1
EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT
April , 1998
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281-1209(1) Ladies and Gentlemen:
Philadelphia Consolidated Holding Corp., a Pennsylvania corporation
(the "Company"), and PCHC Financing I, a Delaware statutory business trust (the
"Trust" and, together with the Company, the "Offerors"), confirm their
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "Underwriter"), with respect to the sale to the Underwriter
of FELINE PRIDES and % Trust Originated Preferred
Securities (the "Trust Preferred Securities" and, together with the FELINE
PRIDES, the "Initial Securities") of the Trust. The FELINE PRIDES will
initially consist of (A) 12,600,000 units (referred to as "Income PRIDES") with
a Stated Amount, per Income PRIDES, of $10 (the "Stated Amount") and (B) at
least units (referred to as "Growth PRIDES") with a face amount, per
Growth PRIDES, equal to the Stated Amount. Each Income PRIDES will initially
consist of a unit comprised of (a) a stock purchase contract (a "Purchase
Contract") under which (i) the holder will purchase from the Company on
16, 2001 (the "Purchase Contract Settlement Date"), for an amount of cash
equal to the Stated Amount, a number of newly issued shares of common stock, no
par value per share (the "Shares"), of the Company equal to the Settlement Rate
described herein, and (ii) the Company will pay the holder unsecured contract
adjustment payments ("Contract Adjustment Payments"), if any, at the rate of
% of the Stated Amount per annum and (b) beneficial ownership of a Trust
Preferred Security. Each Growth PRIDES will initially consist of a unit
comprised of (a) a Purchase Contract under which (i) the holder will purchase
from the Company on the Purchase Contract Settlement Date, for an amount in
cash equal to
____________________
(1) "FELINE PRIDES," "INCOME PRIDES," AND "GROWTH PRIDES" ARE SERVICE MARKS
OF MERRILL LYNCH & CO., INC.
2
the Stated Amount, the number of Shares of Common Stock of the Company, equal
to the Settlement Rate, and (ii) the Company will pay the holder Contract
Adjustment Payments, if any, at the rate of % of the Stated Amount per
annum, and (b) a 1/100 undivided beneficial interest in a zero-coupon U.S.
Treasury Security (CUSIP No. ) in an amount equal to $1,000 payable on
, 2001 (the "Treasury Securities"). The Company and the Trust also
propose to grant to the Underwriter options to purchase up to
additional Income PRIDES additional Growth PRIDES and
additional Trust Preferred Securities (the "Option Securities" and together with
the Initial Securities, the "Securities") as described in Section 2(b) hereof.
In accordance with the terms of the Purchase Contract Agreement, to be dated as
of , 1998, between the Company and The First National Bank of Chicago, as
Purchase Contract Agent (the "Purchase Contract Agent"), the Trust Preferred
Securities constituting a part of the Income PRIDES, and the Treasury Securities
constituting a part of the Growth PRIDES, will be pledged by the Purchase
Contract Agent, on behalf of the holders of the Securities, to the Chase
Manhattan Bank, as Collateral Agent, pursuant to the Pledge Agreement, to be
dated as of , 1998 (the "Pledge Agreement"), among the Company, the
Purchase Contract Agent and the Collateral Agent, to secure the holders'
obligation to purchase Common Stock under the Purchase Contracts. The rights
and obligations of a holder of Securities in respect of Trust Preferred
Securities, subject to the pledge thereof, and Purchase Contracts will be
evidenced by Security Certificates (the "Security Certificates") to be issued
pursuant to the Purchase Contract Agreement.
The Trust Preferred Securities and Common Securities (as defined
below) will be guaranteed by the Company with respect to distributions and
payments upon liquidation, redemption and otherwise (the "Guarantee") pursuant
to the Guarantee Agreement, to be dated as of , 1998 (the "Guarantee
Agreement"), executed and delivered by the Company and The First National Bank
of Chicago, as trustee (the "Guarantee Trustee"), for the benefit of the
holders from time to time of the Trust Preferred Securities and the Common
Securities, and certain back-up undertakings of the Company. All of the net
proceeds from the sale of the Trust Preferred Securities will be combined with
the entire net proceeds from the sale by the Trust to the Company of its common
securities (the "Common Securities" and, together with the Trust Preferred
Securities, the "Trust Securities") will be used by the Trust to purchase the
% Debentures due , 2003 (the "Debentures") of the Company. The
Trust Securities will be issued pursuant to the amended and restated declaration
of trust of the Trust, dated as of , 1998 (the "Declaration"), among
2
3
the Company, as Sponsor, , and (the "Regular
Trustees"), and The First National Bank of Chicago, as the institutional
trustee (the "Institutional Trustee") and First Chicago Delaware, Inc., as the
Delaware trustee (the "Delaware Trustee" and, together with the Institutional
Trustee and the Regular Trustees, the "Trustees"), and the holders from time to
time of undivided beneficial interests in the assets of the Trust. The
Debentures will be issued pursuant to the Indenture, dated as of , 1998
(the "Base Indenture"), between the Company and The First National Bank of
Chicago, as Trustee (the "Debt Trustee"), as supplemented by the First
Supplemental Indenture, dated , 1998 (the Base Indenture, as supplemented
and amended, being referred to as the "Indenture"). Capitalized terms used
herein without definition shall be used as defined in the Prospectus.
Prior to the purchase and public offering of the Securities by the
Underwriter, the Offerors and the Underwriter shall enter into an agreement
substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The
Pricing Agreement may take the form of an exchange of any standard form of
written communication between the Offerors and the Underwriter and shall
specify such applicable information as is indicated in Exhibit A hereto. The
offering of the Securities will be governed by this Agreement, as supplemented
by the Pricing Agreement. From and after the date of the execution and
delivery of the Pricing Agreement, this Agreement shall be deemed to
incorporate the Pricing Agreement.
Pursuant to a remarketing agreement (the "Remarketing Agreement") to
be dated as of , 1998, among the Company, the Trust, the Purchase
Contract Agent and a nationally recognized investment banking firm chosen by
the Company, the Trust Preferred Securities may be remarketed, subject to
certain terms and conditions.
The Company and the Trust have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No. 333-
) and pre-effective amendment no. 1 thereto covering the registration of
securities of the Company and the Trust, including the Securities and the
Purchase Contracts and Trust Preferred Securities included in, and Shares
underlying, the Securities, under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses, and
the offering thereof from time to time in accordance with the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and the Company has filed such post-effective amendments thereto as may be
required prior to the execution of the Pricing Agreement.
3
4
Such registration statement, as so amended, has been declared effective by the
Commission. Such registration statement, as so amended, including the exhibits
and schedules thereto, if any, and the information, if any, deemed to be a part
thereof pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A
Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information"), is referred to herein as the "Registration Statement"; and the
final prospectus relating to the offering of the Securities, in the form first
furnished to the Underwriter by the Company for use in connection with the
offering of the Securities, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of the applicable
Pricing Agreement; provided, further, that if the Offerors file a registration
statement with the Commission pursuant to Section 462(b) of the 1933 Act
Regulations (the "Rule 462(b) Registration Statement"), then after such filing,
all references to "Registration Statement" shall be deemed to include the Rule
462(b) Registration Statement; and provided, further, that if the Offerors
elect to rely upon Rule 434 of the 1933 Act Regulations, then all references to
"Prospectus" shall be deemed to include the final or preliminary prospectus and
the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as the
case may be, in the form first furnished to the Underwriter by the Company in
reliance upon Rule 434 of the 1933 Act Regulations, and all references in this
Underwriting Agreement to the date of the Prospectus shall mean the date of the
Term Sheet. A "preliminary prospectus" shall be deemed to refer to any
prospectus used before the registration statement became effective and any
prospectus that omitted, as applicable, the Rule 430A Information, the Rule 434
Information or other information to be included upon pricing in a form of
prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations, that was used after such effectiveness and prior to the execution
and delivery of the applicable Pricing Agreement. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the electronically transmitted
copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary
4
5
prospectus or the Prospectus (or other references of like import) shall be
deemed to mean and include all such financial statements and schedules and
other information which is incorporated by reference in the Registration
Statement, any preliminary prospectus or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the 1934 Act which
is incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
The Offerors understand that the Underwriter proposes to make a public
offering of the Securities as soon as the Underwriter deems advisable after the
Pricing Agreement has been executed and delivered and the Declaration, the
Indenture and the Guarantee Agreement have been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
SECTION 1. Representations and Warranties.
a. The Offerors represent and warrant to each Underwriter as of
the date hereof, as of the date of the Pricing Agreement and as of each Date of
Delivery (as defined) (such later date being hereinafter referred to as the
"Representation Date") that:
i. No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or, to the knowledge of the Offerors, threatened by the
Commission.
ii. The Company and the Trust meet, and at the respective
times of the commencement and consummation of the offering of the Securities
will meet, the requirements for the use of Form S-3 under the 1933 Act. Each
of the Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act. At the respective times the Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective and at each Representation Date, the
Registration Statement, any Rule 462 Registration Statement and any amendments
or supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act
and the rules and regulations of the Commission under the 1939 Act (the "1939
Act Regulations") and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. At the date of the
Prospectus
5
6
and at the Closing Time (as defined herein), the Prospectus and any amendments
and supplements thereto did not and will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Offerors elect to rely upon Rule 434 of the 1933
Act Regulations, the Offerors will comply with the requirements of Rule 434.
Notwithstanding the foregoing, the representations and warranties in this
subsection shall not apply to (A) statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Offerors in writing by the
Underwriter expressly for use in the Registration Statement or the Prospectus
or (B) the part of the Registration Statement which shall constitute the
Statement of Eligibility (Form T-1) under the 1939 Act.
