposite such party's name, plus any additional number of Option
Shares
which each such Underwriter may become obligated to purchase
pursuant to
the
provisions of Section 10 hereof. The option hereby granted will
expire
30
days after the date hereof and may be exercised in whole or in part
from
time
to time within such 30-day period only for the purpose of
covering
over-allotments which may be made in connection with the offering
and
distribution of the Initial Shares upon notice by the
Representatives to
the
Company and the Selling Stockholders setting forth the number of
Option
Shares as to which the several Underwriters are then exercising the
option
and
the time and date of payment and delivery for such Option Shares.
Any
such
time and date of delivery (an "Option Closing Time") shall be
determined by the Representatives, but shall not be later than
three full
business days (or earlier than two full business days, without the
consent
of
the Company and the Selling Stockholders) after the exercise of
such
option, nor in any event prior to the Closing Time, as hereinafter
defined.
If
the option is exercised as to all or any portion of the Option
Shares,
the
Company and each Selling Stockholder will sell that number of
Option
Shares then being purchased and each of the Underwriters, acting
severally
and
not jointly, will purchase the number of Option Shares that bear
the
same proportion to the
total number of Option Shares then being purchased
as
the number of Initial Shares set forth in Schedule I opposite the
name
of
the Company or such Selling Stockholder bears to the total number
of
Initial Shares, and each of the Underwriters, acting severally and
not
jointly, will purchase that proportion of the total number of
Option Shares
then
being purchased which the number of Initial Shares set forth in
Schedule II opposite the name of such Underwriter bears to the
total number
of
Initial Shares, subject in each case to such adjustments among
the
Underwriters as the Representatives in their sole discretion shall
make to
eliminate any sales or purchases of fractional shares.
2. Payment and
Delivery
(a)
Initial Shares. The Initial Shares to be purchased by each
Underwriter
hereunder, in definitive form, and in such authorized denominations
and
registered in such names as
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the
Representatives may request upon at least forty-eight hours'
prior
notice to the Company and the Selling Stockholders shall be
delivered by or
on
behalf of the Company and the Selling Stockholders to the
Representatives, including, at the option of the Representatives,
through
the
facilities of The Depository Trust Company (the "DTC") for the
account
of
such Underwriters against payment by or on behalf of such
Underwriters
of
the purchase price therefor by wire transfer of federal (same-day)
funds
to
the account specified to the Representatives by the Company and
each of
the
Selling Stockholders upon at least forty-eight hours' prior notice.
The
Company will cause the certificates representing the Initial Shares
to be
made
available for checking and packaging not later than 1:00 p.m. New
York
City
time on the business day prior to the Closing Time (as defined
below)
with
respect thereto at the office of the Representatives, 1001 19th
Street
North, Arlington, Virginia 22209, or at the office of DTC or its
designated
custodian, as the case may be (the "Designated Office"). The time
and date
of
such delivery and payment shall be 9:30 a.m., New York City time,
on the
third (fourth, if the determination of the purchase price of the
Initial
Shares occurs after 4:00 p.m., New York City time) business day
after the
date
hereof (unless another time and date shall be agreed to by the
Representatives, the Selling Stockholders and the Company). The
time and
date
at which such delivery and payment are actually made is
hereinafter
called the "Closing Time." The closing shall take place at the
offices of
Lord, Bissell & Brook LLP, 111 South Wacker Drive, Chicago,
Illinois 60606,
or
such other place as the Company and the Representatives may
agree.
(b)
Option Shares. Any Option Shares to be purchased by each
Underwriter
hereunder, in definitive form, and in such authorized denominations
and
registered in such names as the Representatives may request upon at
least
forty-eight hours' prior notice to the Company and the Selling
Stockholders
shall be delivered by or on behalf of the Company and the
Selling
Stockholders to the Representatives, including, at the option of
the
Representatives, through the facilities of DTC for the account of
such
Underwriter, against payment by or on behalf of such Underwriter of
the
purchase price therefor by wire transfer of Federal (same-day)
funds to the
respective accounts specified to the Representatives by the Company
and
each
of the Selling Stockholders, upon at least forty-eight hours'
prior
notice. The Company will cause the certificates representing the
Option
Shares to be made available for checking and packaging at least
twenty-four
hours prior to the Option Closing Time with respect thereto at
the
Designated Office. The time and date of such delivery and payment
shall be
9:30
a.m., New York City time, on the date specified by the
Representatives
in
the notice given by the Representatives to the Company and the
Selling
Stockholders of the Underwriters' election to purchase such Option
Shares
or
on such other time and date as the Company, the Selling
Stockholders and
the
Representatives may agree upon in writing.