Each preliminary prospectus and 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 1933 Act, complied as so filed
in all material respects with the 1933 Act Regulations and, if applicable, each
preliminary prospectus and the Prospectus delivered to the Underwriter for use
in connection with the offering of the Securities will, at the time of such
delivery, be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
iii. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement or the Prospectus, at
the time they were or hereafter are filed or last amended, as the case may be,
with the Commission, complied and will comply in all material respects with the
requirements of the 1934 Act, and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), and at the time of filing or as of the
time of any subsequent amendment, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading; and any additional documents
deemed to be incorporated by reference in the Registration Statement or the
Prospectus will, if and when such documents are filed with the Commission, or
when amended, as appropriate, comply in all material respects to the
requirements of the 1934 Act and the 1934 Act Regulations and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions
6
7
made in reliance upon and in conformity with information furnished in writing
to the Offerors by the Underwriter expressly for use in the Registration
Statement or the Prospectus.
iv. The accountants who certified the financial
statements and supporting schedules included or incorporated by reference in
the Registration Statement and the Prospectus are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.
v. The financial statements of the Company included or
incorporated by reference in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries as at the dates
indicated and the results of their operations for the periods specified. Such
financial statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included or incorporated
by reference in the Registration Statement and the Prospectus present fairly in
accordance with GAAP the information required to be stated therein. The ratio
of earnings to fixed charges included in the Prospectus has been calculated in
compliance with Item 503(d) of Regulation S-K of the Commission. The selected
financial information and the summary financial data included in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement and the Prospectus. The pro forma financial statements
and the related notes thereto included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein.
vi. The statutory financial statements of each of the
Company's Insurance Subsidiaries (defined herein), from which certain ratios
and other statistical data contained in the Registration Statement have been
derived, have for each relevant period been prepared in accordance with
accounting practices prescribed or permitted by the National Association of
Insurance Commissioners, and with respect to each insurance subsidiary, the
appropriate Insurance Department of the state of domicile of such
7
8
insurance subsidiary, and such accounting practices have been applied on a
consistent basis throughout the periods involved.
vi. Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except as
otherwise stated therein, (A) there has been no material adverse change and no
development which could reasonably be expected to result in a material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries, considered
as one enterprise whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (B) there have been no transactions entered into by
the Company or any of its subsidiaries, other than those arising in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries, considered as one enterprise, (C) except for regular
dividends on the Common Stock in amounts per share that are consistent with
past practice or the applicable charter document or supplement thereto,
respectively, there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
vii. The Company has been incorporated, is validly
existing as a corporation and is in good standing under the laws of the State
of Pennsylvania, has the corporate power and authority to own, lease and
operate its properties and to conduct its business as presently conducted and
as described in the Prospectus and to enter into and perform its obligations
under, or as contemplated under, this Agreement, the Pricing Agreement, the
Remarketing Agreement, the Purchase Contract Agreement, the Pledge Agreement
and the Guarantee Agreement. The Company is qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not have a Material Adverse Effect.
viii. Other than the Trust, each subsidiary of the
Company has been incorporated and 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, lease and operate its properties and to
conduct its business as presently conducted and as described in the Prospectus,
and is qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to
8
9
so qualify or be in good standing would not have a Material Adverse Effect.
Except as otherwise stated in the Registration Statement and the Prospectus,
all of the issued and outstanding shares of capital stock of each subsidiary of
the Company have been authorized and validly issued, are fully paid and
non-assessable and all such shares are owned by the Company, directly or
through its subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity. None of the outstanding shares of
capital stock of the subsidiaries was issued in violation of preemptive or
other similar rights arising by operation of law, under the charter or by-laws
of any subsidiary or under any agreement to which the Company or any subsidiary
is a party, or otherwise.
ix. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus; since the date
indicated in the Prospectus there has been no change in the consolidated
capitalization of the Company and its subsidiaries (other than changes in
outstanding Common Stock resulting from employee benefit plan or dividend
reinvestment and stock purchase plan transactions); and all of the issued and
outstanding capital stock of the Company has been authorized and validly
issued, is fully paid and non-assessable and conforms to the descriptions
thereof contained in the Prospectus.
x. The Trust has been created and is validly existing
in good standing as a business trust under the Delaware Business Trust Act (the
"Delaware Act") with the power and authority to own property and to conduct its
business as described in the Registration Statement and Prospectus and to enter
into and perform its obligations under this Agreement, the Pricing Agreement,
the Remarketing Agreement, the Trust Preferred Securities and the Declaration;
the Trust is qualified to transact business as a foreign company and is in good
standing in each jurisdiction in which such qualification is necessary, except
where the failure to so qualify or be in good standing would not have a
Material Adverse Effect on the Trust; the Trust is not a party to or otherwise
bound by any agreement other than those described in the Prospectus; the Trust
is and will, under current law, be classified for United States federal income
tax purposes as a grantor trust and not as an association taxable as a
corporation.
xi. The Purchase Contract Agreement has been authorized
by the Company and, at the Closing Time, when validly executed and delivered by
the Company and assuming due authorization, execution and delivery of the
Purchase Contract Agreement by the Purchase Contract Agent, will constitute a
legal, valid and binding obligation of the Company, enforceable against the
9
10
Company in accordance with its terms except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally, or by
general equitable principles (whether considered in a proceeding in equity or
at law) (the "Bankruptcy Exceptions"), and will conform in all material
respects to the description thereof contained in the Prospectus.
xii. The Pledge Agreement has been authorized by the
Company and, at the Closing Time, when validly executed and delivered by the
Company and assuming due authorization, execution and delivery of the Pledge
Agreement by the Collateral Agent and the Purchase Contract Agent, will
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, and will
conform in all material respects to the description thereof contained in the
Prospectus.
xiii. The Common Securities have been authorized by the
Declaration and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Registration Statement and Prospectus,
will be validly issued, will represent undivided beneficial interests in the
assets of the Trust and will conform in all material respects to the
description thereof contained in the Prospectus; the issuance of the Common
Securities is not subject to preemptive or other similar rights; and at the
Closing Time all of the issued and outstanding Common Securities of the Trust
will be directly owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equitable right.
xiv. The Declaration has been authorized by the Company
and, at the Closing Time, will have been executed and delivered by the Company
and the Trustees, and assuming due authorization, execution and delivery of the
Declaration by the Institutional Trustee and the Delaware Trustee, the
Declaration will, at the Closing Time, be a legal, valid and binding obligation
of the Company and the Regular Trustees, enforceable against the Company and
the Regular Trustees in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, and will
conform in all material respects to the description thereof contained in the
Prospectus; and at the Closing Time, the Declaration will have been duly
qualified under the 1939 Act.
10
11
xv. The Guarantee Agreement has been authorized by the
Company and, when validly executed and delivered by the Company, and, assuming
due authorization, execution and delivery by the Guarantee Trustee, will
constitute a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, and the
Guarantee and the Guarantee Agreement will conform in all material respects to
the description thereof contained in the Prospectus; and at the Closing Time,
the Guarantee Agreement will have been duly qualified under the 1939 Act.
xvi. The Securities have been authorized for issuance
and sale to the Underwriter and, when issued and delivered against payment
therefor as provided herein, will be validly issued and fully paid and
non-assessable and will conform in all material respects to the description
thereof contained in the Prospectus; the issuance of the Securities is not
subject to preemptive or other similar rights.
xvii. The Shares, when issued and delivered in accordance
with the provisions of the Purchase Contract Agreement and the Pledge
Agreement, will be authorized, validly issued and fully paid and non-assessable
and will conform in all material respects to the description thereof contained
in the Prospectus; and the issuance of such Shares will not be subject to
preemptive or other similar rights.
xviii. The Indenture has been authorized by the Company
and qualified under the 1939 Act and, at the Closing Time, will have been
executed and delivered and will constitute a legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms
except to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions; the Indenture will conform in all material respects to the
description thereof contained in the Prospectus.
xix. The Debentures have been authorized by the Company
and, at the Closing Time, will have been executed by the Company and, when
authenticated in the manner provided for in the Indenture and delivered against
payment therefor as described in the Prospectus, will constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms except to the extent that enforcement thereof may
be limited by the Bankruptcy Exceptions, and will be in the form contemplated
by, and entitled to the benefits of, the Indenture and will conform in all
material respects to the description thereof contained in the Prospectus.
11
12
xx. Each of the Regular Trustees of the Trust is an
employee of the Company and has been authorized by the Company to execute and
deliver the Declaration.
xxi. Neither the Company nor any of its subsidiaries is
in violation of its articles of incorporation or by-laws. The Trust is not in
violation of the Declaration or its certificate of trust filed with the State
of Delaware on August 18, 1997 (the "Certificate of Trust"); none of the
Company, any of its subsidiaries or the Trust is in default in the performance
or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, note, lease, loan or credit agreement or any
other agreement or instrument to which the Company, any of its subsidiaries or
the Trust is a party or by which any of them may be bound, or to which any of
the property or assets of the Company, any subsidiary or the Trust is subject,
or in violation of any applicable law, rule or regulation or any judgment,
order or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets, which violation
or default would, singly or in the aggregate, have a Material Adverse Effect.
xxii. The entry into the Purchase Contracts underlying
the Securities by the Company, the offer of the Securities as contemplated
herein and in the Prospectus, the issue of the Shares and the sale of the
Shares by the Company pursuant to the Purchase Contracts, the execution,
delivery and performance of this Agreement, the Pricing Agreement, the
Remarketing Agreement, the Purchase Contracts, the Purchase Contract Agreement,
the Pledge Agreement, the Declaration, the Trust Preferred Securities, the
Common Securities, the Indenture, the Debentures, the Guarantee Agreement and
the Guarantees, and the consummation of the transactions contemplated herein,
therein and the Registration Statement (including the issuance and sale of the
Securities and the use of proceeds from the sale of the Securities as described
in the prospectus under the caption "Use of Proceeds") and compliance by the
Offerors with their obligations hereunder and thereunder have been authorized
by all necessary action (corporate or otherwise) and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of any of the terms or provisions of, or
constitute a default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company, any subsidiary or the Trust pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
12
13
any other agreement or instrument to which the Company, the Trust or any
subsidiary is a party or by which any of them may be bound, or to which any of
the Property of any of them is subject (the "Agreements and Instruments")
(except for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company or any subsidiary or the Declaration or Certificate of Trust or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company, any subsidiary or the Trust or any of
their assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company, any subsidiary or the Trust.
xxiii. No labor dispute with the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Company, is
imminent.
xxiv. There is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body, domestic
or foreign (including, without limitation any proceeding to revoke or deny
renewal of any Insurance Licenses (as defined below)), now pending or to the
knowledge of the Company threatened against or affecting the Trust, the Company
or any of its subsidiaries which is required to be disclosed in the
Registration Statement and the Prospectus (other than as stated therein), or
which might reasonably be expected to result in a Material Adverse Effect, or
which might be reasonably expected to have a Material Adverse Effect on the
assets, properties or operations thereof or the consummation of this Agreement,
the Pricing Agreement, the Remarketing Agreement, the Purchase Contracts, the
Purchase Contract Agreement, the Pledge Agreement, the Guarantee Agreement, the
Indenture or the transactions contemplated herein or therein.
xxv. The aggregate of all pending legal or governmental
proceedings to which the Trust, the Company or any subsidiary thereof is a
party or of which any of their respective properties or operations is the
subject which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the
13
14
business, could not reasonably be expected to result in a Material Adverse
Effect.
xxvi. The Company and its subsidiaries have good and
indefeasable title to all material real and personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except such as
are described in the Registration Statement or the Prospectus 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 material 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
materially interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries; the Company and its
subsidiaries possess all licenses, franchises, permits, certificates,
authorizations, approvals, consents and orders of all governmental authorities
or agencies (including, without limitation, insurance licenses from the
insurance departments of the various states where the subsidiaries write
insurance business (the "Insurance Licenses")) which are necessary for the
ownership or lease of the material properties owned or leased by each of them
and for the operation of the business now operated by each of them with such
exceptions which, singly or in the aggregate, are not material and do not
materially interfere with the conduct of the business of the Company and its
subsidiaries, considered as one enterprise; the Company, on behalf of its
subsidiaries, has made all required filings under applicable insurance holding
company statutes (except for failures to file that, individually or in the
aggregate, would not have a Material Adverse Effect), including without
limitation, all insurance holding company system registration statements
required to be filed, in all jurisdictions in which such registrations are
required; the insurance subsidiaries of the Company have fulfilled and
performed all material obligations necessary to maintain their respective
Insurance Licenses, and no event or events have occurred which may result in
the impairment, modification, termination or revocation of such Insurance
Licenses; all such licenses, franchises, permits, certificates, orders,
authorizations, approvals and consents are in full force and effect and contain
no unduly burdensome provisions that would interfere with the conduct of the
business of the Company and its subsidiaries, considered as one enterprise and,
except as otherwise set forth in the Registration Statement or the Prospectus,
there are no legal or governmental proceedings pending or threatened that would
result in a material modification, suspension or revocation thereof.
14
15
xxvii. No authorization, approval, consent, order,
registration or qualification of or with any court or governmental authority or
(including, without limitation, any insurance regulatory agency or body) agency
is required for the entry into the Purchase Contracts underlying the
Securities, in connection with the issuance and sale of the Common Securities,
the offering of the Securities and the issuance and sale of the Shares by the
Company pursuant to such Purchase Contracts, except such as have been obtained
and made under the federal securities laws or state insurance laws and such as
may be required under state or foreign securities or Blue Sky laws.
xxviii. This Agreement, the Remarketing Agreement and the
Pricing Agreement have been authorized, executed and delivered by each of the
Offerors.
xxix. The Company has complied with, and is and will be
in compliance with, the provisions of that certain Florida act relating to
disclosure of doing business in Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively, the
"Cuba Act") or is exempt therefrom.
xxx. None of the Trust nor the Company or any of its
subsidiaries is, and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as described in
the Prospectus will not 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 "1940 Act").
xxxi. The Company and its subsidiaries have each filed
all federal, state and foreign income tax returns which have been required to
be filed and have paid all taxes indicated by said returns and all assessments
received by any of them to the extent that such taxes have become due and are
not being contested in good faith.
xxxii. None of the Company, its subsidiaries or any of
their respective directors, officers or controlling persons, has taken,
directly or indirectly, any action resulting in a violation of Regulation M
under the 1934 Act, or designed to cause or result in, or that has constituted
or that reasonably might be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities or the Common Stock.
15
16
xxxiii. No "forward looking statement" (as defined in Rule
175 under the 1933 Act) contained in the Registration Statement, any
preliminary prospectus or the Prospectus was made or reaffirmed without a
reasonable basis or was disclosed other than in good faith.
b. Any certificate signed by any officer of the Company or a
Trustee of the Trust and delivered to the Underwriter or to counsel for the
Underwriter shall be deemed a representation and warranty by the Company or the
Trust, as the case may be, to the Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
a. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the
Offerors agree to sell to the Underwriter, and the Underwriter agrees to
purchase from the Offerors, at the price per security set forth in the Pricing
Agreement, Initial Securities.
(1) If the Offerors have elected not to rely
upon Rule 430A of the 1933 Act Regulations, the initial public offering price
per Security and the purchase price per Security to be paid by the Underwriter
for the Securities have each been determined and set forth in the Pricing
Agreement, dated the date hereof, and any necessary amendments to the
Registration Statement and the Prospectus will be filed before the Registration
Statement becomes effective.
(2) If the Offerors have elected to rely upon
Rule 430A of the 1933 Act Regulations, the purchase price per Security to be
paid by the Underwriter shall be an amount equal to the initial public offering
price per Security, less an amount per Security to be determined by agreement
between the Underwriter and the Offerors. The initial public offering price
per Security shall be a fixed price to be determined by agreement between the
Underwriter and the Offerors. The initial public offering price and the
purchase price, when so determined, shall be set forth in the Pricing
Agreement. In the event that such prices have not been agreed upon and the
Pricing Agreement has not been executed and delivered by all parties thereto by
the close of business on the fourth business day following the date of this
Agreement, this Agreement shall terminate forthwith, without liability of any
party to any other party, unless otherwise agreed to by the Offerors and the
Underwriter.
16
17
b. In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Offerors hereby grant to the Underwriter the right to purchase at
its election up to Income PRIDES, Growth PRIDES and
Trust Preferred Securities at the price per share set forth in the Pricing
Agreement; provided, that, pursuant to such options, the Underwriter shall
purchase at least as many Trust Preferred Securities as Growth PRIDES. The
option hereby granted will expire automatically at the close of business on the
30th calendar day after the later of the date the Registration Statement and
any Rule 462(b) Registration Statement becomes effective, if the Offerors have
elected not to rely upon Rule 430A under the 1933 Act Regulations, or the
Representation Date, if the Offerors have elected to rely upon Rule 430A under
the 1933 Act Regulations, and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Securities upon
notice by the Underwriter to the Offerors setting forth the aggregate number of
additional Optional Securities to be purchased and the time and date of
delivery for the related Option Securities. Any such time and date of delivery
(a "Date of Delivery") shall be determined by the Underwriter but shall not be
later than seven full business days after the exercise of such option, nor in
any event before the Closing Time, unless otherwise agreed upon by the
Underwriter and the Offerors.
c. The Trust Preferred Securities and Treasury Securities
underlying the Securities will be pledged with the Collateral Agent to secure
the holders' obligations to purchase Common Stock under the Purchase Contracts.
Such pledge shall be effected by the transfer to the Collateral Agent of the
Trust Preferred Securities and Treasury Securities to be pledged at the Closing
Time and appropriate Date of Delivery, if any, in accordance with the Pledge
Agreement.
d. Delivery of certificates for the Initial Securities and the
Option Securities (if the option provided for in Section 2(b) hereof shall have
been exercised on or before the first business day prior to the Closing Time)
shall be made at the offices of the Underwriter in New York, against the
delivery to the Collateral Agent of the Trust Preferred Securities and Treasury
Securities relating to such Securities by such Underwriter or on its behalf,
and payment of the purchase price for such Securities shall be made at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New
York, New York 10022 or at such other place as shall be agreed upon by the
Underwriter and the Offerors, at 9:00 a.m. (New York time) on the third
business day
17
18
after the date the Registration Statement becomes effective (or, if the
Offerors have elected to rely upon Rule 430A, the third full business day after
execution of the Pricing Agreement (or, if pricing of the Securities occurs
after 4:30 p.m., Eastern time, on the fourth full business day thereafter)), or
such other time not later than ten business days after such date as shall be
agreed upon by the Underwriter and the Offerors (such time and date of payment
and delivery being referred to herein as the "Closing Time"). Payment for the
Securities purchased by the Underwriter shall be made by wire transfer of
immediately available funds, payable to the Company, against delivery to the
account of the Underwriter of the Securities to be purchased by it. Delivery
of, and payment for, the Securities shall be made through the facilities of The
Depository Trust Company. In addition, if the Underwriter purchase any or all
of the Option Securities, payment of the purchase price and delivery of
certificates for such Option Securities shall be made at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP set forth above, or at such other
place as shall be agreed upon by the Underwriter and the Offerors, on each Date
of Delivery as specified in the relevant notice from the Underwriter to the
Offerors.
Certificates for the Initial Securities and the Option Securities, if
any, shall be in such denominations and registered in such names as the
Underwriter may request in writing at least two full business days before the
Closing Time or any Date of Delivery, as the case may be. The certificates for
the Initial Securities and the Option Securities, if any, will be made
available for examination by the Underwriter no later than 10:00 a.m. (New York
City time) on the last business day prior to the Closing Time or the Date of
Delivery, as the case may be.
e. If settlement for the Option Securities occurs after the
Closing Time, the Offerors will deliver to the Underwriter on the relevant Date
of Delivery, and the obligations of the Underwriter to purchase the Option
Securities shall be conditioned upon the receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered at the Closing Time pursuant to Section 5(k) hereof.