3.
Representations and Warranties of the Company:
The Company represents and warrants to the Underwriters as of the
date
hereof, the Initial Sale Time (as defined below), as of the Closing
Time
and
as of any Option Closing Time (if any), and agrees with each
Underwriter, that:
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(a)
the Company has an authorized capitalization as set forth both in
the
Prospectus and the Disclosure Package; the outstanding shares of
capital
stock of the Company and each subsidiary of the Company (each,
a
"Subsidiary") have been duly and validly authorized and issued and
are
fully paid and non-assessable, and all of the outstanding shares of
capital
stock of the Subsidiaries are directly or indirectly owned of
record and
beneficially by the Company; except as disclosed in both the
Prospectus and
the
Disclosure Package, there are no outstanding (i) securities or
obligations of the Company or any of the Subsidiaries convertible
into or
exchangeable for any capital stock of the Company or any such
Subsidiary,
(ii)
warrants, rights or options to subscribe for or purchase from
the
Company or any such Subsidiary any such capital stock or any
such
convertible or exchangeable securities or obligations, or (iii)
obligations
of
the Company or any such Subsidiary to issue any shares of capital
stock,
any
such convertible or exchangeable securities or obligations, or any
such
warrants, rights or options; the description of the Company's stock
option
and
stock purchase plans and the options or other rights granted
and
exercised thereunder set forth in the Prospectus accurately and
fairly
presents in all material respects the information required by
the
Securities Act and the Securities Act Regulations to be shown with
respect
to
such plans, options and rights;
(b)
each of the Company and the Subsidiaries (all of which are named
in
Exhibit 21 to the Registration Statement) has been duly
incorporated and is
validly existing as a corporation in good standing under the laws
of its
respective jurisdiction of incorporation with full corporate power
and
authority to own its respective properties and to conduct its
respective
businesses as described in each of the Registration Statement,
the
Prospectus and the Disclosure Package, and, in the case of the
Company, to
execute and deliver this Agreement and to consummate the
transactions
contemplated herein;
(c)
each of the Company and the Subsidiaries is duly qualified or
licensed
and
is in good standing in each jurisdiction in which it conducts
its
respective business or in which it owns or leases real property
or
otherwise maintains an office and in which the failure,
individually or in
the
aggregate, to be so qualified or licensed would not reasonably
be
expected to have a material
adverse effect on the assets, business,
operations, earnings or condition (financial or otherwise) of the
Company
and
the Subsidiaries taken as a whole (any such effect or change, where
the
context so requires, is hereinafter called a "Material Adverse
Effect" or
"Material Adverse Change"); each Subsidiary holds such
licenses,
certificates, permits, consents, orders, approvals and other
authorizations
from
governmental authorities (including, without limitation, from
the
insurance regulatory agencies of the various jurisdictions where
it
conducts business) ("Permits") and has made all necessary filings
required
under any federal, state or local law, regulation or rule and has
obtained
all
necessary authorizations, consents and approvals from other
persons
required in order to conduct its respective business as described
in both
the
Prospectus and the Disclosure Package, except where the failure to
hold
any
such Permit or make such filings required under any federal, state
or
local law, regulation or rule or obtain such authorizations,
consents and
approvals from other persons would not reasonably be expected to
result in
a
Material Adverse Effect; each such Permit is valid and in full
force and
effect, except where the failure of such Permit to be valid or in
full
force and effect
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<PAGE>
would not reasonably be expected to have a Material Adverse Effect;
neither
the
Company nor any of the Subsidiaries is in violation of, in
default
under, or has received any written notice regarding or alleging a
violation
of
or default under or revocation of any Permit or a violation of
any
federal, state or
local law, regulation or rule or any decree, order or
judgment applicable to the Company or any of the Subsidiaries the
effect of
which, in each case, would reasonably be expected to result in a
Material
Adverse Effect; except as disclosed in both the Prospectus and
the
Disclosure Package, the authority of each Subsidiary to write or
produce
the
classes and lines of insurance authorized by such Permit is
unrestricted and no such Permit contains a materially
burdensome
restriction that is not adequately disclosed in both the Prospectus
and the
Disclosure Package; neither the Company nor any of the Subsidiaries
is a
party to any agreement, formal or informal, with any regulatory
official or
other person limiting the ability of the Company or any Subsidiary
of the