SECTION 3. Covenants of the Offerors. The Offerors agree with
the Underwriter as follows:
a. Promptly following the execution of this Agreement, the
Offerors will cause the Prospectus to be filed with the Commission pursuant to
Rule 424 of the 1933 Act Regulations and the Offerors will promptly advise the
Underwriter when such filing has been made. Prior to the filing, the Offerors
will cooperate
18
19
with the Underwriter in the preparation of such Prospectus to assure that the
Underwriter has no reasonable objection to the form or content thereof when
filed or mailed.
b. The Offerors will comply with the requirements of Rule 430A
of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations if and
as applicable, and will notify the Underwriter immediately, and confirm the
notice in writing, (i) of the effectiveness of any post-effective amendment to
the Registration Statement or the filing of any supplement or amendment to the
Prospectus, (ii) the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information,
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose and (v) of the issuance by any state securities
commission or other regulatory authority of any order suspending the
qualification or the exemption from qualification of the Securities or the
Shares under state securities or Blue Sky laws or the initiation or threatening
of any proceeding for such purpose. The Offerors will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
c. The Offerors will give the Underwriter notice of their
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment and any filing under Rule 462(b) of the
1933 Act Regulations), any Term Sheet or any amendment, supplement or revision
to either the prospectus included in the Registration Statement at the time it
became effective or to the Prospectus, whether pursuant to the 1933 Act, the
1934 Act or otherwise; will furnish the Underwriter with copies of any such
Rule 462(b) Registration Statement, Term Sheet, amendment, supplement or
revision a reasonable amount of time prior to such proposed filing or use, as
the case may be; and will not file any such Rule 462(b) Registration Statement,
Term Sheet, amendment, supplement or revision to which the Underwriter or
counsel for the Underwriter shall object.
d. The Company will deliver to the Underwriter and counsel for
the Underwriter, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to
19
20
the Underwriter, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits). If
applicable, the copies of the Registration Statement and each amendment thereto
furnished to the Underwriter will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
e. The Company has delivered to the Underwriter, without
charge, as many copies of each preliminary prospectus as the Underwriter
reasonably requested, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to the
Underwriter, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, such number of copies of
the Prospectus (as amended or supplemented) as the Underwriter may reasonably
request. If applicable, the Prospectus and any amendments or supplements
thereto furnished to the Underwriter will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
f. The Offerors will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Registration Statement and the Prospectus. If at any time
when the Prospectus is required by the 1933 Act or the 1934 Act to be delivered
in connection with sales of the Securities, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel for
the Underwriter or for the Offerors, to amend the Registration Statement in
order that the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or to amend or
supplement the Prospectus in order that the Prospectus will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Offerors will promptly prepare and file with the Commission, subject to Section
3(c), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements, and the Offerors
20
21
will furnish to the Underwriter, without charge, such number of copies of such
amendment or supplement as the Underwriter may reasonably request.
g. The Offerors will use their best efforts, in cooperation
with the Underwriter, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as the Underwriter may designate; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified or subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the Offerors
will file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for so long as may be
required in connection with distribution of the Securities and the Shares.
h. The Company will make generally available to its
securityholders as soon as practicable, but not later than 45 days (or 90 days,
in the case of a period that is also the Company's fiscal year) after the close
of the period covered thereby, an earnings statement of the Company and its
subsidiaries (in form complying with the provisions of Rule 158 of the 1933 Act
Regulations) covering a twelve-month period beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the Registration Statement.
i. The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Prospectus under "Use
of Proceeds".
j. If, at the time that the Registration Statement became (or
in the case of a post-effective amendment becomes) effective, any information
shall have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the
1933 Act Regulations, then immediately following the execution of the Pricing
Agreement, the Offerors will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A or Rule 434 and Rule 424(b) of the
1933 Act Regulations, copies of an amended Prospectus, or Term Sheet, or, if
required by such Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted.
k. If the Offerors elect to rely upon Rule 462(b), the Offerors
shall file a Rule 462(b) Registration Statement with the
21
22
Commission in compliance with Rule 462(b) and pay the applicable fees in
accordance with Rule 111 of the 1933 Act Regulations by the earlier of (i)
10:00 p.m. Eastern time on the date of the Pricing Agreement and (ii) the time
confirmations are sent or given, as specified by Rule 462(b)(2).
l. The Offerors, during the period when the Prospectus is
required to be delivered under the 1933 Act, will file all documents required
to be filed with the Commission pursuant to Section 13, 14 or 15 of the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
m. The Offerors will use their best efforts to effect the
listing of the Income PRIDES and the Growth PRIDES on the NASDAQ National
Market and to cause the Securities to be registered under the 1934 Act.
n. During a period of 90 days from the date of the Pricing
Agreement, neither the Trust nor the Company will, without the prior written
consent of the Underwriter, directly or indirectly, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, or enter into any
agreement to sell, any Income PRIDES, Growth PRIDES, Purchase Contracts, Trust
Preferred Securities or Common Stock, as the case may be, or any securities of
the Company similar to the Income PRIDES, Growth PRIDES, Purchase Contracts,
Trust Preferred Securities or Common Stock or any security convertible into or
exchangeable or exercisable for Income PRIDES, Growth PRIDES, Purchase
Contracts, Trust Preferred Securities or Common Stock other than shares of
Common Stock or options for shares of Common Stock issued pursuant to or sold
in connection with any employee benefit, dividend reinvestment and stock option
and stock purchase plans of the Company and its subsidiaries and other than the
Growth PRIDES or Income PRIDES to be created or recreated upon substitution of
Pledged Securities, or shares of Common Stock issuable upon early settlement of
the Income PRIDES or Growth PRIDES or upon exercise of stock options, or (B)
enter into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of the Securities, any security convertible into or exchangeable into
or exercisable for the Securities substantially similar to equity securities
substantially similar to the Securities, whether any such swap or transaction
is to be settled by delivery of Securities, or other securities, in cash or
otherwise.
o. The Company, during a period of three years from the Closing
Time, will make generally available to the Underwriter copies of all reports
and other communications (financial or
22
23
other) mailed to stockholders, and deliver to the Underwriter promptly after
they are available, copies of any reports and financial statements furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and shall furnish such additional
information concerning the business and financial condition of the Company as
the Underwriter may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders).
p. The Company will reserve and keep available at all times,
free of preemptive or other similar rights and liens and adverse claims,
sufficient shares of Common Stock to satisfy any obligations to issue Shares
upon settlement of the Purchase Contracts and shall take all actions necessary
to keep effective the Registration Statement with respect to the Shares.
q. None of the Company, its subsidiaries or any of their
respective directors, officers or controlling persons, will take, directly or
indirectly, any action resulting in a violation of Regulation M under the 1934
Act, or designed to cause or result in, or that reasonably might be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities or the Common
Stock.
SECTION 4. Payment of Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
the Pricing Agreement, the Purchase Contracts, the Purchase Contract Agreement
and the Pledge Agreement, including, without limitation, expenses related to
the following, if incurred: (i) the preparation, delivery, printing and filing
of the Registration Statement and Prospectus as originally filed (including
financial statements and exhibits) and of each amendment thereto; (ii) the
printing and delivery to the Underwriter of this Agreement, the Pricing
Agreement, any Agreement among Underwriter and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
Securities; (iii) the preparation, issuance and delivery of the certificates
for the Securities and the Shares; (iv) the fees and disbursements of the
Company's counsel, accountants and other advisors or agents (including the
transfer agents and registrars), as well as fees and disbursements of the
Trustees, the Purchase Contract Agent, the Collateral Agent and any Depositary,
and their respective counsel (except as provided for in the Prospectus); (v)
the qualification of the Securities and the Shares under securities laws in
accordance with the provisions of
23
24
Section 3(g), including filing fees and the fees and disbursements of counsel
for the Underwriter in connection therewith and in connection with the
preparation of the Blue Sky Survey; (vi) the printing and delivery to the
Underwriter of copies of the Registration Statement as originally filed and of
each amendment thereto, of each preliminary prospectus, any Term Sheet and of
the Prospectus and any amendments or supplements thereto; (vii) any fees
payable in connection with the rating of the Securities by nationally
recognized statistical rating organizations; (viii) any fees payable or
expenses incurred pursuant to any Uniform Commercial Code related filings; and
(ix) the fees and expenses incurred in connection with the listing of the
Income PRIDES, the Growth PRIDES and the Shares on the NASDAQ National Market.
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall
reimburse the Underwriter for all of its out-of-pocket expenses, including the
fees and disbursements of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Underwriter.
SECTION 5. Conditions of Underwriter's Obligations. The
obligations of the Underwriter to purchase and pay for the Securities pursuant
to this Agreement are subject to the accuracy of the representations and
warranties of the Offerors herein contained or in certificates of any officer
of the Company or any subsidiary or the trustees of the Trust delivered
pursuant to the provisions hereof, to the performance by the Offerors of their
obligations hereunder, and to the following further conditions:
a. The Registration Statement, including any Rule 462(b)
Registration Statement, shall have become effective under the 1933 Act not
later than 5:30 p.m., New York City time, on the date hereof, and on the date
hereof and at the Closing Time and any Date of Delivery, no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the satisfaction of
counsel to the Underwriter. A prospectus containing information relating to
the description of the Securities, the specific method of distribution and
similar matters shall have been filed with the Commission in accordance with
Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any required
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A), or, if
the Company has elected to
24
25
rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the Rule
434 Information shall have been filed with the Commission in accordance with
Rule 424(b)(7).
b. At the Closing Time the Underwriter shall have received:
(1) The favorable opinion, dated as of the
Closing Time, of Wolff, Block Schorr & Solis- Cohen LLP, special counsel to the
Offerors, in form and substance satisfactory to counsel for the Underwriter and
subject to the qualifications and assumptions stated therein, to the effect
that:
(i) The Company has been incorporated,
is validly existing as a corporation and is in good standing under the
laws of the State of Pennsylvania.
(ii) The Company has corporate power
and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus.
(iii) The Company is qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, except
where such failure to qualify or be in good standing would not have a
Material Adverse Effect.