Company from making full use of the Permits issued to it; except
as
disclosed in both the Prospectus and the Disclosure Package, no
Subsidiary
is
prohibited or restricted, directly or indirectly, from paying
dividends
to
the Company, or from making any other distribution with respect to
such
Subsidiary's capital stock or from repaying to the Company or any
other
Subsidiary any amounts which may from time to time become due under
any
loans or advances to such Subsidiary from the Company or such
other
Subsidiary, or from transferring any such Subsidiary's property or
assets
to
the Company or to any other Subsidiary; other than as disclosed in
both
the
Prospectus and the Disclosure Package, the Company does not
own,
directly or indirectly, more than 5% of any capital stock or other
equity
securities of any other corporation or any ownership interest of
more than
5%
in any partnership, joint venture or other association;
(d)
the Company and each Subsidiary is in compliance with all
applicable
laws, rules, regulations, orders, decrees and judgments, including
those
relating to transactions with affiliates, except where such
non-compliance,
individually or in the aggregate, would not reasonably be expected
to have
a
Material Adverse Effect;
(e)
except as disclosed in both the Prospectus and the Disclosure
Package,
the
Company and SeaBright Insurance Company ("SBIC") have made no
material
change in their insurance reserving practices since December 31,
2004;
(f)
all reinsurance treaties and arrangements to which the Company or
any
Subsidiary is a party are in full force and effect and neither the
Company
nor
any Subsidiary is in violation of, or in default in the
performance,
observance or fulfillment of, any obligation, agreement, covenant
or
condition contained therein, except where the failure of such
reinsurance
treaties and
arrangements to be in full force and effect or where such
violation or default would not, individually or in the
aggregate,
reasonably be expected to have a Material Adverse Effect; neither
the
Company nor any Subsidiary has received any written notice from any
of the
other parties to such treaties, contracts or agreements, or
otherwise has
knowledge, that such other party will be unable to perform such
treaty or
arrangement except to the extent adequately and properly reserved
for in
the
audited historical financial statements of the Company included in
both
the
Prospectus and the
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<PAGE>
Disclosure Package, except where such nonperformance would not
reasonably
be
expected, individually or in the aggregate, to have a Material
Adverse
Effect;
(g)
the statutory financial statements of SBIC from which certain
ratios
and
other statistical data filed as part of the Registration Statement,
the
Prospectus and the Disclosure Package 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, the Illinois Department of Financial and
Professional
Regulation - Division of Insurance and the California Department
of
Insurance, 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 SBIC as of
the dates
thereof, and the statutory basis results of operations of SBIC for
the
periods covered thereby;
(h)
neither the Company nor any Subsidiary is in breach of or in
default
under (nor has any event occurred which with notice, lapse of time,
or both
would constitute a breach of, or default under), its respective
organizational documents, or in the performance or observance of
any
obligation, agreement, covenant or condition contained in any
license,
indenture, mortgage, deed of trust, loan or credit agreement or
other
agreement or instrument to which the Company or any Subsidiary is a
party
or
by which any of them or their respective properties is bound,
except for
such
breaches or defaults which would not have a Material Adverse
Effect;
(i)
the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not
conflict
with, or result in any breach of, or constitute a default under
(nor
constitute any event which with notice, lapse of time, or both
would
constitute a breach of, or default under): (i) any provision of
the
organizational documents of the Company or any Subsidiary, (ii)
any
provision of any license, indenture, mortgage, deed of trust, loan
or
credit agreement or other agreement or instrument to which the
Company or
any
Subsidiary is a party or by which any of them or their
respective
properties may be bound or affected, (iii) any federal, state,
local or
foreign law, regulation or rule or any decree, judgment or order
applicable
to
the Company or any Subsidiary, or (iv) result in the creation
or
imposition of any lien, charge, claim or encumbrance upon any
property or
asset of the Company or the Subsidiaries; except in the case of
clause
(ii), (iii) and (iv) for such breaches, defaults, liens, charges,
claims or
encumbrances that would not reasonably be expected to have a
Material
Adverse Effect;
(j)
this Agreement has been duly authorized, executed and delivered by
the
Company and is a legal, valid and binding agreement of the
Company
enforceable in accordance with its terms, except as may be limited
by
bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting creditors' rights generally, and by general equitable
principles,
and