(iv) The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Prospectus (except for subsequent issuances, if any, pursuant to
incentive compensation plan, employee benefit plan or dividend
reinvestment and stock purchase plan transactions), and the shares of
issued and outstanding capital stock of the Company have been
authorized and validly issued and are fully paid and non-assessable.
(v) Except for the Trust, each
subsidiary of the Company has been incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation; each subsidiary of the Company has
the corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Prospectus, and is qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify or be in good standing would not have
a Material Adverse Effect; and all of the
25
26
issued and outstanding capital stock of each subsidiary of the Company
has been authorized and validly issued, is fully paid and
non-assessable and all shares owned by the Company, directly or
through its subsidiaries, are owned free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(vi) The Trust is not required to be
qualified and in good standing as a foreign company in Pennsylvania,
except to the extent that the failure to so qualify or be in good
standing would not have a Material Adverse Effect on the Trust; and
the Trust is not a party to or otherwise bound by any agreement other
than those described in the Prospectus.
(vii) The Declaration has been
authorized, executed and delivered by the Company and the Trustees and
is a legal, valid and binding obligation of the Company, enforceable
against the Company and each of the Regular Trustees in accordance
with its terms, except as enforcement thereof may be limited by the
Bankruptcy Exceptions; and the Declaration has been duly qualified
under the 1939 Act.
(viii) All legally required proceedings
in connection with the authorization, issuance and validity of the
Securities and the sale of the Securities in accordance with this
Agreement have been taken and all legally required orders, consents or
other authorizations or approvals of any other public boards or bodies
(including, without limitation, any insurance regulatory agency or
body) in connection with the authorization, issuance and validity of
the Securities and the sale of the Securities in accordance with this
Agreement (other than in connection with or in compliance with the
provisions of the securities or Blue Sky laws of any jurisdictions, as
to which no opinion need be expressed) have been obtained and are in
full force and effect; and except as otherwise specifically described
in the Prospectus, neither the Company nor any of its subsidiaries
engaged in the business of insurance (each, an "Insurance Subsidiary")
has received any notification from any insurance regulatory authority
to the effect that any additional authorization, approval, order,
consent, license, certificate, permit, registration or qualification
from such insurance regulatory authority is needed to be obtained by
either of the Company or any of its Insurance Subsidiaries in any case
where it would be reasonably expected that the failure to obtain any
such additional authorization, approval,
26
27
order, consent, license, certificate, permit, registration or
qualification would have a Material Adverse Effect.
(ix) Each of the documents incorporated
by reference in the Registration Statement or the Prospectus at the
time they were filed or last amended (other than the financial
statements and the notes thereto, the financial schedules, and any
other financial data included or incorporated by reference therein, as
to which such counsel need express no belief), complied as to form in
all material respects with the requirements of the 1934 Act and the
1934 Act Regulations, as applicable; and such counsel has no reason to
believe that any of such documents, when such documents became
effective or were so filed, as the case may be, contained, in the case
of a registration statement which became effective under the 1933 Act,
an untrue statement of a material fact, or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and, in the case of other documents which were
filed under the 1934 Act with the Commission, an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein not misleading.
(x) The Company and the Trust meet the
registrant requirements for use of Form S-3 under the 1933 Act
Regulations.
(xi) The Income PRIDES and Growth
PRIDES have been duly authorized, executed and delivered by the
Company, and (assuming due execution by the Purchase Contract Agent as
attorney-in-fact of the holders thereof and due authentication by the
Purchase Contract Agent) and upon payment therefor as set forth
herein, will be duly and validly issued and outstanding, and will
constitute valid and binding obligations of the Company entitled to
the benefits of the Purchase Contract Agreement and enforceable
against the Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by the Bankruptcy Exceptions.
The Shares and the Securities are each registered under the 1934 Act,
and the Income PRIDES issuable at the Closing Time and the Shares
issuable by the Company pursuant to the Purchase Contracts have been
authorized for listing on the NASDAQ National Market, upon official
notice of issuance.
(xii) The Shares subject to the Purchase
Contract Agreement have been validly authorized and reserved for
27
28
issuance and, when issued and delivered by the Company in accordance
with the provisions of the Purchase Contract Agreement, the Purchase
Contracts and the Pledge Agreement, will be fully paid and
non-assessable; the issuance of such Shares will not be subject to
preemptive or other similar rights arising by law or, to the best of
such counsel's knowledge, otherwise.
(xiii) The issuance of the Securities is
not subject to preemptive or other similar rights arising by law or,
to the best of such counsel's knowledge, otherwise.
(xiv) All of the issued and outstanding
Common Securities of the Trust are directly owned by the Company free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right.
(xv) This Agreement, the Remarketing
Agreement and the Pricing Agreement have been duly authorized,
executed and delivered by each of the Company and the Trust.
(xvi) The Purchase Contract Agreement
has been duly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery by the Purchase
Contract Agent, constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xvii) The Pledge Agreement has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Collateral Agent and the
Purchase Contract Agent, constitutes a legal, valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xviii) The Guarantee Agreement has been
duly authorized, executed and delivered by the Company; the Guarantee
Agreement, assuming it is duly authorized, executed, and delivered by
the Guarantee Trustee, constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its
terms, except to the extent that enforcement thereof may be limited by
Bankruptcy Exceptions.
28
29
(xix) The Indenture has been executed
and delivered by the Company and, assuming authorization, execution,
and delivery thereof by the Debt Trustee, is a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xx) The Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Debt Trustee
in the manner provided for in the Indenture and delivered against
payment therefor by the Trust, will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xxi) The entry into the Purchase
Contracts underlying the Securities by the Company, the offer of the
Securities as contemplated herein and in the Prospectus, the issuance
of the Shares and the sale of the Shares by the Company pursuant to
the Purchase Contracts, the execution, delivery and performance of
this Agreement, the Pricing Agreement, the Remarketing Agreement, the
Purchase Contracts, the Purchase Contract Agreement, the Pledge
Agreement, the Declaration, the Trust Preferred Securities, the Common
Securities, the Indenture, the Debentures, the Guarantee Agreement and
the Guarantees, and the consummation of the transactions contemplated
herein, therein and the Registration Statement (including the issuance
and sale of the Securities and the use of proceeds from the sale of
the Securities as described in the prospectus under the caption "Use
of Proceeds") and compliance by the Offerors with their obligations
hereunder and thereunder have been authorized by all necessary action
(corporate or otherwise) and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of any of the terms or provisions of, or
constitute a default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, any subsidiary
or the Trust pursuant to, the Agreements and Instruments (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or
by-laws of the Company or any Significant Subsidiary or the
Declaration or
29
30
Certificate of Trust or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction
over the Company, any subsidiary or the Trust or any of their assets,
properties or operations. As used herein, a "Repayment Event" means
any event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company, any
subsidiary or the Trust.
(xxii) All conditions precedent provided
for in the Purchase Contract Agreement relating to the authentication
and delivery of the Security Certificates have been complied with and
the Company is duly entitled to the authentication and delivery of the
Security Certificates in accordance with the terms of the Purchase
Contract Agreement; the Security Certificates are in a form
contemplated by the Purchase Contract Agreement and comply with all
applicable statutory requirements and with the requirements of the
NASDAQ National Market.
(xxiii) There are no actions, suits or
proceedings before or by any court or governmental agency or body,
domestic or foreign (including, without limitation, any insurance
regulatory agency or body), now pending or threatened, which are
required to be disclosed in the Registration Statement or the
Prospectus, other than those disclosed therein, and all pending legal
or governmental proceedings to which the Company or any of its
subsidiaries is a party or to which any of their property is subject
which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material.
(xxiv) To the best of such counsel's
knowledge and information, there are no contracts, indentures,
mortgages, agreements, notes, leases or other instruments required to
be described or referred to or incorporated by reference in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to or incorporated by reference therein or
filed as exhibits thereto; the descriptions thereof or references
thereto are true and correct in all material respects, and no default
exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in
30
31
any contract, indenture, mortgage, agreement, note, lease or other
instrument so described, referred to, filed or incorporated by
reference which would result in a Material Adverse Effect.
(xxv) No authorization, approval,
consent, order, registration or qualification of or with any court or
federal or state governmental authority or agency (including, without
limitation, any insurance regulatory agency or body) is required for
the issuance and sale of the Securities by the Offerors to the
Underwriter or the performance by the Trust and the Company of their
respective obligations in this Agreement, the Remarketing Agreement,
the Pricing Agreement, the Purchase Contract Agreement, the Purchase
Contracts, the Pledge Agreement, the Indenture, the Debentures, the
Guarantee Agreement, the Declaration and the Securities except such as
has been obtained and made under the federal securities laws or such
as may be required under state or foreign securities or Blue Sky laws.
(xxvi) The Company, on behalf of its
subsidiaries, has made all required filings under applicable insurance
holding company statutes, including without limitation insurance
holding company system registration statements, in each jurisdiction
where such filings are required to conduct its business as described
in the Prospectus, except where the failure to make such filings would
not, individually or in the aggregate, have a Material Adverse Effect.
(xxvii) Each subsidiary that is required
to be organized and licensed as an insurance company in its
jurisdiction of incorporation is so organized and licensed and each
such subsidiary is authorized or qualified as an insurer in each other
jurisdiction where it is required to be so authorized or qualified to
conduct its business as described in the Prospectus, except where the
failure to be so authorized or qualified in such jurisdiction would
not, singly or in the aggregate, have a Material Adverse Effect; the
Company and its subsidiaries possess all licenses, franchises,
permits, certificates, authorizations, approvals, consents and orders
of all governmental authorities or agencies (including, without
limitation, the Insurance Licenses) necessary for the ownership or
lease of the material properties owned or leased by each of them and
for the operation of the business carried on by each of them as
described in the Registration Statement and the Prospectus with such
exceptions as are not material and do not materially interfere with
the conduct of the business of the
31
32
Company and its subsidiaries, considered as one enterprise; all such
licenses, franchises, permits, certificates, authorizations,
approvals, consents and orders are in full force and effect and
contain no unduly burdensome provisions that would interfere with the
conduct of the business of the Company and its subsidiaries,
considered as one enterprise and, except as otherwise set forth in the
Registration Statement or the Prospectus, there are no legal or
governmental proceedings pending or threatened that would result in a
material modification, suspension or revocation thereof.