except to the extent that the indemnification and contribution
provisions of Section 11 hereof may be limited by federal or
state
securities laws and public policy considerations in respect
thereof;
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<PAGE>
(k)
no approval, authorization, consent or order of or filing with
any
federal, state or local governmental or regulatory commission,
board, body,
authority or agency is required to be obtained by the Company or
any of its
Subsidiaries in connection with the Company's execution, delivery
and
performance of this Agreement, its consummation of the
transactions
contemplated herein, and its sale and delivery of the Shares, other
than
(A)
such as have been obtained, or will have been obtained at the
Closing
Time
or the relevant Option Closing Time, as the case may be, under
the
Securities Act and the Securities Exchange Act of 1934, as amended
(the
"Exchange Act"), (B) such
approvals as have been obtained in connection
with
the approval of the listing of the Shares on the Nasdaq
National
Market and (C) any necessary qualifications under the securities or
blue
sky
laws of the various jurisdictions in which the Shares are being
offered
by
the Underwriters;
(l)
the Registration Statement has become effective under the
Securities
Act
and no stop order suspending the effectiveness of the
Registration
Statement or any Rule 462(b) Registration Statement has been issued
under
the
Securities Act and no proceedings for that purpose have been
instituted
or
are pending or, to the knowledge of the Company are threatened by
the
Commission, and the Company has complied to the Commission's
satisfaction
with
any request on the part of the Commission for additional
information;
(m)
the Preliminary Prospectus when filed and the Registration
Statement as
of
each effective date and as of the date hereof complied or will
comply,
and
the Prospectus and any further amendments or supplements to the
Registration Statement, the Preliminary Prospectus or the
Prospectus will,
when
they become effective or are filed with the Commission, as the
case
may be, comply, in all
material respects with the requirements of the
Securities Act and the Securities Act Regulations;
(n)
the Registration Statement, as of its effective date and as of the
date
hereof, did not and does not contain an untrue statement of a
material fact
or
omit to state a material fact required to be stated therein or
necessary
to
make the statements therein not misleading; and the Preliminary
Prospectus does not, and the Prospectus or any amendment or
supplement
thereto will not, as of the applicable filing date, the date hereof
and at
the
Closing Time and on each Option Closing Time (if any), contain
an
untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements
therein,
in
the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no warranty
or
representation with respect to any statement contained in or
omitted from
the
Registration Statement, the Preliminary Prospectus or the
Prospectus in
reliance upon and in conformity with the information concerning
the
Underwriters and furnished in writing by or on behalf of the
Underwriters
through the Representatives to the Company expressly for use
therein (that
information being limited to that described in the penultimate
sentence of
the
first paragraph of Section 11(c) hereof);
(o)
as of the date hereof, the Company (i) is subject to the
requirement to
file
reports pursuant to Section 13 or Section 15(d) of the Exchange
Act,
(ii)
has filed all reports and other materials required to be filed
by
Sections 13(a), 14 or 15(d) of the Exchange Act
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<PAGE>
during the preceding 12 months (or for such shorter period that the
Company
was
required to file such reports and materials), (iii) has filed an
Annual
Report on Form 10-K required under Section 13(a) or 15(d) under
the
Exchange Act for its fiscal year ended December 31, 2004; (iii) is
not (a)
a
blank check company as defined in Rule 419(a)(2), (b) a shell
company,
other than a business combination related shell company, each as
defined in
Rule
405, or (c) a registrant for an offering of penny stock as defined
in
Rule
3a51-1 of the Exchange Act Regulations, and (iv) makes its
periodic
and
current reports filed pursuant to Section 13 or Section 15(d) of
the
Exchange Act readily available and accessible on a web site
maintained by
or
for the Company and containing information about the Company; and
any
further documents so filed or any further amendment or supplement
thereto,
when
such documents become effective or are filed with the Commission,
as
applicable, will conform in all material respects to the
requirements of
the
Securities Act and the Securities Act Regulations, or the Exchange
Act
and
the Exchange Act Regulations, as applicable, and will not include
an
untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary in order to make the
statements
therein, in the light of the circumstances under which they were
made, not
misleading;
(p)
as of ___:00 pm (Eastern time) January 26, 2006 (the "Initial
Sale
Time"), the Disclosure Package did not, and at the time of each
sale of
Shares and at the Closing Time and each Option Closing Time, the
Disclosure
Package will not, contain any untrue statement of a material fact
or omit
to
state any material fact necessary in order to make the
statements
therein, in the light of the circumstances under which they were
made, not
misleading; as of its issue date or date of first use and at all
subsequent
times through the Initial Sale Time, each Issuer Free Writing
Prospectus
did
not, and at the time of each sale of Shares and at the Closing Time
and
each
Option Closing Time, each such Issuer Free Writing Prospectus
will
not,
contain any untrue statement of a material fact or omit to state
any
material fact necessary in order to make the statements therein, in
the
light of the circumstances under which they were made, not
misleading;
provided, however, that the Company makes no warranty or
representation
with
respect to any statement contained in or omitted from the
Disclosure
Package in reliance upon and in conformity with the information
concerning
the Underwriters and
furnished in writing by or on behalf of the
Underwriters through the Representatives to the Company expressly
for use
therein (that information being limited to that described in
the
penultimate sentence of the first paragraph of Section 11(c)
hereof);
(q)
each Issuer Free Writing Prospectus, as of its issue date and at
all
subsequent times through the completion of the public offer and
sale of the
Shares did not, does not and will not include any information
that
conflicted, conflicts or will conflict with the information
contained in
the
Registration Statement;
(r)
the Company is eligible to use Free Writing Prospectuses in
connection
with
this offering pursuant to Rules 164 and 433 under the Securities
Act;
any
Free Writing Prospectus that the Company is required to file
pursuant
to
Rule 433(d) under the Securities Act Regulations has been, or will
be,
filed with the Commission in accordance
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<PAGE>
with
the requirements of the Securities Act and the Securities Act
Regulations; and each Free Writing Prospectus that the Company has
filed,
or
is required to file, pursuant to Rule 433(d) under the Securities
Act
Regulations or that was prepared by or on behalf of or used by the
Company
complies or will comply in all material respects with the
requirements of
the
Securities Act and the Securities Act Regulations;
(s)
except for the Issuer Free Writing Prospectuses identified in
Schedule
III
hereto, and any electronic road show relating to the public
offering of
shares contemplated herein, the Company has not prepared, used or
referred
to,
and will not, without the prior consent of the Representatives,
prepare, use or refer to, any Free Writing Prospectus;
(t)
the Preliminary Prospectus, the Prospectus and any Issuer Free
Writing
Prospectuses (to the extent any such Issuer Free Writing Prospectus
was
required to be filed with the Commission) delivered to the
Underwriters for
use
in connection with the public offering of the Shares
contemplated
herein have been and will be identical to the versions of such
documents
transmitted to the Commission for filing via the Electronic Data
Gathering
Analysis and Retrieval System ("EDGAR"), except to the extent
permitted by
Regulation S-T or Rule 424 of the Securities Act Regulations;
(u)
the Company filed the Registration Statement with the Commission
before
using any Issuer Free Writing Prospectus;
(v)
except as disclosed in the prospectus, there are no actions,
suits,
proceedings, inquiries or investigations pending or, to the
knowledge of
the
Company, threatened against the Company or any Subsidiary or any
of
their respective officers and directors or to which the properties,
assets
or
rights of any such entity are subject, at law or in equity, before
or by
any
federal, state, local or foreign governmental or regulatory
commission,
board, body, authority, arbitral panel or agency which would
reasonably be
expected to result in a judgment, decree, award or order having a
Material
Adverse Effect;
(w)
the consolidated financial statements of the Company and the
combined
financial statements of Eagle Pacific Insurance Company, Pacific
Eagle
Insurance Company and PointSure Insurance Services, Inc. (which
are
collectively referred to as "Predecessor"), in each case including
the
notes thereto, included in each of the Registration Statement,
the
Prospectus and the Disclosure Package present fairly in all
material
respects the consolidated and combined financial position of the
Company
and
the Predecessor, respectively, as of the dates indicated and
the
consolidated and combined results of operations and changes in
financial
position and cash flows of the Company and the Predecessor,
respectively,
for
the periods specified; such financial statements have been prepared
in
conformity with generally accepted accounting principles as applied
in the
United States and on a consistent basis during the periods involved
and in
accordance with Regulation S-X promulgated by the Commission; the
financial
statement schedules included in the Registration Statement and the
amounts
in
both the Prospectus and the Disclosure Package under the
captions
"Prospectus Summary - Summary Financial Information," "Unaudited
Pro Forma
Financial Information" and "Selected Financial Information" fairly
present
the
information shown therein and have been compiled on a
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<PAGE>
basis consistent with the financial statements included in each of
the
Registration Statement, the Prospectus and the Disclosure
Package;
(x)
KPMG LLP, whose reports on the consolidated financial statements of
the
Company and the Subsidiaries are filed with the Commission as part
of each
of
the Registration Statement, the Prospectus and the Disclosure
Package,
is
and was during the periods covered by its reports, independent
public
accountants as required by the Securities Act and the Securities
Act
Regulations and registered with the Public Company Accounting
Oversight
Board, and their appointment has been ratified by the Audit
Committee of
the
Company's board of directors, which is comprised entirely of
independent directors as defined under the applicable standards of
the
Nasdaq Stock Market and the applicable rules and regulations of
the
Commission;
(y)
subsequent to the respective dates as of which information is given
in
each
of the Registration Statement, the Prospectus and the
Disclosure
Package, and except as may be otherwise stated in such documents,
there has
not
been (A) any Material Adverse Change or any development that
would
reasonably be expected to result in a Material Adverse Change,
whether or
not
arising in the ordinary course of business, (B) any transaction
or
agreement in principle that is material to the Company and the
Subsidiaries
taken as a whole, entered into by the Company or any of the
Subsidiaries,
(C)
any obligation, contingent or otherwise, directly or indirectly
incurred by the Company or any Subsidiary that is material to the
Company
and
Subsidiaries taken as a whole or (D) any dividend or distribution
of
any
kind declared, paid or made by the Company on any class of its
capital
stock;
(z)
the Shares conform in all material respects to the description
thereof
contained in the Registration Statement, the Prospectus and the
Disclosure
Package;
(aa)
except as described in both the Prospectus and the Disclosure
Package,
there are no persons with registration or other similar rights to
have any
equity or debt securities, including securities which are
convertible into
or
exchangeable for equity securities, registered pursuant to the
Registration Statement or otherwise registered by the Company under
the
Securities Act;
(bb)
the Shares to be issued and sold by the Company have been duly
authorized and, when issued and duly delivered against payment
therefor as
contemplated by this Agreement, will be validly issued, fully paid
and
non-assessable, free and clear of any pledge, lien, encumbrance,
security
interest or other claim, and the issuance and sale of the Shares by
the
Company is not subject to preemptive or other similar rights
arising by
operation of law, under the organizational documents of the Company
or
under any agreement to which the Company or any Subsidiary is a
party or
otherwise that is not described in the Prospectus; and no further
approval
or
authority of the stockholders or the board of directors of the
Company
will
be required for the issuance and sale of the Shares to be sold by
the
Company as contemplated herein;
-11-
<PAGE>
(cc)
the Shares have been approved for listing on the Nasdaq
National
Market, subject only to official notice of issuance; the Company
has taken
all
necessary actions to ensure that at the time Nasdaq shall have
approved
the
Shares for inclusion, it will be in compliance with all
applicable
corporate governance requirements set forth in the NASD's
Nasdaq
Marketplace Rules that are then in effect;
(dd)
the Company has not taken, and will not take, directly or
indirectly,
any
action which is designed to or which has constituted or which
might
reasonably be expected to cause or result in stabilization or
manipulation
of
the price of any security of the Company to facilitate the sale
or
resale of the Shares;
(ee)
neither the Company nor any of its affiliates (i) is required
to
register as a "broker" or "dealer" in accordance with the
provisions of the
Exchange Act, or the rules and regulations thereunder (the
"Exchange Act
Regulations"), or (ii)
directly, or indirectly through one or more
intermediaries, controls or has any other association with (within
the
meaning of Article I of the By-Laws and the applicable rules of
the
National Association of Securities Dealers, Inc. (the "NASD")) any
member
firm
of the NASD, other than certain affiliates of Summit Partners,
which
hold
not more than 19% of the outstanding common stock of
optionsXpress
Holdings, Inc. and not more than a 7% interest in Liquidnet,
Inc.;
(ff)
the Company has not relied upon the Representatives or legal
counsel
for
the Representatives for any legal, tax or accounting advice in
connection with the offering and sale of the Shares;
(gg)
the form of certificate used to evidence the Common Stock complies
in
all
material respects with all applicable statutory requirements,
any
applicable requirements of the organizational documents of the
Company and
the
requirements of the Nasdaq National Market;
(hh)
neither the Company nor the Subsidiaries own any real property.
The
Company and the Subsidiaries have good title to all personal
property owned
by
them, in each case free and clear of all liens, security
interests,
pledges, charges, encumbrances, mortgages and defects, except such
as are
disclosed in both the Prospectus and the Disclosure Package, or
such as
would not reasonably be expected to have a Material Adverse Effect;
and any
real
property and buildings held under lease by the Company or any
Subsidiary are held under valid, existing and enforceable leases,
with such
exceptions as are disclosed in both the Prospectus and the
Disclosure
Package or would not reasonably be expected to have a Material
Adverse
Effect;
(ii)
the descriptions in each of the Registration Statement, the
Prospectus
and
the Disclosure Package of the legal or governmental
proceedings,
contracts, leases and other legal documents therein described
present
fairly in all material
respects the information required to be described by
the
Securities Act or by the Securities Act Regulations; all
agreements
between the Company or one or more of its Subsidiaries and third
parties
expressly referenced in both the Prospectus and the Disclosure
Package have
been
duly
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<PAGE>
authorized, executed and delivered by the Company or one or more of
its
Subsidiaries and are legal, valid and binding obligations of the
Company or
one
or more of its Subsidiaries, enforceable in accordance with
their
respective terms, except where the failure of any such agreement to
be duly
authorized, executed and delivered would not, individually or in
the
aggregate, reasonably be expected to have a Material Adverse Effect
or to
the
extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights
generally and by general equitable principles; such contracts are
in full
force and effect on the date hereof except where the failure of any
such
contracts to be in full force and effect would not, individually or
in the
aggregate, reasonably be expected to have a Material Adverse
Effect; and
neither the Company nor any of its Subsidiaries nor, to the
Company's
knowledge, any other party thereto, is in breach of or default
under any of
such
contracts, except for such breaches or defaults that would not
result
in a
Material Adverse Change;
(jj)
the Company and each Subsidiary owns or possesses adequate licenses
or
other rights to use all patents, trademarks, service marks, trade
names,
copyrights, software and design licenses, trade secrets,
manufacturing
processes, other intangible property rights and know-how
(collectively
"Intangibles") necessary to entitle the Company and each Subsidiary
to
conduct its business as described in both the Prospectus and the
Disclosure
Package, and neither the Company, any Selling Stockholder nor
any
Subsidiary has received notice of infringement of or conflict with
(and the
Company does not know of any such infringement of or conflict
with)
asserted rights of others with respect to any Intangibles which
would have
a
Material Adverse Effect;
(kk)
(x) the Company has established and maintains disclosure controls
and
procedures (as such term is defined in Rule 13a 15(e) under the
Exchange
Act), which (i) are designed to ensure that material information
relating
to
the Company, including its consolidated subsidiaries, is made known
to
the
Company's principal executive officer and its principal
financial
officer by others within those entities, particularly during the
periods in
which the periodic reports required under the Exchange Act are
being
prepared, (ii) have been evaluated for effectiveness as of the end
of the
last
fiscal period covered by the Registration Statement, and (iii)
are
effective in all material respects to perform the functions for
which they
were
established, and (y) the Company is not aware of (a) any
significant
deficiency or material weakness in the design or operation of its
internal
controls over financial reporting which are reasonably likely to
adversely
affect the Company's ability to record, process, summarize and
report
financial information to management and the Board of Directors, or
(b) any
fraud, whether or not material, that involves management or other
employees
who
have a significant role in the Company's internal control over
financial reporting. Since the most recent evaluation of the
Company's
disclosure controls and procedures described above, there have been
no
significant changes in internal control over financial reporting or
in
other factors that could significantly affect internal control
over
financial reporting;
(ll)
the Company and each of the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable
assurance
that
(i) transactions are
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<PAGE>
executed in accordance with management's general or specific
authorizations; (ii)
transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted
accounting principles as applied in the United States and to
maintain asset
accountability; (iii) access to assets is permitted only in
accordance with
management's general or specific authorization; and (iv) the
recorded
accountability for assets is compared with the existing assets
at
reasonable intervals and appropriate action is taken with respect
to any
differences;
(mm)
each of the Company and the Subsidiaries has filed on a timely
basis
all
necessary federal, state, local and foreign income and franchise
tax
returns required to be filed through the date hereof, each of which
has
been
true and correct in all material respects, and has paid all
taxes
shown as due thereon; and no tax deficiency has been asserted
against any
such
entity, nor does any such entity know of any tax deficiency which
is
likely to be asserted against any such entity which, if
determined
adversely to any such entity, would reasonably be expected to have
a
Material Adverse Effect;
(nn)
each of the Company and the Subsidiaries maintains insurance
(issued
by
insurers of recognized financial responsibility) of the types and
in the
amounts generally deemed adequate for their respective businesses
and
consistent with insurance coverage maintained by similar companies
in
similar businesses, including, but not limited to, insurance
covering real
and
personal property owned or leased by the Company and the
Subsidiaries
against theft, damage, destruction, acts of vandalism and all other
risks
customarily insured against, all of which insurance is in full
force and
effect, it being understood that no representation is made in
this
subsection (nn) as to the reinsurance obtained by the Company or
the
Subsidiaries;
(oo)
neither the Company nor any of the Subsidiaries is in violation,
or
has
received notice, of any violation with respect to any
applicable
environmental, safety or similar law applicable to the business of
the
Company or any of the Subsidiaries; the Company and the
Subsidiaries have
received all permits,
licenses or other approvals required of them under
applicable federal and state occupational safety and health and
environmental laws and regulations to conduct their respective
businesses,
and
the Company and the Subsidiaries are in compliance with all terms
and
conditions of any such permit, license or approval, except any
such
violation of law or regulation, failure to receive required
permits,
licenses or other approvals or failure to comply with the terms
and
conditions of such permits, licenses or approvals which would
not,
individually or in the aggregate, result in a Material Adverse
Change;
(pp)
neither the Company nor any Subsidiary is in violation of or
has
received notice of any violation with respect to any federal or
state law
relating to discrimination in the hiring, promotion or pay of
employees,
nor
any applicable federal or state wages and hours law, nor any
applicable
provisions of the Employee Retirement Income Security Act of 1974,
as
amended, including the regulations and published
interpretations
thereunder, the violation of any of which would reasonably be
expected to
have
a Material Adverse Effect;
-14-
<PAGE>
(qq)
neither the Company nor any of the Subsidiaries nor any officer
or
director purporting to act on behalf of the Company or any of
the
Subsidiaries has at any time (i) made any contributions to any
candidate
for
political office, or failed to disclose fully any such
contributions,
in
violation of law; (ii) made any payment to any state, federal or
foreign
governmental officer or official, or other person charged with
similar
public or quasi-public duties, other than payments required or
allowed by
applicable law; (iii) engaged in any transactions, maintained any
bank
account or used any corporate funds except for transactions, bank
accounts
and
funds which have been and are reflected in the normally
maintained
books and records of the Company and the Subsidiaries;
(rr)
there are no outstanding loans or advances or material guarantees
of
indebtedness by the Company or any of the Subsidiaries to or for
the
benefit of any of the executive officers or directors of the
Company or any
of
the Subsidiaries or any of the members of the families of any of
them;
(ss)
all securities issued by the Company, any of the Subsidiaries or
any
trusts established by the Company or any Subsidiary, have been
issued and
sold
in compliance with (i) all applicable federal and state
securities
laws, (ii) the laws of the applicable jurisdiction of incorporation
of the
issuing entity and, (iii) to the extent applicable to the issuing
entity,
the
requirements of the Nasdaq National Market;
(tt)
in connection with this offering, the Company has not offered and
will
not
offer its Common Stock or any other securities convertible into
or
exchangeable or exercisable for Common Stock in a manner in
violation of
the
Securities Act or the Securities Act Regulations, and the Company
has
not
distributed and will not distribute any offering material in
connection
with
the offer and sale of the Shares except for the Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus or
the
Registration Statement;
(uu)
except as otherwise contemplated by this Agreement, the Company
has
not
incurred any liability for any finder's fees or similar payments
in
connection with the transactions herein contemplated;
(vv)
no relationship, direct or indirect, exists and no transaction
has
occurred between or among the Company or any of the Subsidiaries on
the one
hand, and the
directors, officers, stockholders, customers or suppliers of
the
Company or any of the Subsidiaries on the other hand, which is
required
by
the Securities Act and the Securities Act Regulations to be
described in
the
Registration Statement and the Prospectus and which is not so
described;
(ww)
neither the Company nor any of the Subsidiaries is or, after
giving
effect to the offering and sale of the Shares, will be an
"investment
company" or an entity "controlled" by an "investment company," as
such
terms are defined in the Investment Company Act of 1940, as amended
(the
"Investment Company Act");
-15-
<PAGE>
(xx)
there are no existing or, to the knowledge of the Company,
threatened
labor disputes with the employees of the Company or any of the
Subsidiaries
which are likely to have individually or in the aggregate a
Material
Adverse Effect; and
(yy)
the Company, the Subsidiaries and any of the officers and directors
of
the
Company and the Subsidiaries, in their capacities as such, are, and
at
the
Closing Time and any Option Closing Time will be, in compliance in
all
material respects with the provisions of the Sarbanes-Oxley Act
of