(xxviii) The Registration Statement,
including any Rule 462(b) Registration Statement, is effective under
the 1933 Act; any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required
by Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or
proceedings therefor initiated, to the best of such counsel's
knowledge, or threatened by the Commission.
(xxix) The Registration Statement,
including any Rule 462(b) Registration Statement and the Prospectus,
and each amendment or supplement thereto (other than the financial
statements and the notes thereto, the financial schedules and any
other financial data included or incorporated by reference therein, as
of their respective effective or issue dates, or when amended, as
appropriate, complied as to form in all material respects with the
requirements of the 1933 Act, the 1933 Act Regulations and the 1939
Act.
(xxx) The statements in the Prospectus
under the captions "The Company," "The Trust," "Use of Proceeds,"
"Capitalization," "Description of the FELINE PRIDES," "Description of
the Purchase Contracts," "Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement," "Description of the Trust
Preferred Securities," "Description of the Guarantee," "Description of
the Debentures," "Effect of Obligations Under the Debentures and the
Guarantee,""Description of the Common Stock," and "ERISA
Considerations" to the extent that they involve matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects.
(xxxi) Each Purchase Contract underlying
the Securities being delivered at the Closing Time and at any
32
33
Date of Delivery is a valid and legally binding agreement of the
Company enforceable against the Company in accordance with its terms,
except as may be limited by the Bankruptcy Exceptions; provided,
however, that based on a review of applicable case law, the occurrence
of a Termination Event, Section 365(e)(1) of the Bankruptcy Code (11
U.S.C. Sections 101-1330, as amended) should not substantively limit
the provisions of Sections 3.15 and 5.8 of the Purchase Contract
Agreement and Section 4.3 of the Pledge Agreement that require
termination of the Purchase Contracts and release of the Collateral
Agent's security interest in the Trust Preferred Securities, the
Treasury Portfolio or the Treasury Securities; provided, however, that
procedural restrictions respecting relief from the automatic stay
under Section 362 of the Code may affect the timing of the exercise of
such rights and remedies.
(xxxii) The Income PRIDES and the Growth
PRIDES have each been duly authorized, executed and delivered by the
Company and (assuming due execution by the Purchase Contract Agent as
attorney-in-fact of the holders thereof and due authentication by the
Purchase Contract Agent) and upon payment therefor as set forth in the
Underwriting Agreement, will be duly and validly issued and
outstanding, and will constitute valid and binding obligations of the
Company entitled to the benefits of the Purchase Contract Agreement
and enforceable against the Company in accordance with their terms,
except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions.
(xxxiii) The provisions of the Pledge
Agreement are effective to create in favor of the Collateral Agent for
the benefit of the Company, a valid and perfected security interest
under the Uniform Commercial Code as in effect on the date of such
opinion in the State of New York in the Pledged Trust Preferred
Securities, Pledged Debentures, Applicable Ownership Interests (as
specified in clause (A) of the definition thereof in the Declaration)
of the Treasury Portfolio and the Pledged Treasury Securities from
time to time credited to the Collateral Account.
(xxxiv) The Guarantee Agreement has been
duly authorized, executed and delivered by the Company and duly
qualified under the Trust Indenture Act and (assuming due execution
and delivery by the Guarantee Trustee) constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, except to
33
34
the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions.
(xxxv) The Indenture has been duly
authorized, executed and delivered by the Company and duly qualified
under the Trust Indenture Act, and (assuming due authentication,
execution and delivery by the Debt Trustee) constitutes a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xxxvi) The Debentures have been duly
authorized, executed and delivered by the Company and (assuming due
authentication by the Debt Trustee) and upon payment therefor as set
forth herein, will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions.
(xxxvii) The Remarketing Agreement has been
duly authorized, executed and delivered by the Company and the Trust
and constitutes a valid and binding agreement of the Company and the
Trust, enforceable against the Company and the Trust in accordance
with its terms.
(xxxviii) The Securities, the Shares, the
Common Securities, the Debentures, the Declaration and the Guarantee
Agreement conform in all material respects to the description thereof
contained in the Prospectus.
(xxxix) No authorization, approval,
consent, order, registration or qualification of or with any court or
federal, New York or Pennsylvania governmental authority or agency
(including, without limitation, any insurance regulator) is required
for the entry into the Purchase Contracts underlying the Securities,
the issuance and sale of the Securities by the Offerors to the
Underwriters, or the issuance and sale of the Shares by the Company
pursuant to such Purchase Contracts, or the performance by the Company
and the Trust of their respective obligations under this Agreement,
the Pricing Agreement, the Purchase Contracts, the Remarketing
Agreement, the Purchase Contract Agreement,
34
35
the Pledge Agreement, the Indenture, the Debentures, the Guarantee
Agreement, the Declaration and the Securities, except such as has been
obtained and made under the federal securities laws or such as may be
required under state or foreign securities or Blue Sky laws.
(xi) The issuance and sale of the
Income PRIDES and Growth PRIDES in accordance with this Agreement do
not contravene the Commodity Exchange Act or the regulations of the
Commodity Futures Trading Commission.
(xii) None of the Trust nor the Company
is, and upon the issuance and sale of the Income PRIDES and Growth
PRIDES as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus, will not be, an "investment
company" or an entity "controlled" by an "investment company" as such
terms are defined within the meaning of and subject to registration
under the Investment Company Act of 1940, as amended.
(xiii) Based upon current law and the
assumptions stated or referred to therein, under current United States
Federal income tax law: (i) the Trust will be classified as a grantor
trust and not as an association taxable as a corporation; (ii) the
Debentures will be classified as indebtedness of the Company and (iii)
the discussion in the Prospectus under the caption "Certain Federal
Income Tax Consequences" is a fair and accurate summary of the matters
addressed therein.
Moreover, such counsel shall confirm that based upon their
examination of the Registration Statement and the Prospectus and their
investigations made in connection with the preparation of the
Registration Statement and the Prospectus (excluding any documents
incorporated therein) and their participations in conferences with
certain officers and employees of the Company, with representatives of
Coopers & Lybrand LLP and counsel to the Company such counsel has no
reason to believe that the Registration Statement, as of its effective
date (including any documents incorporated therein on file with
Commission on such effective date), contained any untrue statement of
a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading or that the Prospectus as of its date or as of the Date
of Delivery (including the documents incorporated therein by
reference) contains any untrue statement of a material fact or omits
to state any material fact necessary
35
36
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
in each case such counsel need express no belief with respect to the
financial statements or other financial data contained or incorporated
by reference in the Registration Statement, the Prospectus or the
documents incorporated therein.
(2) The favorable opinion, dated as of the
Closing of Wolf, Block, Schorr & Solis-Cohen, LLP special Delaware counsel to
the Offerors, in form and substance satisfactory to counsel for the
Underwriter, to the effect that:
(i) The Trust has been created and is
validly existing in good standing as a business trust under the
Delaware Act, and has the trust power and authority to conduct its
business as described in the Prospectus.
(ii) The Declaration constitutes a
legal, valid and binding obligation of the Company and is enforceable
against the Company in accordance with its terms, except that to the
extent enforceability thereof may be limited by the Bankruptcy
Exceptions.
(iii) Under the Delaware Act and the
Declaration, the Trust has the power and authority to (i) execute and
deliver, and to perform its obligations under, this Agreement and the
Pricing Agreement and (ii) issue, and perform its obligations under,
the Trust Securities.
(iv) Under the Delaware Act and the
Declaration, the execution and delivery by the Trust of this
Agreement, the Remarketing Agreement and the Pricing Agreement, and
the performance by the Trust of its obligations hereunder and
thereunder, have been authorized by all necessary action on the part
of the Trust.
(v) The Trust Preferred Securities
have been authorized by the Declaration and, when executed by the
Trust and authenticated by the Institutional Trustee in accordance
with the Declaration and delivered against payment therefor in
accordance with the terms of this Agreement, will be validly issued
and, subject to qualifications hereinafter expressed, fully paid and
nonassessable undivided beneficial interests in the assets of the
Trust; the Holders of the Trust Preferred Securities, as beneficial
owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private
36
37
corporations for profit organized under the General Corporation Law of
the State of Delaware; said counsel may note that the holders of the
Trust Preferred Securities may be obligated to make payments as set
forth in the Declaration.
(vi) The Common Securities have been
authorized by the Declaration and, when issued, executed and
authenticated in accordance with the terms of the Declaration, and
delivered and paid for as set forth in the Prospectus, will be validly
issued, undivided beneficial interests in the assets of the Trust.
(vii) Under the Delaware Act and the
Declaration, the issuance of the Trust Securities is not subject to
preemptive or other similar rights.
(viii) None of the execution and delivery
by the Trust of, or the performance by the Trust of its obligations
under, this Agreement, the issuance and sale of the Trust Preferred
Securities by the Trust in accordance with the terms of this Agreement
and the Pricing Agreement, or the consummation by the Trust of the
other transactions contemplated thereby, will contravene any
provisions of applicable Delaware law or Delaware administrative
regulations or the Certificate of Trust or the Declaration.
(ix) This Agreement, the Pricing
Agreement and the Remarketing Agreement have been duly authorized,
executed and delivered by the Trust.
(x) No authorization, approval,
consent, order, registration or qualification of or with any Delaware
state governmental authority or Delaware state agency is required for
the entry into the Purchase Contracts underlying the Securities, the
issuance and sale by the Trust of the Trust Preferred Securities to
the Underwriter, or the performance by the Company and the Trust of
their respective obligations under this Agreement, the Pricing
Agreement, the Purchase Contracts, the Purchase Contract Agreement,
the Pledge Agreement, the Indenture, the Debentures, the Guarantee
Agreement, the Declaration and the Trust Securities, except such as
has been obtained and made under the federal securities laws of such
as may be required under state or foreign securities or Blue Sky laws.
(3) The favorable opinion, dated as of the
Closing of Pepper Hamilton LLP, counsel to First National Bank of Chicago, as
Institutional Trustee under the Declaration, and Guarantee
37
38
Trustee under the Guarantee Agreement, and to First Chicago Delaware Inc., as
Delaware Trustee, in form and substance satisfactory to counsel for the
Underwriter, to the effect that:
(i) The Institutional Trustee is a
national banking association with trust powers, duly organized,
validly existing and in good standing under the laws of the United
States with all necessary corporate power and authority to execute,
deliver, and to carry out and perform its obligations under the terms
of, the Declaration and the Guarantee.
(ii) The Delaware Trustee is a Delaware
corporation, duly organized, validly existing and in good standing,
with full corporate power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, the
Declaration.
(iii) The execution, delivery and
performance by each of the Institutional Trustee and the Delaware
Trustee of the Declaration, and the execution, delivery and
performance by Guarantee Trustee of the Guarantee, have been duly
authorized by all necessary corporate action on the part of the
Institutional Trustee and the Delaware Trustee, respectively, in the
case of the Declaration, and by the Guarantee Trustee, in the case of
the Guarantee. The Declaration and the Guarantee have been duly
executed and delivered by the Institutional Trustee and the Delaware
Trustee, respectively, in the case of the Declaration, and by the
Guarantee Trustee, in the case of the Guarantee, and constitute the
legal, valid and binding obligation of the Institutional Trustee and
the Delaware Trustee, in the case of the Declaration, and of the
Guarantee Trustee, in the case of the Guarantee, enforceable against
the Institutional Trustee and the Delaware Trustee in the case of the
Declaration, and against the Guarantee Trustee, in the case of the
Guarantee, in accordance with their terms except to the extent
enforcement thereof may be limited by the Bankruptcy Exceptions.
(iv) The execution, delivery and
performance by each of the Institutional Trustee and the Delaware
Trustee of the Declaration, and the execution, delivery and
performance by the Guarantee Trustee of the Guarantee, do not conflict
with, or constitute a breach of, the Institutional Trustee's, the
Delaware Trustee's or the Guarantee Trustee's respective charter or
bylaws.
38
39
(v) No consent, approval or
authorization of, or registration with or notice to, any Delaware or
federal banking authority is required for the execution, delivery or
performance by the Institutional Trustee and the Guarantee Trustee of
the Declaration and the Preferred Securities Guarantee Agreement.
(4) The favorable opinion, dated as of the
Closing Time, of the Law Department of The First National Bank of Chicago, as
Purchase Contract Agent, in form and substance satisfactory to counsel for the
Underwriter, to the effect that:
(i) The First National Bank of
Chicago, is duly incorporated and is validly existing as a banking
corporation with trust powers under the laws of the United States with
all necessary power and authority to execute, deliver and perform its
obligations under the Purchase Contract Agreement and the Pledge
Agreement.
(ii) The execution, delivery and
performance by the Purchase Contract Agent of the Purchase Contract
Agreement and the Pledge Agreement, and the authentication and
delivery of the Securities have been duly authorized by all necessary
corporate action on the part of the Purchase Contract Agent. The
Purchase Contract Agreement and the Pledge Agreement have been duly
executed and delivered by the Purchase Contract Agent, and constitute
the legal, valid and binding obligations of the Purchase Contract
Agent, enforceable against the Purchase
39
40
Contract Agent in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions.
(iii) the execution, delivery and
performance of the Purchase Contract Agreement and the Pledge
Agreement by the Purchase Contract Agent does not conflict with or
constitute a breach of the charter or by-laws of the Purchase Contract
Agent.
(iv) No consent, approval or
authorization of, or registration with or notice to, any Illinois or
federal governmental authority or agency is required for the
execution, delivery or performance by the Purchase Contract Agent of
the Purchase Contract Agreement and the Pledge Agreement.
(5) The opinion of Wolf, Block, Schorr &
Solis-Cohen LLP, special tax counsel to the Offerors, generally to the effect
that based upon current law and the assumptions stated or referred to therein,
under current U.S. federal income tax law: (i) the Trust will be classified as
a grantor trust and not as an association taxable as a corporation; (ii) the
Debentures will be classified as indebtedness of the Company and (iii) the
discussion in the Prospectus under the caption "Certain Federal Income Tax
Consequences" is a fair and accurate summary of the matters addressed therein,
based upon current law and the assumptions stated or referred to therein.
(6) The favorable opinion, dated as of the
Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Underwriter, in form and substance satisfactory to the Underwriter, with
respect to the issuance and sale of the Securities, and other related matters
as the Underwriter may reasonably require, and the Company shall have furnished
to such counsel such documents as they request for the purpose of enabling them
to pass upon such matters. In giving its opinion, such counsel may rely as to
certain matters of Pennsylvania law upon the
40
41
opinion of Wolf, Block, Schorr & Solis-Cohen LLP, special counsel for the
Offerors, which shall be delivered in accordance with Section 5(b)(1) hereof.
a. Between the date of this Agreement and prior to the Closing
Time, no material adverse change shall have occurred in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Trust or the Company and its subsidiaries, considered as one
enterprise, whether or not in the ordinary course of business.
b. At the Closing Time, the Underwriter shall have received a
certificate of the President or a Vice-President of the Company and of the
Chief Financial Officer or Chief Accounting Officer of the Company and a
certificate of a Regular Trustee of the Trust, and dated as of the Closing
Time, to the effect that (i) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Trust or the Company and its subsidiaries considered
as one enterprise, whether or not in the ordinary course of business, (ii) the
representations and warranties in Section 1 hereof are true and correct as
though expressly made at and as of the Closing Time, (iii) the Company and the
Trust have complied with all agreements and satisfied all conditions on their
part to be performed or satisfied at or prior to the Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or threatened by
the Commission.
c. At the time of the execution of this Agreement, the
Underwriter shall have received from Coopers & Lybrand LLP a letter dated such
date in form and substance satisfactory to the Underwriter, to the effect set
forth below and as to such other matters as the Underwriter may reasonably
request, that: [TO BE SUPPLIED]
d. At the Closing Time, the Underwriter shall have received from
Coopers & Lybrand LLP a letter, dated as of the Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (e) of this Section, except that the specified
41
42
date referred to shall be a date not more than five days prior to the Closing
Time.
e. At the Closing Time, and at each Date of Delivery, if any,
counsel for the Underwriter shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions herein contained;
and all proceedings taken by the Offerors in connection with the issuance and
sale of the Securities as herein contemplated shall be satisfactory in form and
substance to the Underwriter and counsel for the Underwriter.
f. At the Closing Time, (i) the Securities shall be rated in one
of the four highest rating categories for preferred stock ("Investment Grade")
by any nationally recognized statistical rating agency, and the Offerors shall
have delivered to the Underwriter a letter, from such nationally recognized
statistical rating agency, or other evidence satisfactory to the Underwriter,
confirming that the Securities have Investment Grade ratings; (ii) there shall
not have occurred any decrease in the rating assigned to the Securities or any
other securities of the Company or of the financial condition of the Company by
any "nationally recognized statistical rating organization," as defined for
purposes of Rule 436(g)(2) under the 1933 Act Regulations, and (iii) no
downgrading shall have occurred in the "A" claims-paying ability rating
assigned to the Company by Standard & Poor's Corporation ("S&P"), the "A"
(Excellent) financial strength rating assigned to the Company by A.M. Best
Company ("Best") or the "A" claims-paying ability rating assigned to the
Insurance Subsidiaries by S&P and (iv) no such organization shall have publicly
announced that it has under surveillance or review its rating of the Securities
or any other securities of the Company or of the financial condition or
claims-paying ability of the Company.
g. At the Closing Time, the Income PRIDES, the Growth PRIDES and
the Shares shall have been approved for listing on the NASDAQ National Market
upon notice of issuance.
42
43
h. In the event that the Underwriter exercises the options
provided in Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Offerors contained herein
and the statements in any certificates furnished by the Offerors hereunder
shall be true and correct as of, and as if made on, each Date of Delivery, and
at the relevant Date of Delivery, the Underwriter shall have received:
(1) A certificate, dated such Date of Delivery,
of the President or a Vice-President of the Company and the Chief Financial
Officer or Chief Accounting Officer of the Company and a certificate of a
Regular Trustee of the Trust confirming that the certificate delivered at the
Closing Time pursuant to Section 5(d) hereof is true and correct as of, and as
if made on, such Date of Delivery.
(2) The favorable opinion of Wolf, Block,
Schorr & Solis-Cohen LLP, special counsel and special tax counsel for the
Offerors, in form and substance satisfactory to counsel for the Underwriter,
dated such Date of Delivery, relating to the Option Securities and otherwise to
the same effect as the opinion required by Sections 5(b)(1) and 5(b)(5) hereof.
(3) The favorable opinion of Wolf, Block,
Schorr & Solis-Cohen LLP, special Delaware counsel for the Offerors, in form
and substance satisfactory to counsel for the Underwriter, dated such Date of
Delivery, relating to the Option Securities and otherwise to the same effect as
the opinion required by Section 5(b)(2) hereof.
(4) The favorable opinion of Pepper Hamilton
LLP, counsel to The First National Bank of Chicago and First Chicago Delaware,
Inc. in form and substance satisfactory to counsel for the Underwriter, dated
such Date of Delivery, relating to the Option Securities and otherwise to the
same effect as the opinion required by Section 5(b)(3) hereof.
(5) The favorable opinion of the Law Department
of The First National Bank of Chicago, as Purchase Contract Agent, in form and
substance satisfactory to counsel for the Underwriter, dated such Date of
Delivery, relating to the Option Securities and otherwise to the same effect as
the opinion required by Section 5(b)(4) hereof.
(6) The favorable opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, counsel for the Underwriter, dated such Date
43
44
of Delivery, relating to the Option Securities and otherwise to the same effect
as the opinion required by Section 5(b)(6) hereof.
(7) A letter from Coopers & Lybrand L.L.P. in
form and substance satisfactory to the Underwriter and dated such Date of
Delivery, substantially the same in form and substance as the letter furnished
to the Underwriter pursuant to Section 5(e) hereof, except that the "specified
date" in the letter furnished pursuant to this Section shall be a date not more
than five days prior to such Date of Delivery.
(8) At such Date of Delivery, (i) the
Securities shall be rated Investment Grade by any nationally recognized
statistical rating agency, and the Offerors shall have delivered to the
Underwriter a letter from such nationally recognized statistical rating agency,
or other evidence satisfactory to the Underwriter, confirming that the
Securities have Investment Grade ratings; (ii) there shall not have occurred
any decrease in the rating assigned to the Securities or any other securities
of the Company or of the financial condition of the Company by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g)(2) under the 1933 Act Regulations, and (iii) no downgrading shall have
occurred in the "A" claims-paying ability rating assigned to the Company by
S&P, the "A" (Excellent) financial strength rating assigned to the Company by
Best or the "A" claims-paying ability rating assigned to the Insurance
Subsidiaries by S&P and (iv) no such organization shall have publicly announced
that it has under surveillance or review its rating of the Securities or any
other securities of the Company or of the financial condition of the Company.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement, or, in the case
of any condition to the purchase of Option Securities on a Date of Delivery
which is after the Closing Time, the obligations of the Underwriter to purchase
the relevant Option Securities may be terminated by the Underwriter by notice
to the Company at any time at or prior to the Closing Time, or such Date of
Delivery, as the case may be, and such termination shall be without liability
of any party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
44
45
Section 6. Indemnification.
a. The Offerors agree to jointly and severally indemnify and
hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, arising
out of any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434
Information deemed to be part thereof, if applicable, or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever
45
46
based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, provided, that (subject to Section 6(d)
below) any such settlement is effected with the written consent of the
Offerors; and
(iii) against any and all expense
whatsoever, as incurred (including the fees and disbursements of
counsel chosen by the Underwriter), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that the foregoing indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Offerors by the Underwriter expressly for use in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule 434
Information deemed to be a part thereof, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
b. The Underwriter agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, the Trust and each of its Trustees who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section,
46
47
as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule 434
Information deemed to be a part thereof, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Offerors by the Underwriter expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
c. Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. In the case
of parties indemnified pursuant to Section 6(a) above, counsel to the
indemnified parties shall be selected by the Underwriter, and, in the case of
parties indemnified pursuant to section 6(b) above, counsel to the indemnified
parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7
47
48
hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
d. If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for
in Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Offerors on the one hand, and the Underwriter, on the other hand, from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Offerors on the one hand,
and the Underwriter, on the other hand, in connection with the statements or
omissions which resulted in
48
49
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by Offerors on the one hand, and the
Underwriter, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of such
Securities (before deducting expenses) received by the Offerors and the total
underwriting discount received by the Underwriter, in each case as set forth on
the cover of the Prospectus, or, if Rule 434 is used, the corresponding
location on the Term Sheet bear to the aggregate initial public offering price
of such Securities as set forth on such cover.
The relative fault of the Offerors, on the one hand, and the
Underwriter, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Offerors or by the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Offerors and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Underwriter
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
the Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
49
50
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter, and
each director of the Company, each officer of the Company and each Trustee of
the Trust who signed the Registration Statement, and each person, if any, who
controls the Company and the Trust within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Offerors.
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement and the Pricing Agreement, or contained in certificates of
officers of the Company or trustees of the Trust submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or controlling person, or
by or on behalf of the Company, and shall survive delivery of and payment for
the Securities to the Underwriter.
SECTION 9. Termination of Agreement.
a. The Underwriter may terminate this Agreement, by notice to
the Company at any time at or prior to the Closing Time, if (i) there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change or any
development which could reasonably be expected to result in a prospective
material adverse change, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) there has occurred any material adverse change in the financial markets in
the United States or any outbreak of hostilities or escalation of hostilities
or other calamity or crisis, or any change or development involving a
prospective change in national or international political, financial or
50
51
economic conditions the effect of which is such as to make it, in the judgment
of the Underwriter impracticable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading in the Common
Stock or any other security of the Company has been suspended or limited by the
Commission, NASD or the NASDAQ National Market, or if trading generally on
either the American Stock Exchange, the NASDAQ National Market or in the
over-the-counter market has been suspended or limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities
have been required, by either of said exchanges or by such system or by order
of the Commission, NASD or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal, New York or New Jersey
authorities.
b. If this Agreement and the Pricing Agreement are terminated
pursuant to this Section 9, such termination shall be without liability of any
party to any other party except as provided in Section 4, and provided,
further, that Sections 1, 6, 7 and 8 shall survive such termination and remain
in full force and effect.
SECTION 10. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to
the Underwriter shall be directed to the Underwriter c/o Merrill Lynch at
Merrill Lynch World Headquarters, World Financial Center, North Tower, New
York, New York 10281, Attention of Tony Ursano, Director, with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP, Attention of John Osborn, Esq.;
notices to the Offerors shall be directed to it at Philadelphia Consolidated
Holding Corp., One Bala Plaza, Suite 100, Bala Cynwyd, Pennsylvania 19004,
Attention of Mr. Craig P. Keller, Secretary.
SECTION 11. Parties. This Agreement and the Pricing Agreement
shall each inure to the benefit of and be binding upon the Offerors and the
Underwriter and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or
51
52
shall be construed to give any person, firm or corporation, other than the
Underwriter and the Offerors and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or the Pricing Agreement or any
provision herein or therein contained. This Agreement and the Pricing
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the parties hereto and thereto and
their respective successors and legal representatives, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Securities from the Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT AND THE
PRICING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME UNLESS OTHERWISE INDICATED.
SECTION 13. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.
52
53
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Company, the Trust and the Underwriter in accordance with
its terms.
Very truly yours,
PHILADELPHIA CONSOLIDATED HOLDING CORP.
By:
-----------------------------------
Name:
Title:
PCHC FINANCING I
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
---------------------------------------
Name:
Authorized Signatory:
53
54
PHILADELPHIA CONSOLIDATED HOLDING CORP.
(A PENNSYLVANIA CORPORATION)
PCHC FINANCING I
(A DELAWARE BUSINESS TRUST)
FELINE PRIDES
AND
% TRUST ORIGINATED PREFERRED SECURITIES (TOPRS(SM))
PRICING AGREEMENT
DATED: APRIL , 1998
55
PHILADELPHIA CONSOLIDATED HOLDING CORP.
(A PENNSYLVANIA CORPORATION)
PCHC FINANCING I
(A DELAWARE BUSINESS TRUST)
FELINE PRIDES(SM)
(STATED AMOUNT OF $10 PER FELINE PRIDES),
CONSISTING OF
INCOME PRIDES(SM)
EACH CONSISTING OF
A PURCHASE CONTRACT OF PHILADELPHIA CONSOLIDATED HOLDING CORP.
REQUIRING THE
PURCHASE ON , 2001 (OR EARLIER) OF CERTAIN SHARES
OF COMMON STOCK OF PHILADELPHIA CONSOLIDATED HOLDING CORP.
AND
A % TRUST ORIGINATED PREFERRED SECURITY(SM)
(TOPRS(SM))
OF PCHC FINANCING I
AND
GROWTH PRIDES(SM)
EACH CONSISTING OF
A PURCHASE CONTRACT OF PHILADELPHIA CONSOLIDATED HOLDING CORP.
REQUIRING THE
PURCHASE ON , 2001 (OR EARLIER) OF CERTAIN SHARES
OF COMMON STOCK OF PHILADELPHIA CONSOLIDATED HOLDING CORP.
AND
A 1/100 UNDIVIDED BENEFICIAL INTEREST IN A ZERO-COUPON U.S.
TREASURY SECURITY HAVING A PRINCIPAL AMOUNT EQUAL
TO $1,000 AND MATURING ON 15, 2001;
AND
% TRUST PREFERRED SECURITIES OF
PCHC FINANCING I (LIQUIDATION AMOUNT $10 PER
TRUST PREFERRED SECURITY)
56
April , 1998
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated
, 1998 (the "Underwriting Agreement"), relating to the purchase by the
Underwriter named therein of the above Income PRIDES (the "Income PRIDES"),
Growth PRIDES (The "Growth PRIDES") and Trust Preferred Securities (the "Trust
Preferred Securities" and, together with the Income PRIDES and Growth PRIDES,
the "Securities") of Philadelphia Consolidated Holding Corp. (the "Company"),
and PCHC Financing I (the "Trust"). The Securities are being issued and sold
by the Company and the Trust to the Underwriter on the terms and conditions set
forth in the Underwriting Agreement.
Pursuant to Section 2 of the Underwriting Agreement, the
Company and the Trust agree with the Underwriter as follows:
1. The initial public offering price, and the aggregate
interest rate to be paid by the Offerors, per security for the Securities,
determined as provided in said Section 2, shall be (a) in the case of each
Income PRIDES, $10.00 and %, (b) in the case of each Growth PRIDES, $ and
% and (c) in the case of each separately offered Trust Preferred Security,
$10.00 and %.
2. The respective purchase prices per security for the
Securities to be paid by the several Underwriters shall be equal to the initial
public offering prices set forth in paragraph 1. above. The Company shall pay
a commission to the Underwriters equal, in the case of the Initial Securities,
to $ and, with respect to the Option Securities, $ per security in
the case of Income PRIDES, $ per security in the case of Growth PRIDES and $
per security in the case of separately offered Trust Preferred Securities.
57
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a binding
agreement among the Company, the Trust and the Underwriter in accordance with
its terms.
Very truly yours,
PHILADELPHIA CONSOLIDATED HOLDING CORP.
By:
------------------------------------
Name:
Title:
PCHC FINANCING I
By:
------------------------------------
Name:
Title: Regular Trustee
By:
------------------------------------
Name:
Title: Regular Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
---------------------------------------
Name:
Authorized Signatory: