1
DRAFT
5/7/96
2,000,000 Shares
EXECUTIVE RISK INC.
Common Stock
UNDERWRITING AGREEMENT
May __, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CONNING & COMPANY
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Aetna Life and Casualty Company ("Aetna"), a Connecticut
insurance corporation and a stockholder of Executive Risk Inc., a Delaware
corporation (the "Company") proposes to sell an aggregate of 2,000,000 shares of
common stock, par value $.01 per share (the "Common Stock"), of the Company (the
"Firm Shares"), to the several underwriters named in Schedule I hereto (the
"Underwriters"). The Company proposes to issue and sell to the several
Underwriters not more than 300,000 additional shares of Common Stock of the
Company (the "Additional Shares"), if requested by the Underwriters as provided
in Section 2 hereof. The Firm Shares and the Additional Shares are herein
collectively called the "Shares". The Company and Aetna are sometimes
hereinafter collectively referred to as the "Sellers."
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Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and Conning
& Company shall act as representatives (the "Representatives") of the several
Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission"), in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 (Registration No. 333-3956)
including a prospectus relating to the Shares, which registration statement may
be amended. The registration statement, as amended at the time when it becomes
effective, including any amendment to the registration statement filed pursuant
to Rule 462(b) under the Act increasing the size of the offering registered
under the Act and information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A (or Rule 434) under
the Act (and including, in each case, all documents incorporated by reference),
is hereinafter referred to as the "Registration Statement;" and the prospectus
in the form first used to confirm sales of Shares is hereinafter referred as the
"Prospectus."
2. Agreements to Sell and Purchase. Upon the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, Aetna hereby agrees to sell to the Underwriters the Firm
Shares, at a price per share of $______ per share (the "Purchase Price"), and
each Underwriter hereby agrees, severally and not jointly, to purchase from
Aetna, at the Purchase Price, the number of Firm Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may determine)
set forth opposite the name of such Underwriter in Schedule I.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company hereby agrees to
issue and sell to the Underwriters, and the Underwriters shall have the right to
purchase, severally and not jointly, from the Company, up to an aggregate of
300,000 Additional Shares at the Purchase Price. Additional Shares may be
purchased solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. The Underwriters may exercise their right
to purchase Additional Shares in whole or in part from time to time by giving
written notice thereof to the Company within 30 days after the date of this
Agreement. The Representatives shall give any such notice on behalf of the
Underwriters and such notice shall specify the aggregate number of Additional
Shares to be purchased pursuant to such exercise and the date for payment and
delivery thereof. The date specified in any such notice shall be
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a business day (i) no earlier than the Closing Date (as hereinafter defined),
(ii) no later than ten business days after such notice has been given and (iii)
no earlier than two business days after such notice has been given. If any
Additional Shares are to be purchased, each Underwriter, severally and not
jointly, agrees to purchase from the Company the number of Additional Shares
(subject to such adjustments to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the total
number of Additional Shares to be purchased from the Company as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I bears
to the total number of Firm Shares purchased by such Underwriter from Aetna.
Aetna hereby agrees, and the Company shall, concurrently with the
execution of this Agreement, deliver an agreement executed by each of the
directors and executive officers of the Company pursuant to which each such
person agrees, not to directly or indirectly offer, sell, contract to sell,
grant any option to purchase, or otherwise dispose of any capital stock of the
Company or any securities convertible into or exercisable or exchangeable for
such capital stock or in any other manner transfer all or a portion of the
economic consequences associated with the ownership of any such capital stock,
except to the Underwriters pursuant to this Agreement, for a period of 180 days
after the date of the Prospectus, without the prior written consent of the
Representatives (the "Lock-up"), and except any transfers of such capital stock
pursuant to bona fide gifts whereby the transferee agrees in writing to be bound
by the Lock-up.
3. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after the effective date of the Registration Statement as
in your judgment is advisable and (ii) initially to offer the Shares upon the
terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and payment
for the Firm Shares shall be made at 10:00 A.M., New York City time, on the
third or fourth business day, unless otherwise permitted by the Commission
pursuant to Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (the "Closing Date") following the date of the public offering,
at the offices of LeBoeuf, Lamb Greene & MacRae, L.L.P., 125 West 55th Street,
New York, New York 10019 against payment therefor by wire transfer or by
certified or official bank check or checks in Federal (same day) funds drawn to
the order of Aetna. The Closing Date and the location of
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delivery of and the form of payment for the Firm Shares may be
varied by agreement between you and the Sellers.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at 10:00 A.M., New York City
time, at such place in New York, New York as the Representatives shall designate
on the date specified in the applicable exercise notice given by the
Representatives pursuant to Section 2 (the "Option Closing Date"), against
payment of the purchase price therefor by wire transfer or by certified or
official bank check or checks in Federal (same day) funds drawn to the order of
the Company. Any such Option Closing Date and the location of delivery of and
the form of payment for such Additional Shares may be varied by agreement
between the Representatives and the Company.
Aetna has prior to the date hereof surrendered its certificates
representing the Firm Shares, along with fully executed stock powers, to the
Company. Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or the Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
Closing Date or the Option Closing Date, as the case may be. Certificates in
definitive form evidencing the Shares shall be delivered to you on the Closing
Date or the Option Closing Date, as the case may be, with any transfer taxes
thereon duly paid by the respective Sellers, for the respective accounts of the
several Underwriters, against payment of the Purchase Price therefor by wire
transfer or certified or official bank checks payable in Federal (same day)
funds to the order of the applicable Sellers.
5. Agreements of the Company. The Company agrees with you as follows:
(a) As soon as practicable after the execution and delivery of this
Agreement, the Company will file (i) if the Registration Statement is not
yet effective, an amendment to the Registration Statement or (ii) if the
Registration Statement is already effective, a post-effective amendment to
the Registration Statement, if necessary, pursuant to Rule 430A under the
Act. The Company will use its best efforts to cause the Registration
Statement or such post-effective amendment to become effective at the
earliest possible time. The Company will comply fully and in a timely manner
with the applicable provisions of Rules 424 and 430A under the Act.
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(b) The Company will advise you promptly and, if requested by you, will
confirm such advice in writing, (i) when the Registration Statement has
become effective (if such Registration Statement has not become effective
prior to the execution of this Agreement), if and when any Prospectus is
filed with the Commission pursuant to Rule 424 under the Act and when any
post-effective amendment to the Registration Statement becomes effective,
(ii) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for additional
information, (iii) if and when it becomes aware of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the issuance by any state securities commission or
other regulatory authority of any order suspending the qualification or
exemption from qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes, and
(iv) during the period referred to in paragraph (f) below, if and when it
becomes aware of any material change in the business, prospects, operations,
properties, net worth, results of operations or financial condition of the
Company and its subsidiaries (including, for the purposes of this Agreement,
any Subsidiary (as hereinafter defined)), taken as a whole, or of the
happening of any event which makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue or which requires the
making of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading in any
material respect. If at any time the Commission shall issue any stop order
of which the Company becomes aware suspending the effectiveness of the
Registration Statement or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Shares, the Company will make every
reasonable effort to obtain the withdrawal or lifting of such order at the
earliest possible time.
(c) The Company will furnish to you, without charge, five signed copies
of the Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits filed therewith or incorporated by
reference therein, and will furnish to you and each Underwriter designated
by you such number of conformed copies of the Registration Statement as so
filed and of each amendment to it, without exhibits, as you may reasonably
request.
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(d) The Company will not (i) file any amendment or supplement to the
Registration Statement, whether before or after the time when the
Registration Statement becomes effective, or make any amendment or
supplement to the Prospectus of which you shall not previously have been
advised or to which you shall reasonably and timely object or (ii) during
such period as, in the judgment of counsel for the Underwriters, a
Prospectus is required to be delivered in connection with sales by any
Underwriter or dealer, file any information, documents or reports pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
without delivering a copy of such information, documents or reports to you,
as the Representatives, prior to, concurrently with or immediately after
such filing. The Company will prepare and file with the Commission, promptly
upon your reasonable request, any amendment to the Registration Statement or
any amendment or supplement to the Prospectus that may be necessary or
advisable in connection with the distribution of the Shares as determined by
the Company and the Representatives. The Company will use its best efforts
to cause any such amendment or supplement to become effective as promptly as
possible. In the event that the Company and you, as the Representatives,
agree that the Prospectus should be amended or supplemented, the Company, if
requested by you, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or
supplement.
(e) Prior to the execution and delivery of this Agreement, the Company
has delivered to you, without charge, in such quantities as you have
reasonably requested, copies of each form of preliminary prospectus. The
Company consents to the use, in accordance with the provisions of the Act
and with the securities, insurance securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters
and by all dealers to whom the Shares may be sold, prior to the date of the
Prospectus, of each preliminary prospectus.
(f) Promptly after the Registration Statement becomes effective, and
from time to time thereafter during such period as in the judgment of
counsel for the Underwriters a prospectus is required by law to be delivered
in connection with sales by an Underwriter or a dealer, the Company will
furnish without charge to each Underwriter and such dealers as you shall
specify as many copies of the Prospectus (and of each amendment or
supplement thereto) as such Underwriter or dealer may reasonably request.
The Company consents to the use of the Prospectus and any amendment or
supplement
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thereto by the Underwriters and by all dealers to whom the Shares may be
sold, both at the time of the offering or sale of the Shares and for such
period of time thereafter as the Prospectus is required by law to be
delivered in connection therewith.
(g) If during the period specified in paragraph (f) any event shall
occur as a result of which, in the judgment of counsel for the Underwriters,
it becomes necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any law, the
Company will forthwith prepare and file with the Commission an appropriate
amendment or supplement to the Prospectus so that the statements in the
Prospectus, as so amended or supplemented, will not in the light of the
circumstances when it is so delivered, be misleading, or so that the
Prospectus will comply with law, and to furnish without charge to each
Underwriter and to such dealers as you shall specify, such number of copies
thereof as such Underwriter or dealers may reasonably request.
(h) Prior to any public offering of the Shares, the Company will
cooperate with you and with counsel for the Underwriters in connection with
the registration or qualification of the Shares for offer and sale by the
several Underwriters and by dealers under the securities, Blue Sky or
insurance laws governing the offer and sale of securities of such
jurisdictions as you may request, to continue such qualification in effect
so long as required for distribution of the Shares and to file such consents
to service of process or other documents as may be necessary in order to
effect such registration or qualification.
(i) The Company will make generally available to its stockholders as
soon as reasonably practicable, but not later than 60 days after the close
of the period covered thereby, an earnings statement covering a period of at
least twelve months beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration
Statement which shall satisfy the provisions of Section 11(a) of the Act and
Rule 158 promulgated thereunder.
(j) During the period of five years after the date of this Agreement,
the Company will (i) mail as soon as reasonably practicable after the end of
each fiscal year to the record holders of the Common Stock a financial
report of
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the Company and the Subsidiaries on a consolidated basis, all such financial
reports to include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated
statement of shareholders' equity as of the end of and for such fiscal year,
together with comparable information as of the end of and for the preceding
year, certified by independent certified public accountants, and (ii) mail
and make generally available as soon as practicable after the end of each
quarterly period (except for the last quarterly period of each fiscal year)
to such holders, an unaudited consolidated balance sheet, an unaudited
consolidated statement of operations and an unaudited consolidated statement
of cash flows as of the end of and for such period, and for the period from
the beginning of such year to the close of such quarterly period, together
with comparable information for the corresponding periods of the preceding
year.
(k) During the five years after the date of this Agreement, the Company
will furnish without charge to you, and, upon request, to each of the other
Underwriters, as soon as available, a copy of each report or other publicly
available information of the Company mailed to the holders of Common Stock
or filed with the Commission and such other non-confidential information
concerning the Company and the Subsidiaries as you may reasonably request.
(l) Aetna and the Company will pay pro rata, in proportion to the
number of shares of Common Stock sold by each of them, all costs, expenses,
fees and taxes incident to (i) the preparation, printing, filing and
distribution under the Act of the Registration Statement (including
financial statements and exhibits), each preliminary prospectus and all
amendments and supplements to any of them, (ii) the preparation, printing,
filing and delivery of the Prospectus and all amendments or supplements
thereto, (iii) the printing and delivery of this Agreement, the Preliminary
and Supplemental Blue Sky Memoranda and all other agreements printed and
delivered in connection with the offering of the Shares (including in each
case any reasonable disbursements of counsel for the Underwriters relating
to such printing and delivery), (iv) the registration with the Commission,
and the issuance and delivery by the Company, and the delivery by Aetna, of
the Shares, (v) the registration or qualification of the Shares for offer
and sale under the securities, Blue Sky or insurance laws governing the
offer and sale of securities of the several states (including in each case
the reasonable fees and disbursements of counsel for the Underwriters
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relating to such registration or qualification and memoranda relating
thereto), (vi) furnishing such copies of the Registration Statement, the
Prospectus and any preliminary prospectus, and all amendments and
supplements thereto, as may be requested for use in connection with the
offering or sale of the Shares by the several Underwriters or by dealers to
whom the Shares may be sold, (vii) filings and clearance with the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
offering, and (viii) the performance by the Sellers of their other
obligations under this Agreement (including, without limitation, the fees of
the Company's transfer agent and registrar, the cost of its personnel and
other internal costs, the cost of printing and engraving the certificates
representing the Shares and all expenses and taxes incident to the sale and
delivery of the Shares to be sold to the Underwriters other than any
transfer taxes on resales by the Underwriters); but excluding except as
expressly provided in clauses (iii) and (v) above, the fees and expenses of
counsel to the Underwriters.
(m) From the date hereof and for a period of 180 days after the date of
the Prospectus, the Company will not directly or indirectly offer, sell,
contract to sell, grant any option for the sale of, otherwise dispose of,
file with the Commission a registration statement under the Act to register,
or announce the sale or offering of, any additional shares of its capital
stock or any security convertible into or exchangeable or exercisable for
its capital stock without your prior written consent; provided, however,
that the foregoing shall not apply to (i) the grant of options to purchase
shares of Common Stock to employees, officers or directors of the Company
pursuant to any stock option plan of the Company existing on the date hereof
(the "Stock Option Plans"), (ii) the issuance of shares of Common Stock
pursuant to the exercise of options granted under any of the Stock Option
Plans, (iii) the issuance of shares of Common Stock pursuant to the exercise
of options granted to former directors of ERI prior to the date hereof, (iv)
the grant of performance share units under the Company's Performance Share
Plan ("PSP"), (v) the grant of stock units under the Company's Stock
Incentive Plan ("SIP"), (vi) the issuance of shares of Common Stock pursuant
to the PSP or the SIP or (vii) any registration statement filed under the
Act in respect of securities to be issued pursuant to any of the Company's
Stock Option Plans, the PSP or the SIP.
(n) The Company will use its best efforts to maintain the inclusion of
the Common Stock on the NYSE for a period of three years after the effective
date of the Registration
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Statement; provided that any acquisition of an ownership interest in
the Company resulting in the removal of the Common Stock from the NYSE
shall not constitute a breach of the agreement contained in this
Section 5(n).
(o) The Company will apply the net proceeds from the sale of
the Additional Shares in accordance with the description set forth in
the Prospectus under the caption "Use of Proceeds."
(p) The Company will use its best efforts to satisfy all
conditions precedent to the delivery of the Shares.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) The Registration Statement, when it became
effective, did not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with
the Act; and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this paragraph (b) do not apply to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to (i) any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein or
(ii) Aetna under the caption "Selling Stockholder" furnished to the
Company (with a copy to the Representative) in writing by Aetna
expressly for use therein.
(c) The documents incorporated by reference in the
Registration Statement or the Prospectus pursuant to Item 12 of Form
S-3 under the Act, at the time they were filed or last amended or
hereafter are filed or amended, as the case may be, with the
Commission, complied and will comply in all
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material respects with the requirements of the Exchange Act and, when
read together and with the other information in the Prospectus, at the
time the Registration Statement became or becomes effective and at the
Closing Date and the Option Closing Date, as the case may be, 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, in the light of the circumstances under
which they were or are made, not misleading; and any documents deemed
to be incorporated by reference in the Registration Statement or the
Prospectus, if and when they were or are filed with the Commission,
complied with or will comply in all material respects with the
requirements of the Exchange Act 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; provided, however, that the representations and
warranties in this paragraph shall not apply to statements in or
omissions from the Registration Statement or the Prospectus (or any
supplement or amendment to them) made based upon and conforming with
information relating to any Underwriter furnished to the Company in
writing by or on behalf of any Underwriter through the Representatives
expressly for use therein.
(d) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, and each
Registration Statement filed pursuant to Rule 462(b) under the Act, if
any, complied when so filed in all material respects with the Act and
did not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The Commission has not issued any order
preventing or suspending the use of any preliminary prospectus.
(e) Each corporation, partnership or other entity in which the
Company owns beneficially at least 50% of the outstanding ownership
interests is listed on Exhibit 21.1 to the Registration Statement. With
the exception of UAP Executive Partners, each of such entities is
referred to herein as a "Subsidiary" and all of such entities,
collectively, are referred to as the "Subsidiaries". The Company owns
100% of the outstanding capital stock of Executive Re Inc., a Delaware
corporation ("ERI"), and 70% of the general partnership interests in
Executive Risk Management Associates, a Connecticut general partnership
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("ERMA"), free and clear of all liens, claims, charges, options,
restrictions or other encumbrances of any type or nature, except, with
respect to the stock of ERI, for the lien of The Chase Manhattan Bank
(National Association), as Agent (the "Agent"), pursuant to the Stock
Pledge Agreement dated as of March 26, 1996 between the Company and the
Agent entered into in connection with that certain Term Loan Agreement
dated as of March 26, 1996 among the Company, the Banks signatory
thereto and the Agent. ERI owns 100% of the outstanding capital stock
of Executive Re Indemnity, Inc., a Delaware corporation ("ERII"), 100%
of the outstanding capital stock of Talcott Services Corporation, a
Delaware corporation ("Talcott"), 100% of the issued share capital of
Executive Risk Limited, a company incorporated under the laws of the
United Kingdom, 100% of the outstanding capital stock of Executive Risk
N.V., a company incorporated under the laws of the Netherlands, 50% of
the outstanding capital stock of UAP Executive Partners, a French
corporation ("UPEX"), and 30% of the general partnership interests in
ERMA, free and clear of all liens, claims, charges, options,
restrictions or other encumbrances of any type or nature except, in the
case of the stock of ERII, for the lien of The Chase Manhattan Bank
(National Association), as Agent (the "Agent"), pursuant to the Stock
Pledge Agreement dated as of March 26, 1996 between ERI and the Agent
entered into in connection with that certain Term Loan Agreement dated
as of March 26, 1996 among the Company, the Banks signatory thereto and
the Agent. ERII owns 100% of the outstanding capital stock of Executive
Re Specialty Insurance Company, a Connecticut corporation ("ERSIC"),
free and clear of all liens, claims, charges, options, restrictions or
other encumbrances of any type or nature. Except as set forth above,
neither the Company nor any Subsidiary (i) owns equity securities of
any other corporation representing in excess of 5% of the outstanding
capital stock of such corporation or (ii) is a partner in any
partnership other than ERMA.
(f) The Company and each Subsidiary (other than ERMA) (i) is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it was organized and has all
requisite power and authority to conduct its business as it is
currently being conducted and to own, lease and operate its properties;
(ii) is duly qualified as a foreign corporation authorized to transact
business in, and is in good standing in, each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would
not have a material adverse effect on the business, prospects,
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operations, properties, net worth, results of operations or condition
(financial or otherwise) of the Company and the Subsidiaries taken as a
whole; ERMA is a duly organized and validly existing general
partnership and has all requisite power and authority to conduct its
business as it is currently being conducted and to own, lease and
operate its properties. The only partners in ERMA are the Company and
ERI.
(g) The Company and each of the Subsidiaries (i) holds such
licenses, certificates, permits, franchises and authorizations from
insurance departments and other governmental or regulatory authorities
("permits") (including, without limitation, insurance licenses from the
insurance regulatory agencies of the various states where it conducts
business (the "Insurance Licenses")) which are necessary to own, lease
and operate its respective properties and to the conduct of its
businesses as described in the Prospectus, except to the extent the
failure to hold any such permits or Insurance Licenses (either
singularly or in the aggregate) would not have a material adverse
effect on the business, prospects, operations, properties, net worth,
results of operations or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole and (ii) to the
Company's knowledge has fulfilled and performed all material
obligations necessary to maintain such permits and the Insurance
Licenses. There has been, and there is, no pending or, to the knowledge
of the Company, threatened action, suit, proceeding, investigation or
event that may reasonably be expected to lead to the revocation,
termination, suspension or any other material impairment of the rights
of the holder of any such permit (including, without limitation, the
Insurance Licenses); and except as disclosed in the Prospectus, the
Company is not aware of any order or decree of an insurance regulatory
agency or body impairing, restricting or prohibiting the payment of
dividends by any of the Subsidiaries of the Company to its parent.
(h) All of the outstanding shares of capital stock of, or
other ownership interests in, each Subsidiary of the Company have been,
as applicable, duly authorized and validly issued and, in the case of
shares of capital stock, are fully paid and non-assessable, and all
such shares and other ownership interests owned of record by the
Company or by a Subsidiary of the Company are owned free and clear of
any security interest, lien, claim, encumbrance or adverse interest of
any nature, except as set forth in paragraph (e) above.
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(i) The partnership agreement of ERMA has been duly executed
and delivered by each of the parties thereto and is a valid and binding
agreement enforceable in accordance with its terms except as (i) rights
to indemnity and contribution hereunder may be limited by applicable
law or principles of public policy, (ii) the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (iii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Other than as described in the
Prospectus, there are no outstanding warrants, rights or options to
acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in the Company or any
of the Subsidiaries.
(j) All the outstanding shares of capital stock of the Company
(including the Shares to be sold by Aetna) have been duly authorized,
validly issued, and are fully paid and non-assessable; the Additional
Shares to be issued and sold by the Company hereunder, if any, have
been duly authorized and, when issued and delivered to the Underwriters
against payment therefor as provided by this Agreement, will be validly
issued, fully paid and non-assessable; no holder of the Shares will be
subject to personal liability by reason of being such a holder; and
such Shares are not subject to any preemptive rights.
(k) The authorized and outstanding capital stock of the
Company, including the Common Stock, conforms in all material respects
to the description thereof incorporated by reference in the Prospectus.
(l) Except as described in the Prospectus and except to the
extent that any of the following would not have a material adverse
effect on the business, prospects, operations, properties, net worth,
results of operations or financial condition of the Company and the
Subsidiaries, taken as a whole, neither the Company nor any of the
Subsidiaries is (i) in violation of its respective charter or by-laws,
or other organizational documents, (ii) in violation of any law,
ordinance, administrative or governmental rule or regulation applicable
to the Company or any of the Subsidiaries or any of their respective
properties, (iii) in violation of any judgment, injunction, order or
decree of any court, governmental agency or body (including, without
limitation, any insurance regulatory agency or body) or arbitrator
having jurisdiction over the
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Company or any of the Subsidiaries, or (iv) in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
other agreement, indenture, lease or instrument to which the Company or
any of the Subsidiaries is a party or by which it or any of the
Subsidiaries or their respective property is bound.
(m) No consent, approval, waiver, license, authorization,
order, filing, registration, qualification or other action of or with
any court, regulatory body, arbitrator, administrative agency or other
governmental agency or body (including, without limitation, any
insurance regulatory agency or body) is required for the issuance and
sale of the Additional Shares, if any, being sold by the Company or the
execution, delivery and performance of this Agreement, compliance by
the Company with all the provisions hereof or the consummation of the
other transactions contemplated hereby or by the Registration Statement
or for the use of the proceeds received by the Company, if any, from
such sale in the manner described under the caption "Use of Proceeds"
contained in the Prospectus, except such as have been obtained and made
under the Act and the Exchange Act, all of which have been or will be
obtained in accordance with this Agreement and as may be required under
the insurance securities laws or securities or Blue Sky laws of various
jurisdictions, and except to the extent that the failure to obtain such
would not have a material adverse effect on the business, prospects,
operations, properties, net worth, results of operations or financial
condition of the Company and the Subsidiaries, taken as a whole.
(n) The issuance and sale of the Additional Shares, if any, to
be sold by the Company under this Agreement and the application of the
net proceeds therefrom as described under the caption "Use of Proceeds"
contained in the Prospectus and the execution, delivery and performance
of this Agreement, compliance by the Company with all the provisions
hereof and the consummation of the transactions herein contemplated,
will not result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to
which any of them is a party or by which any of them may be bound or to
which any of the property or assets of any of them is subject, and will
not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default (with notice or the
passage of time or both) under, (i) any statute, rule, regulation or
order of any governmental agency or body (including, without
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limitation, any insurance regulatory agency or body) or any court or
arbitrator, which is applicable to the Company or any Subsidiary or any
of their respective properties, (ii) any bond, debenture, note, other
evidence of indebtedness, agreement, indenture, lease or other
instrument to which the Company or any such Subsidiary is a party or by
which the Company or any such Subsidiary is bound or to which any of
the properties of the Company or any such Subsidiary is subject, or
(iii) the organizational documents of the Company or any such
Subsidiary except, in the case of clauses (i) and (ii), to the extent
that any such creation or imposition or any such breach, violation or
default would not have a material adverse effect on the business,
prospects, operations, properties, net worth, results of operations or
financial condition of the Company and the Subsidiaries, taken as a
whole.
(o) The Company is not (a) an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), or (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended (the "1935
Act").
(p) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act, except as provided in (i)
the Securityholders Agreement dated as of January 1, 1994 (the
"Securityholders Agreement") among the Company, The Aetna Casualty and
Surety Company ("AC&S") and the other persons named as parties therein
and (ii) the Stock Purchase Agreement (as defined in paragraph (oo) of
this Section 6).
(q) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the
Company or any of the Subsidiaries, any brokerage or finder's fee or
other similar fee or commission as a result of any of the transactions
contemplated by this Agreement.
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(r) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company enforceable in accordance with its terms except as (i) rights
to indemnity and contribution hereunder may be limited by applicable
law or principles of public policy, (ii) the enforceability hereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (iii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(s) Except as described in the Prospectus (or in the documents
incorporated therein by reference), there are no outstanding: (i)
securities or obligations of the Company convertible into or
exchangeable for any capital stock of the Company, (ii) warrants,
rights or options to subscribe for or purchase from the Company any
such capital stock or any such convertible or exchangeable securities
or obligations, or (iii) obligations for the Company to issue such
shares, any such convertible or exchangeable securities or obligations,
or any such warrants, rights or obligations.
(t) To the Company's knowledge, neither A.M. Best Company,
Inc. nor Standard & Poor's Corporation has pending, or has overtly
threatened, as applicable: (i) any downgrading in the ratings of the
Subsidiaries or (ii) any public announcement that its ratings of any of
the Subsidiaries are under surveillance or review.
(u) Subsequent to the dates as of which information is given
in the Registration Statement and the Prospectus, except as disclosed
therein: (i) neither the Company nor any of the Subsidiaries has
incurred any liability or obligation, direct or contingent, or entered
into any transaction, not in the ordinary course of business, that is
material to the Company and the Subsidiaries taken as a whole, (ii)
there has not been any change in the capital stock of the Company or
any payment of or declaration to pay any dividends other than regular
quarterly dividends on the Common Stock or any other distribution with
respect to the Company's capital stock, and (iii) there has not been
any material adverse change in the financial condition, business,
properties, prospects, net worth or results of operations or material
increase in the loss and loss adjustment expense reserves or any
material decrease in statutory surplus of the Company and the
Subsidiaries, taken as a whole.
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(v) The Shares have been duly authorized for listing on the
NYSE, subject in the case of the Additional Shares to official notice
of issuance.
(w) Except as otherwise set forth in the Prospectus (or in the
documents incorporated therein by reference), there are no material
pending legal or governmental actions, suits or proceedings to which
the Company or any of the Subsidiaries is a party or of which any of
their respective property is the subject, and, to the best of the
Company's knowledge, no such actions, suits or proceedings are
threatened or contemplated. No contract or document of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
is not so described or filed as required. The descriptions of the terms
of any such contracts or documents contained in the Registration
Statement or the Prospectus are correct in all material respects.
(x) Neither the Company nor any of the Subsidiaries has
violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), or any federal or state law relating to
discrimination in the hiring, promotion or pay of employees, or any
applicable federal or state wages and hours laws, or any provisions of
the United States Employee Retirement Income Security Act of 1974 and
the regulations and published interpretations thereunder ("ERISA"),
which in each case might result in any material adverse change in the
business, prospects, financial condition or results of operations of
the Company and the Subsidiaries, taken as a whole.
(y) Except as otherwise set forth in the Prospectus (or in
the documents incorporated therein by reference) or such as are not
material to the business, prospects, operations, properties, net worth,
results of operations or financial condition of the Company and the
Subsidiaries, taken as a whole, the Company and each of the
Subsidiaries has good and marketable title, free and clear of all
liens, claims, security interests, encumbrances and restrictions except
liens for taxes not yet due and payable, to all property and assets
described in the Registration Statement as being owned by it. All
material leases to which the Company or any of the Subsidiaries is a
party are binding on and enforceable against the Company or any such
Subsidiary, as the case may be, in all material respects and no default
on the part of the Company or any such Subsidiary, as the case
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may be, or, to the Company's knowledge, the other party thereto, has
occurred or is continuing thereunder, which might result in any
material adverse change in the business, prospects, financial condition
or results of operations of the Company and the Subsidiaries taken as a
whole, and the Company and the Subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which any of them is a
party as lessee with such exceptions as do not materially interfere
with the use made by the Company or such Subsidiary.
(z) Ernst & Young has informed the Company that they are
independent public accountants with respect to the Company, as required
by the Act.
(aa) The financial statements, together with related schedules
and notes, forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto) or incorporated
therein by reference, present fairly the consolidated financial
position, results of operations, cash flows and changes in financial
position of the Company and the Subsidiaries on the basis stated in the
Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except as disclosed therein and except that quarterly
financial statements contained in the Registration Statement are
subject to year-end adjustments; and the other financial and
statistical information and data set forth in the Registration
Statement and the Prospectus (and any amendment or supplement thereto)
is, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and
records of the Company. The pro forma financial statements of the
Company and the Subsidiaries 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
applicable requirements of Rule 11-02 of Regulation S-X promulgated
under the Act, have been properly compiled on the pro forma bases
described therein and, in the opinion of the Company, the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or
circumstances referred to therein. The statutory financial statements
of ERII and ERSIC required or permitted to be prepared in accordance
with the insurance laws of the States of Delaware and Connecticut,
respectively (the "Insurance Laws") and the rules and regulations
promulgated
-19-
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thereunder, from which certain ratios and other statistical data
contained in the Registration Statement and the Prospectus have been
derived, have for each relevant period been prepared in conformity in
all material respects with the requirements of the Insurance Laws and
such rules and regulations and present fairly the information purported
to be shown.
(bb) The Company has corporate power and authority to enter
into this Agreement and to issue, sell and deliver the Additional
Shares, if any, to be sold by it to the Underwriters as provided
herein. The execution and delivery by the Company of this Agreement,
and the performance by the Company of its obligations hereunder
(including without limitation the issuance and sale by the Company of
the Shares), have been duly authorized by all necessary corporate
action on the part of the Company.
(cc) The form of certificate for the Shares conforms in all
material respects to the requirements of the Delaware General
Corporation Law and the NYSE.
(dd) The Company has not taken and will not take, directly or
indirectly, any action designed to, or which might reasonably be
expected to, cause or result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Shares pursuant to the distribution contemplated by this
Agreement, and other than as permitted by the Act, the Company has not
distributed and will not distribute, prior to the later to occur of (i)
the Closing Date or the Option Closing Date and (ii) completion of the
distribution of the Shares, any prospectus or other offering material
in connection with the offering and sale of the Shares.
(ee) Each of the Company and the Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in all material respects
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles or statutory accounting principles, as the case may be, and
to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
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(ff) Each of the Company and the Subsidiaries owns or has
valid and adequate rights to use all patents, trademarks, trademark
registration, service marks, service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights described in
the Prospectus as being owned by it or necessary for the conduct of its
respective business, free and clear of all liens, claims, security
interests encumbrances and restrictions that may materially interfere
with the conduct of its business, and neither the Company nor any of
the Subsidiaries is aware of any claim to the contrary or any challenge
by any other person to the rights of the Company and any of the
Subsidiaries with respect to the foregoing which would have a material
adverse effect on the business, prospects, operations, properties, net
worth, results of operations or financial condition of the Company and
the Subsidiaries taken as a whole.
(gg) Except as disclosed in the Registration Statement all
reinsurance treaties, contracts and agreements to which the Company or
any of the Subsidiaries is a party (including without limitation the
Amended and Restated Agency and Insurance Services Agreement dated as
of January 1, 1994, as amended (the "Agency Agreement"), among the
Company, AC&S and ERMA, and the Amended and Restated Quota Share
Reinsurance Agreement dated as of January 1, 1994, as amended (the
"Reinsurance Agreement"), between AC&S and ERII) are in full force and
effect and neither the Company nor any of the Subsidiaries is in
violation of, or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition
contained therein, except where the failure to be in full force and
effect and except where any such violation or default would not have a
material adverse effect on the business, prospects, operations,
properties, net worth, results of operations or financial condition of
the Company and the Subsidiaries taken as a whole; neither the Company
nor any of the Subsidiaries has received any notice from any of the
other parties to such treaties, contracts or agreements which are
material to its business that such other party intends not to perform
in any material respect such treaty, contract or agreement, and the
Company and the Subsidiaries have no reason to believe that any of the
other parties to such treaties, contracts or agreements will be unable
to perform such treaty, contract, agreement or arrangement, except
where any such non-performance would not have a material adverse effect
on the business, prospects, operations, properties, net worth, results
of operations or financial condition of the Company and the
Subsidiaries taken as a whole.
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(hh) No relationship, direct or indirect, or agreement,
arrangement or understanding (including, without limitation, any voting
agreement), exists between or among the Company or any of the
Subsidiaries and any other party, which is required by the Act to be
described or incorporated by reference in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or filed as required.
(ii) Except to the extent that the failure with respect to the
following would not result in a material adverse effect on the
business, prospects, operations, properties, net worth, results of
operations, or financial condition of the Company and the Subsidiaries
taken as a whole, each of the Company and the Subsidiaries has
fulfilled its obligations, if any, under the minimum funding standards
of Section 302 of ERISA with respect to each "plan" (as defined in
ERISA and its regulations and published interpretations) in which
employees of the Company or the Subsidiaries are eligible to
participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such
regulations and published interpretations, and has not incurred any
unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such
plan under Title IV of ERISA.
(jj) All United States federal income tax returns of, and
assessments to, the Company and the Subsidiaries required by law to be
filed have been filed and have not been audited and all taxes shown by
such returns or otherwise assessed, which are due and payable, have
been paid, except assessments against which appeals have been or will
be promptly taken or which are being contested in good faith and as to
which adequate reserves have been provided. Each of the Company and the
Subsidiaries has filed all other tax returns that are required to have
been filed by it pursuant to applicable foreign, state, local or other
laws, except insofar as the failure to file such returns would not have
a material adverse effect on the business, prospects, operations,
properties, net worth, results of operations, or financial condition of
the Company and the Subsidiaries taken as a whole, and has paid all
taxes due pursuant to such returns or pursuant to any assessment
received by the Company or any Subsidiary, except for such taxes, if
any, as are being contested in good faith and as to which adequate
reserves have been provided. The charges, accruals and reserves on the
books of the Company and the Subsidiaries in respect of any income and
corporation tax liability for any years not finally determined are
adequate in the Company's
-22-
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reasonable judgment to meet any assessments or reassessments for
additional income tax for any years not finally determined, except to
the extent of any inadequacy that would not have a material adverse
effect on the business, prospects, operations, properties, net worth,
results of operations, or financial condition of the Company and the
Subsidiaries taken as a whole.
(kk) To the best knowledge of the Company, no labor problem
exists with its employees or with employees of the Subsidiaries or is
imminent that could reasonably be expected to have a material adverse
affect on the Company and the Subsidiaries taken as a whole.
(ll) No part of the proceeds of the sale of the Additional
Shares, if any, will be used for any purpose that violates the
provisions of any of Regulation G, T or X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board of
Governors.
(mm) Except as disclosed in the Prospectus or the documents
incorporated by reference therein, the Subsidiaries have made no
material changes in their insurance reserving practices during the last
two years.
(nn) Any certificate signed by any officer of the Company or
any Subsidiary and delivered at any closing contemplated by Section 4
hereof to the Underwriters or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to the Underwriters
as to the matters covered thereby.
(oo) The representations and warranties of the Company
contained in the Amended and Restated Stock Purchase Agreement, dated
as of March 22, 1996 (the "Stock Purchase Agreement"), among the
Company, Aetna and AC&S are true and correct in all material respects
on the date hereof, except to the extent any such representation or
warranty was expressly made as of any other date, in which case such
representation and warranty was true and correct at such date, and
except to the extent that the failure to be true and correct would not
have a material adverse effect on the business, prospects, operations,
properties, net worth, results of the operations or financial condition
of the Company and the Subsidiaries, taken as a whole. The Stock
Purchase Agreement is a valid and binding agreement enforceable against
the Company and ERI in accordance with its terms except as (i) rights
to indemnity and contribution thereunder may be limited by applicable
law or principles of public policy, (ii) the enforceability thereof may
be
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limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (iii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(pp) There are no pending or, to the Company's knowledge,
threatened claims, actions, suits or proceedings arising out of or in
connection with the consummation of the transactions contemplated by
the Stock Purchase Agreement.
(qq) The purchase by the Company of 1,225,000 shares of its
Class B Common Stock, par value $.01 per share, and 1,286,300 shares of
the Company's Common Stock from Aetna (the "Stock Repurchase") referred
to in the Prospectus under the caption "Recent Developments", and all
other transactions contemplated by the Stock Purchase Agreement that
are required to have been consummated prior to the date hereof have
been duly consummated as described in the Prospectus in compliance in
all material respects with applicable law, including without limitation
applicable federal and state securities laws.
7. Representations and Warranties of Aetna. Aetna represents
and warrants to each Underwriter that:
(a) Aetna is a corporation duly organized, validly existing in
a good standing under the laws of the jurisdiction in which it was
organized and has all requisite corporate power and authority to
conduct its business as it is currently being conducted and to own,
lease and operate its properties.
(b) Aetna has, and on the Closing Date will have, full legal
right, power and authority and any approval required by law (other than
any approval imposed by the applicable Federal and state securities and
Blue Sky laws) to enter into this Agreement and to sell, assign,
transfer and deliver the Firm Shares to be sold by Aetna in the manner
provided herein, and this Agreement has been duly authorized, executed
and delivered by Aetna and is a valid and binding agreement of Aetna
enforceable against Aetna in accordance with its terms except (i) as
rights to indemnity and contribution hereunder may be limited by
applicable law or principles of public policy, (ii) the enforceability
hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally
-24-
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and (iii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
(c) No consent, approval, waiver, license, authorization,
order, filing, registration, qualification or other action of or with
any court, regulatory body, administrative agency or other governmental
agency or body (including, without limitation, any insurance regulatory
agency or body) is required for the sale of the Shares to be sold by
Aetna or the execution, delivery and performance of this Agreement,
compliance by Aetna with all the provisions hereof or the consummation
of the other transactions contemplated hereby or by the Registration
Statement, except such as have been obtained and made under the Act and
the Exchange Act, all of which have been or will be obtained in
accordance with this Agreement, and as may be required under the
insurance securities laws or securities or Blue Sky laws of various
jurisdictions, and except to the extent that the failure to obtain the
same would not have a material adverse effect on the ability of Aetna
to perform its obligations under this Agreement, or that are otherwise
material in the context of the sale of the Firm Shares.
(d) The execution, delivery and performance by Aetna of this
Agreement, compliance by Aetna with all the provisions hereof and the
consummation by Aetna of the transactions herein contemplated will not
conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default (with notice or the passage
of time) under, (i) any statute, rule, regulation or order of any
governmental agency or body (including, without limitation, any
insurance regulatory agency or body) or any court or arbitrator which
is applicable to Aetna or any subsidiary thereof or any of their
respective properties, or (ii) any bond, debenture, note, other
evidence of indebtedness, agreement, indenture, lease or other
instrument to which Aetna or any such subsidiary is a party or by which
Aetna or any such subsidiary is bound or to which any of the properties
of Aetna or any such subsidiary is subject, or (iii) the
organizational documents of Aetna or any such subsidiary, except, in
the case of clauses (i) and (ii), for any conflicts, breaches,
violations or defaults that would not have a material adverse effect on
the ability of Aetna to perform its obligations under this Agreement,
or that are not otherwise material in the context of the sale of the
Firm Shares,
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(e) Aetna is not (a) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act or (b) a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company" within the
meaning of the 1935 Act.
(f) There are no pending legal or governmental actions, suits
or proceedings to which Aetna or any of its subsidiaries is a party or
of which any of their respective property is the subject relating to
the sale of Shares by Aetna under this Agreement, and, to the best of
Aetna's knowledge, no such actions, suits or proceedings are threatened
or contemplated. No contract or document pertaining to Aetna of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
is not so described or filed as required. The descriptions of the terms
of any such contracts or documents contained in the Registration
Statement or the Prospectus are correct in all material respects.
(g) Aetna is the lawful owner of the Firm Shares to be sold by
it pursuant to this Agreement and has, and on the Closing Date will
have, valid and unencumbered title to such Shares, and Aetna has the
corporate power and authority to enter into this Agreement and to sell,
assign, transfer and deliver such Firm Shares to you hereunder, and the
execution and delivery of this Agreement, and the performance by it of
its obligations hereunder (including without limitation the sale of the
Firm Shares to be sold thereby), have been duly authorized by all
necessary corporate action on the part of Aetna; and upon the delivery
of and payment for the Firm Shares hereunder, the several Underwriters
will acquire valid and unencumbered title to the Firm Shares purchased
by them from Aetna, free and clear of any and all restrictions on
transfer, liens, charges, encumbrances, security interests and claims
whatsoever, assuming such Underwriters acquire such shares without
notice of any adverse claims; and Aetna has not entered into any
agreement with any third party or taken any other action the effect of
which would be to subject the Firm Shares to any restrictions on
transfer, lien, charge, encumbrance, security interest or any other
claim whatsoever which has not been legally and validly waived.
(h) The information pertaining to Aetna contained in the
Registration Statement under the captions "Selling Stockholder,"
"Business Relationship with AC&S," "Recent
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Developments" and as otherwise specifically identified in Exhibit A
hereto, does not, and will not on the Closing Date, contain
any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(i) Aetna has not taken and will not take, directly or
indirectly, any action designed to, or which might reasonably be
expected to, cause or result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Shares pursuant to the distribution contemplated by this
Agreement, and other than as permitted by the Act, Aetna has not
distributed and will not distribute, prior to the later to occur of (i)
the Closing Date or the Option Closing Date and (ii) completion of the
distribution of the Shares, any prospectus or other offering material
in connection with the offering and sale of the Shares.
(j) At any time during the period described in paragraph 5(f)
hereof, if there is any change in the information referred to in
paragraph 7(h) above, Aetna shall immediately notify you of such
change.
8. Indemnification and Contribution. (a) The Company will
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
judgments, or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, only insofar as such losses, claims,
damages, judgments or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus or any
amendment or supplement thereto, or any preliminary prospectus, or arise out of
or are based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, judgment, liability or
action as such expenses are incurred; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
judgment or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in
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conformity with written information furnished to the Company by any Underwriter
relating to the Underwriter through you, or by Aetna under the caption "Selling
Stockholder," in either case expressly for use therein; provided, however, that
the foregoing indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), other than the documents incorporated by reference therein, was timely
made available by the Company to such Underwriter and was not delivered by or on
behalf of such Underwriter to such person, if required by the Act so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect contained in such preliminary prospectus giving rise
to such losses, claims, damages or liabilities.
(b) Aetna will indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages, judgments or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise, only
insofar as such losses, claims, damages, judgments or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus or any amendment or supplement thereto, or any preliminary
prospectus, or arise out of or are based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent that such untrue statement or alleged untrue statement or omission
or alleged omission was contained in those specific sections of the prospectus
describing Aetna and/or AC&S and/or the business relationships of Aetna and/or
AC&S with the Company and its Subsidiaries as identified in Exhibit A hereto,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, judgment, liability or action as such expenses are
incurred; provided, however, that the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if Aetna shall have furnished any
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amendments or supplements thereto), other than the documents incorporated by
reference therein, was timely made available by Aetna to such Underwriter and
was not delivered by or on behalf of such Underwriter to such person, if
required by the Act so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect contained in such
preliminary prospectus giving rise to such losses, claims, damages or
liabilities. Notwithstanding any other provision of this Agreement, the
aggregate liability of Aetna for indemnification or contribution under this
Agreement shall not exceed an amount equal to the proceeds of the sale of the
Shares being sold by Aetna after deduction of underwriting discounts and
commissions and all costs and expenses required to be paid by it under this
Agreement.
(c) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company, each officer of the Company who signs
the Registration Statement, each director of the Company, Aetna and each person,
if any, who controls the Company or Aetna within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, judgments or liabilities to which the Company, such officers
and directors or Aetna may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained or incorporated by reference in the Registration
Statement, the Prospectus or any amendment or supplement thereto, or any
preliminary prospectus, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or incorporated by reference therein or necessary to make the statements
therein or incorporated by reference therein not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter, or by such Underwriter through you, expressly for use in the
preparation thereof, and will reimburse the Company, such officers and
directors, Aetna or any such control person for any legal or other expenses
reasonably incurred by the Company, such officers and directors, Aetna or any
such control person in connection with investigating or defending any such loss,
claim, damage, judgment, liability or action as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to
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be made against an indemnifying party under subsection (a), (b) or (c) above,
notify the indemnifying party of the commencement thereof and the indemnifying
party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such indemnified party and payment of all fees and
expenses; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a), (b) or (c) above. An indemnified party shall have the
right to employ separate counsel in any such action or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment of
such counsel has been specifically authorized in writing by the indemnifying
parties, (ii) the indemnifying parties have failed promptly to assume the
defense and employ counsel reasonably satisfactory to the indemnified party
(which payment of fees and expenses of separate counsel by the indemnifying
parties shall cease upon such assumption of defense by the indemnifying parties)
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include both the indemnified party and the indemnifying
parties and representation of both parties by the same counsel would be
inappropriate due to actual or potential differences between them (in which case
the indemnifying parties shall not have the right to assume the defense of such
action on behalf of such indemnified party), it being understood, however, that
the Company and Aetna shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such Underwriters and controlling persons, which firm
shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation and that all such fees and expenses shall be reimbursed as they are
incurred). The indemnifying party shall not be liable for any settlement of any
such action affected without the written consent of the indemnifying parties,
but if settled with a written consent of the indemnifying parties, or if there
is a final judgment with respect thereto or with respect to the indemnifying
parties' liability therefore, the indemnifying parties agree to indemnify and
hold harmless each indemnified party from and against any loss or liability by
reason of such settlement or judgment (if and to the extent required hereby).
The indemnifying party shall not, without the prior written consent of each
indemnified party affected thereby, effect any settlement of any pending or
threatened proceeding in which such indemnified party could have sought
indemnity hereunder, unless such settlement includes an unconditional release of
such indemnified party from all liability for which there is an indemnification
obligation hereunder.
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(e) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages, judgments or
liabilities referred to in subsection (a), (b), (c) or (d) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Sellers on the one hand and the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
claims, damages, judgments or liabilities as well as any other relevant
equitable considerations. The relative benefits received by the Sellers on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (before deducting
expenses) received by the Sellers and the total underwriting discounts and
commissions received by the Underwriters, bear to the total price to the public
of the Shares, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Sellers on the one hand and the
Underwriters 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 Company, Aetna or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Sellers and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8(e)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, judgments or liabilities referred to in
the first sentence of this subsection (e) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
action or claim which is the subject of this subsection (e). Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay
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by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(e) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
the respective number of shares purchased by each of the Underwriters hereunder
and not joint.
(f) The obligations of the Company and Aetna under this
Section shall be in addition to any liability which the Company and Aetna
otherwise may have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the Company, to
each person who has consented to become a director of the Company, to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company or Aetna within the meaning of the Act.
9. Conditions of Underwriters' Obligations. The several
obligations of (i) the Underwriters to purchase the Firm Shares and (ii) the
Underwriters pursuant to their option to purchase the Additional Shares under
this Agreement are subject to the satisfaction of each of the following
conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date (with respect to the Firm Shares) and the Option Closing Date
(with respect to the Additional Shares) with the same force and effect
as if made on and as of the Closing Date or Option Closing Date, as the
case may be. The Company shall have performed or complied with all
agreements and satisfied all conditions on its part to be performed or
complied with by the Company at or prior to the Closing Date or the
Option Closing Date, as the case may be.
(b) (i) The Registration Statement shall have become effective
not later than 5:00 P.M. (and in the case of a Registration Statement
filed under Rule 462(b) of the Act, not later than 10:00 P.M.), New
York City time, on the date of this Agreement or at such later date and
time as you may approve in writing, (ii) all filings, if any, required
by Rules 424 and 430A under the Act shall have been timely made, (iii)
at the Closing Date and the Option Closing Date no stop order
suspending the effectiveness of the
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Registration Statement or any post-effective amendment to the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been commenced or shall be pending before or
contemplated by the Commission and (iv) any request of the Commission
for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to your reasonable satisfaction. No stop order suspending the sale of
the Shares in any jurisdiction shall have been issued and no
proceedings for that purpose shall have been commenced or shall be
pending or contemplated.
(c) (i) Since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, there shall not have
been any material adverse change in, or affecting the affairs,
business, prospects, operations, properties, net worth, results of
operations or financial condition, whether or not arising in the
ordinary course of business, of the Company or any of the Subsidiaries,
(ii) since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, (iii) since the date of the
latest balance sheet included in the Registration Statement and
Prospectus, and except as disclosed therein, none of the Company or any
of the Subsidiaries shall have incurred any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of
business), or entered into any transactions, not in the ordinary course
of business, that are material, individually or in the aggregate, to
the business of the Company and the Subsidiaries taken as a whole and
(iv) on the Closing Date and the Option Closing Date, you shall have
received a certificate dated the Closing Date or the Option Closing
Date, as the case may be, signed by two of: LeRoy A. Vander Putten,
Robert H. Kullas and Robert V. Deutsch, solely in their respective
capacities as the Chairman and Chief Executive Officer, Vice Chairman
and Chief Operating Officer and Executive Vice President and Chief
Financial Officer of the Company, confirming the matters set forth in
paragraphs (a), (b), and (c) of this Section 9.
(d) All the representations and warranties of Aetna contained
in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date.
Aetna shall have performed or complied with all agreements and
satisfied all conditions on its part to be performed or complied with
by it at or prior to the Closing Date and you shall have received a
certificate to such effect, dated the Closing Date, from
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Aetna with respect to the matters set forth in this paragraph.
(e) You shall have received an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the
Closing Date or the Option Closing Date, as the case may be, of Dewey
Ballantine, counsel for the Company, to the effect that:
(i) The Company and each of ERI, ERII and Talcott
(collectively, the "Delaware Subsidiaries") is a corporation
duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it was organized and has
all requisite power and authority to conduct its business as
it is currently being conducted and to own, lease and operate
its properties. The Company and each of the Delaware
Subsidiaries (other than ERMA) is duly qualified as a foreign
corporation authorized to transact business in and is in good
standing in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified
would not have a material adverse effect on the business,
prospects, operations, properties, net worth, results of
operations or financial condition of the Company and the
Subsidiaries considered as a whole. The partnership agreement
of ERMA has been duly executed and delivered by the Company
and ERI. To the best of such counsel's knowledge, the only
partners of ERMA are the Company and ERI.
(ii) All of the outstanding shares of capital stock
of, or other ownership interests in, each Delaware Subsidiary
of the Company have been, as applicable, duly authorized and
validly issued and, in the case of shares of capital stock,
are fully paid and non-assessable, and all such shares and
other ownership interests owned of record by the Company or by
a Delaware Subsidiary are owned free and clear of any
perfected security interest and, to the best of such counsel's
knowledge, any lien, claim, encumbrance or adverse interest of
any nature, except (A) with respect to the stock of ERI, for
the lien of The Chase Manhattan Bank (National Association),
as Agent (the "Agent"), pursuant to the Stock Pledge Agreement
dated as of March 26, 1996 between the Company and the Agent
entered into in connection with that certain Term Loan
Agreement dated as of March 26, 1996 among the Company, the
Banks signatory thereto and the Agent, and (B) with
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respect to the stock of ERII, for the lien of The Chase
Manhattan Bank (National Association), as Agent (the "Agent"),
pursuant to the Stock Pledge Agreement dated as of March 26,
1996 between ERI and the Agent entered into in connection with
that certain Term Loan Agreement dated as of March 26, 1996
among the Company, the Banks signatory thereto and the Agent.
(iii) Other than as described in the Prospectus, to
the best of such counsel's knowledge, there are no outstanding
warrants, rights or options to acquire, or instruments
convertible into or exchangeable for, or any obligation of the
Company to issue any shares of capital stock or other equity
interests in the Company or any of the Subsidiaries.
(iv) All the outstanding shares of capital stock of
the Company (including the Shares to be sold by Aetna) have
been duly authorized, validly issued, and are fully paid and
non-assessable; and the Additional Shares to be issued and
sold by the Company hereunder have been duly authorized and,
when issued and delivered to the Underwriters against payment
therefor as provided by this Agreement, will be validly
issued, fully paid and non-assessable; no holder of the Shares
will be subject to personal liability by reason of being such
a holder; and such Shares are not subject to any preemptive
rights of any stockholder of the Company under Delaware
General Corporation Law except as described in the Prospectus.
(v) To the best of such counsel's knowledge, there
are no contracts or agreements between the Company and any
person granting such person the right to require the Company
to file a registration statement under the Act with respect to
any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in
the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under
the Act, except as provided in the Securityholders Agreement.
(vi) No consent, approval, waiver, license,
authorization, order, filing, registration, qualification or
other action of or with any court, regulatory body,
arbitrator, administrative agency or other governmental agency
or body (including, without limitation, any insurance
regulatory agency or body) is
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required for the issuance and sale of the Additional Shares or
the execution, delivery and performance of this Agreement by
the Company, compliance by the Company with all the provisions
hereof or the consummation of the other transactions
contemplated hereby or by the Registration Statement, except
such as have been obtained and made under the Act and the
Exchange Act, all of which have been or will be obtained in
accordance with this Agreement, and as may be required under
the insurance securities laws or securities or Blue Sky laws
of various jurisdictions.
(vii) To the best of such counsel's knowledge, the
issuance and sale of the Shares to be sold by the Company
under this Agreement and the execution, delivery and
performance of this Agreement by the Company, compliance by
the Company with all the provisions hereof and the
consummation by the Company of the transactions herein
contemplated, will not result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company or any of the Subsidiaries pursuant to the terms
of any agreement or instrument to which any of the Company and
its Subsidiaries is a party or by which any of them may be
bound or to which any of the property or assets of any of them
is subject except, in all instances to the extent that any
such creation or imposition would not have a material adverse
effect on the business, prospects, operations, properties, net
worth, results of operations or financial condition of the
Company and its Subsidiaries, taken as a whole, and will not
conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default (with notice
or the passage of time) under, (i) any statute, rule,
regulation or order, of any governmental agency or body
(including, without limitation, any insurance regulatory
agency or body) or any court or arbitrator, which is
applicable to the Company or any Subsidiary or any of their
respective properties, (ii) any bond, debenture, note, other
evidence of indebtedness, agreement, indenture, lease or other
instrument to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary is bound or to which
any of the properties of the Company or any Subsidiary is
subject or (iii) the organizational documents of the Company
or any such Subsidiary except, in the case of clauses (i) and
(ii), to the extent that any such breach, violation or default
would not have a material adverse effect on the business,
prospects, operations, properties, net
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worth, results of operations or financial condition of
the Company and the Subsidiaries, taken as a whole.
(viii) Such counsel has been informed by the staff of
the Commission that the Registration Statement and all
post-effective amendments, if any, have become effective under
the Act, the Prospectus either was filed with the Commission
pursuant to the subparagraph of Rule 424(b) specified in such
opinion on the date specified therein or was included in the
Registration Statement (as the case may be), and to such
counsel's knowledge no stop order suspending the effectiveness
of the Registration Statement or any part thereof has been
issued and to such counsel's knowledge no proceedings for that
purpose have been instituted or are pending or are
contemplated under the Act.
(ix) Each document filed pursuant to the 1934 Act and
incorporated by reference in the Prospectus, at the time it
was filed or last amended (other than financial statements or
other financial information or statistical data included
therein, as to which no opinion need be rendered), complied as
to form in all material respects to the requirements of the
Exchange Act and the regulations adopted in connection
therewith.
(x) To the best of such counsel's knowledge, except
as otherwise set forth in the Prospectus, there are no pending
legal or governmental actions, suits or proceedings to which
the Company or any of the Subsidiaries is a party or of which
any of their respective property is the subject and which are
required to be described or incorporated by reference in the
Registration Statement or the Prospectus, and, to the best of
such counsel's knowledge, no such actions, suits or
proceedings are threatened or contemplated, and no contract or
document of a character required to be described or
incorporated by reference in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration
Statement is not so described or filed or incorporated by
reference as required, and the descriptions of the terms of
any such contracts or documents contained or incorporated by
reference in the Registration Statement or the Prospectus are
correct in all material respects.
(xi) This Agreement has been duly authorized,
executed and delivered by the Company and is a valid
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and binding agreement of the Company, enforceable in
accordance with its terms except as (i) rights to indemnity
and contribution hereunder may be limited by applicable law or
principles of public policy, (ii) the enforceability hereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (iii) the remedy
of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding
therefor may be brought.
(xii) The authorized capital stock of the Company,
including the Common Stock, conforms in all material respects
to the description thereof contained or incorporated by
reference in the Prospectus.
(xiii) The statements under the captions "Risk
Factors", "Capitalization", "Management's Discussion and
Analysis of Financial Condition and Results of Operations",
"Shares Eligible for Future Sale", "Business", "Relationship
with Aetna", "Recent Developments", "Selling Stockholder" and
"Underwriting" in the Prospectus and Items 14 and 15 of Part
II of the Registration Statement insofar as such statements
constitute a description of legal matters, documents or
proceedings or refer to statements of regulation, law or legal
conclusions, are accurate in all material respects.
(xiv) Neither the Company nor any of the Subsidiaries
is (A) in violation of its respective charter or by-laws, or
other organizational documents, or, to the best of such
counsel's knowledge, except as described in the Prospectus and
except to the extent that any of the following would not have
a material adverse effect on the business, prospects,
operations, properties, net worth, results of operations or
financial condition of the Company and the Subsidiaries, taken
as a whole, (B) in violation of any judgment, injunction,
order or decree of any court, governmental agency or body
(including, without limitation, any insurance regulatory
agency or body) or arbitrator having jurisdiction over the
Company or any of the Subsidiaries, or (C) in default in the
performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence
of indebtedness or in any other agreement,
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indenture, lease or instrument that is an exhibit to
the Registration Statement.
(xv) To the best of such counsel's knowledge after
due inquiry, all material leases to which the Company or any
of the Subsidiaries is a party are valid and binding on the
Company or such Subsidiary, as the case may be, and no default
has occurred or is continuing thereunder, which might result
in any material adverse change in the business, prospects,
financial condition or results of operation of the Company and
the Subsidiaries taken as a whole.
(xvi) To such counsel's knowledge, each of the
Company and its Subsidiaries holds such licenses,
certificates, permits, franchises and authorizations from
insurance departments and other governmental or regulatory
authorities ("permits") (including, without limitation,
Insurance Licenses) which are necessary to own, lease and
operate its properties and to conduct its business as
described in the Prospectus, except to the extent the failure
to hold any such permits or Insurance Licenses (either
singularly or in the aggregate) would not have a material
adverse effect on the business, prospects, operations,
properties, net worth, results of operations or financial
condition of the Company and the Subsidiaries taken as a
whole; to the best of such counsel's knowledge, all such
permits and the Insurance Licenses are in full force and
effect. Except as disclosed in the Prospectus, to the best of
such counsel's knowledge, there has been, and there is no,
pending or threatened action, suit, proceeding, investigation
or event that may reasonably be expected to lead to the
revocation, termination, suspension or any other material
impairment of the rights of the holder of any such permit
(including, without limitation, the Insurance Licenses); to
the best of such counsel's knowledge, such permits and
Insurance Licenses do not materially restrict the conduct of
business of the Company or any of the Subsidiaries except as
described in the Prospectus and except for any restrictions
customarily found in insurance licenses generally; and except
as disclosed or incorporated by reference in the Prospectus,
to the best of such counsel's knowledge, no insurance
regulatory agency or body has issued any order or decree
impairing, restricting or prohibiting the payment of dividends
by any of the Subsidiaries of the Company to its parent.
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(xvii) The Company is not (a) an "investment company"
or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act or (b) a "holding
company" or a "subsidiary company" of a "holding company" or
an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the 1935
Act.
(xviii) (i) The Registration Statement and any
post-effective amendment thereto, at the time such
Registration Statement or such post-effective amendment became
or becomes effective, complies or will comply in all material
respects with the provisions of the Act; and (ii) the
Prospectus, and any supplement or amendment thereto, on the
date of filing thereof with the Commission and on the Closing
Date and the Option Closing Date, complies and will comply in
all material respects with the provisions of the Act; provided
that such counsel need express no view on the financial
statements and the notes thereto and the schedules and other
financial, statistical and accounting data included therein.
(xix) The Company has corporate power and authority
to enter into this Agreement and to issue, sell and deliver
the Additional Shares to be sold by it to the Underwriters as
provided herein. The performance by the Company of its
obligations hereunder (including without limitation the
issuance and sale of the Additional Shares), has been duly
authorized by all necessary corporate action on the part of
the Company.
(xx) The form of certificate for the Shares conforms
in all material respects to the requirements of the Delaware
General Corporation Law and the NYSE.
(xxi) To the best of such counsel's knowledge, after
due inquiry, no relationship, direct or indirect, or
agreement, (including, without limitation, any voting
agreement), exists between or among the Company or any of the
Subsidiaries and any other party or any of their respective
affiliates, which is required by the Act to be described or
incorporated by reference in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration
Statement which is not described or incorporated by reference
or filed as required.
(xxii) The Stock Purchase Agreement has been duly
executed and delivered by the Company. The Stock
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Repurchase and all other transactions contemplated by the
Stock Purchase Agreement that are required to have been
consummated prior to the date hereof have been duly
consummated as described in the Prospectus in compliance in
all material respects with applicable law, including without
limitation applicable federal and state securities laws,
except to the extent that the failure to comply would not have
a material adverse effect on the business, prospects,
operations, properties, net worth, results of operations or
financial condition of the Company and the Subsidiaries, taken
as a whole.
(xxiii) To the best of such counsel's knowledge,
after due inquiry, there are no pending or threatened claims,
actions, suits or proceedings arising out of or in connection
with the consummation of the transactions contemplated by the
Stock Purchase Agreement.
Such counsel shall also state that although such counsel has
not undertaken to determine independently, and therefore does not assume any
responsibility explicitly or implicitly for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement and in the
Prospectus, such counsel has participated in the preparation of the Registration
Statement and the Prospectus, including review and discussion of the contents
thereof, and that based upon and subject to the foregoing, nothing came to such
counsel's attention that caused them to believe that the Registration Statement,
at the time it became effective, contained 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, or that the Prospectus,
as of its date and as of the date of such opinion, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (except in
each case as to the financial statements and the notes thereto and the schedules
and other financial and statistical data included therein, as to which such
counsel need express no belief).
As to factual matters, such counsel may rely on certificates
obtained from officers of the Company and the Subsidiaries and from public
officials and on such other authority as such counsel deems reasonable. In
rendering such opinion counsel may rely upon an opinion or opinions, each dated
the Closing Date, of other counsel retained by them or the Company as to laws of
any jurisdiction other than the United States or the States of New York and
Delaware, provided that
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(1) each such local counsel is reasonably acceptable to the Representatives and
their counsel, (2) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to the Representatives
and is in form and substance reasonably satisfactory to the Representatives and
their counsel.
(f) You shall have received opinions (reasonably satisfactory
to you and to counsel for the Underwriters), dated the Closing Date, of
counsel to Aetna, which counsel are reasonably satisfactory to you and
to counsel for the Underwriters, to the effect that:
(i) Aetna is a corporation duly organized and validly
existing under the laws of the jurisdiction in which it was
organized and has all requisite power and authority and any
approval required by law (other than any approval imposed by
the applicable state securities and Blue Sky laws) to enter
into this Agreement and to sell, assign, transfer and deliver
the Shares to be sold by Aetna in the manner provided herein
and therein, and this Agreement has been duly authorized,
executed and delivered by Aetna and is a valid and binding
agreement of Aetna enforceable in accordance with its terms
except as (i) rights to indemnity and contribution hereunder
may be limited by applicable law or principles of public
policy, (ii) the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (iii) the remedy of specific performance
and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(ii) To such counsel's knowledge, no consent,
approval, waiver, license, authorization, order, filing,
registration, qualification or other action of or with any
court, regulatory body, administrative agency or other
governmental agency or body (including, without limitation,
any insurance regulatory agency or body) is required for the
sale of the Firm Shares to be sold by Aetna or the execution,
delivery and performance of this Agreement by Aetna,
compliance by Aetna with all the provisions hereof or the
consummation by Aetna of the other transactions contemplated
hereby or by the Registration Statement, except such as have
been obtained and made under the Act and the Exchange Act, all
of which have been or
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will be obtained in accordance with this Agreement, and as may
be required under the insurance securities laws or securities
or Blue Sky laws of various jurisdictions.
(iii) The execution, delivery and performance by
Aetna of this Agreement, compliance by Aetna with all the
provisions hereof and the consummation of the transactions
herein contemplated will not conflict with or result in a
breach or violation of any of the terms and provisions of (A)
the organizational documents of Aetna, or, to such counsel's
knowledge, (B) any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence
of indebtedness or in any other agreement, indenture, lease or
instrument or (C) any law, regulation or rule or any judgment,
injunction, order or decree of any court, governmental agency
or body (including, without limitation, any insurance
regulatory agency or body) or arbitrator having jurisdiction
over Aetna that, in the case of either (B) or (C), is material
to the business of Aetna.
(iv) The Amended and Restated Stock Purchase
Agreement has been duly authorized, executed and delivered by
Aetna and is a valid and binding agreement of Aetna
enforceable in accordance with its terms except as (i) rights
to indemnity and contribution hereunder may be limited by
applicable law or principles of public policy, (ii) the
enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally and (iii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(v) Upon due delivery and payment for the Shares to
be sold by the Selling Stockholder as provided for in this
Underwriting Agreement, the Underwriters will have good and
valid title to the Shares so transferred, free and clear of
any liens, encumbrances, equities or claims (assuming that the
Underwriters are without notice of any adverse claim, as
defined in the Uniform Commercial Code as adopted in the State
of New York). Aetna has good and clear title to the
certificates for the Firm Shares to be sold by it and upon
delivery thereof, pursuant hereto and
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payment therefor, good and clear title will pass to the
Underwriters, severally, free of all restrictions on transfer,
liens, encumbrances, security interests and claims whatsoever.
(vi) Aetna is not (a) an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act or (b) a "holding
company" or a "subsidiary company" of a "holding company" or
an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the 1935
Act.
As to factual matters, such counsel may rely on certificates
obtained from officers of the Company or Aetna and from public officials and
such other authority as such counsel deems reasonable.
(g) You shall have received an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the
Closing Date or the Option Closing Date, as the case may be, of
Timothy Curry, counsel to the Company, to the effect that:
(i) ERSIC is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it was organized and has all requisite
power and authority to conduct its business as it is currently
being conducted and to own, lease and operate its properties.
ERMA is a partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it
was organized and has all requisite power and authority to
conduct its business as it is currently being conducted and to
own, lease and operate its properties. ERSIC is duly qualified
as a foreign corporation authorized to transact business in
and is in good standing in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the
business, prospects, operations, properties, net worth,
results of operations or financial condition of the Company
and the Subsidiaries considered as a whole.
(ii) All of the outstanding shares of capital stock
of, or other ownership interests in, each of ERSIC and ERMA
have been duly authorized and validly issued and, in the case
of shares of capital stock, are fully paid and non-assessable,
and all such shares and
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other ownership interests owned of record by the Company or by
a Subsidiary of the Company are owned free and clear of any
perfected security interest and any lien, claim, encumbrance
or adverse interest of any nature.
(iii) Except as otherwise set forth in the
Prospectus, there are no pending legal or governmental
actions, suits or proceedings to which ERSIC or ERMA is a
party or of which any of their respective property is the
subject and which are required to be described in the
Registration Statement or the Prospectus, and, to the best of
such counsel's knowledge after due inquiry, no such actions,
suits or proceedings are threatened or contemplated, and no
contract or document of a character required to be described
in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement is not so
described or filed as required, and the descriptions of the
terms of any such contracts or documents contained in the
Registration Statement or the Prospectus are correct in all
material respects.
(iv) Neither ERSIC nor ERMA is (A) in violation of
its respective charter or by-laws, or other organizational
documents, or (B) in violation of any judgment, injunction,
order or decree of any court, governmental agency or body
(including, without limitation, any insurance regulatory
agency or body) or arbitrator having jurisdiction over ERSIC
or ERMA, or (C) in default in the performance of any
obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in
any other agreement, indenture, lease or instrument that, in
the case of either (B) or (C), is material to the business of
and the Other Subsidiaries.
(v) All material leases to which any of ERSIC or ERMA
is a party are valid and binding on each such subsidiary, as
the case may be, and no default has occurred or is continuing
thereunder, which might result in any material adverse change
in the business, prospects, financial condition or results of
operation of the Company and the Subsidiaries taken as a
whole.
(vi) Each of ERSIC and ERMA holds such licenses,
certificates, permits, franchises and authorizations from
insurance departments and other governmental or regulatory
authorities ("permits") (including, without limitation,
Insurance Licenses)
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which are necessary to own, lease and operate its properties
and to conduct its business as described in the Prospectus,
except to the extent the failure to hold any such permits or
Insurance Licenses (either singularly or in the aggregate)
would not have a material adverse effect on the business,
prospects, operations, properties, net worth, results of
operations or financial condition of the Company and the
Subsidiaries taken as a whole; all such permits and the
Insurance Licenses are in full force and effect. Except as
disclosed in the Prospectus there has been, and there is no,
pending or threatened action, suit, proceeding, investigation
or event that could reasonably be expected to lead to the
revocation, termination, suspension or any other material
impairment of the rights of the holder of any such permit
(including, without limitation, the Insurance Licenses); such
permits and Insurance Licenses do not materially restrict the
conduct of business of the Other Subsidiaries except as
described in the Prospectus and except for any restrictions
customarily found in insurance licenses generally; and except
as disclosed in the Prospectus no insurance regulatory agency
or body has issued any order or decree impairing, restricting
or prohibiting the payment of dividends by any of the
Subsidiaries of the Company to its parent.
(vii) No relationship, direct or indirect, or
agreement, (including, without limitation, any voting
agreement), exists between or among any of ERSIC or ERMA and
any other party or any of their respective affiliates, which
is required by the Act to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed as
required.
(h) You shall have received on the Closing Date and the Option
Closing Date, as the case may be, an opinion, dated as of such date, of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., a partnership including
professional corporations, as counsel for the Underwriters, with
respect to the incorporation of the Company, the validity of the
Shares, the Registration Statement, the Prospectus and other related
matters as you may require, and the Company and Aetna shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters.
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The opinions of Dewey Ballantine, counsel to the Company, of
Timothy Curry, counsel to ERI and ERSIC, of the counsel to Aetna and of LeBoeuf,
Lamb, Greene & MacRae, L.L.P., counsel to the Underwriters, described in
paragraphs (e), (f), (g) and (h), respectively, above shall be rendered to you
at the request and direction and instruction of the Company or Aetna, as the
case may be, and shall so state therein.
(i) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency as of such Closing Date or Option Closing Date, as
the case may be, that would prevent the issuance of the Shares. No
injunction, restraining order or order of any nature by a federal or
state court of competent jurisdiction shall have been issued as of such
Closing Date or Option Closing Date, as the case may be, that would
prevent the issuance of the Shares.
(j) You shall have received a letter, dated the date of this
Agreement, of Ernst & Young confirming that they are independent public
accountants with respect to the Company within the meaning of the Act
and the applicable published rules and regulations promulgated
thereunder and stating in effect the information contained in Annex I.
(k) You shall have received a letter on and as of the Closing
Date and the Option Closing Date from Ernst & Young substantially in
the form and substance of, or confirming the statements contained in,
the letter delivered to you by Ernst & Young on the date of this
Agreement.
(l) The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the
Representatives on the Option Closing Date of such documents as you may
reasonably request with respect to the good standing of the Company,
the due authorization and issuance of the Additional Shares and other
matters related to the issuance of the Additional Shares.
(m) All of the transactions contemplated by this Agreement and
by the Registration Statement shall have been consummated at or prior
to the time that the Shares are delivered and paid for pursuant to
Section 4 of this Agreement.
(n) The Shares shall have been listed or approved for listing
upon official notice of issuance on the New York Stock Exchange.
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(o) The Company and Aetna shall have furnished or caused to be
furnished to you such further certificates and documents as you shall
have reasonably requested.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and your counsel.
Any certificate or document signed by any officer of the
Company or Aetna, as the case may be, and delivered to you, as the
Representatives, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company or Aetna to each Underwriter as to
the statements made therein.
10. Effective Date of Agreement and Termination.
(a) This Agreement shall become effective upon the later of
(i) execution of this Agreement and (ii) when notification of the
effectiveness of the Registration Statement has been released by the
Commission.
(b) This Agreement may be terminated at any time prior to the
Closing Date or the Option Closing Date, as the case may be, by you by
written notice to the Sellers if any of the following has occurred: (i)
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change
or development involving a prospective material adverse change in or
affecting particularly the business, prospects, operations, properties,
net worth, results of operations or financial condition of the Company
or any Subsidiary other than Talcott Services Corporation, Executive
Risk N.V. or Executive Risk Limited, whether or not arising in the
ordinary course of business, which would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus, (ii) any outbreak or escalation of
hostilities or other national or international calamity or crisis or
change in economic conditions or in the financial markets of the United
States or elsewhere that, in your judgment, is material and adverse and
would, in your judgment, make it impracticable to market the Shares on
the terms and in the manner contemplated in the Prospectus, (iii) the
suspension or material limitation of trading in securities on the NYSE,
the American Stock Exchange or the NASDAQ National Market System or
limitation on prices for securities on any such exchange or National
Market System, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order
of any court or other governmental
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authority which in your opinion materially and adversely affects, or
will materially and adversely affect, the business or operations of the
Company or any Subsidiary other than Talcott Services Corporation,
Executive Risk N.V. or Executive Risk Limited, (v) the declaration of a
banking moratorium by either federal or New York State authorities or
(vi) the taking of any action by any federal, state or local government
or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the
United States.
(c) If on the Closing Date or on the Option Closing Date, as
the case may be, any one or more of the Underwriters shall fail or
refuse to purchase the Firm Shares or Additional Shares, as the case
may be, which it or they have agreed to purchase hereunder on such date
and the aggregate number of Firm Shares or Additional Shares, as the
case may be, which such defaulting Underwriter or Underwriters, as the
case may be, agreed but failed or refused to purchase is not more than
one-tenth of the total number of Shares to be purchased on such date by
all Underwriters, each non-defaulting Underwriter shall be obligated
severally, in the proportion which the number of Firm Shares set forth
opposite its name in Schedule I bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be,
have agreed to purchase, or in such other proportion as you may
specify, to purchase the Firm Shares or Additional Shares, as the case
may be, which such defaulting Underwriter or Underwriters, as the case
may be, agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Firm Shares or Additional Shares,
as the case may be, which any Underwriter has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Firm Shares or
Additional Shares, as the case may be, without the written consent of
such Underwriter. If on the Closing Date or on an Option Closing Date,
as the case may be, any Underwriter or Underwriters shall fail or
refuse to purchase Firm Shares, or Additional Shares, as the case may
be, and the aggregate number of Firm Shares or Additional Shares, as
the case may be, with respect to which such default occurs is more than
one-tenth of the aggregate number of Shares to be purchased on such
date by all Underwriters and arrangements satisfactory to you and the
applicable Sellers for purchase of such Shares are not made within 48
hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter and the
applicable Sellers. In any such case which does not result in
termination of this Agreement, either you or the Sellers
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shall have the right to postpone the Closing Date or the applicable
Option Closing Date, as the case may be, but in no event for longer
than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect
of any default of any such Underwriter under this Agreement.
11. Agreements of Aetna. Aetna agrees with you and the Company
as follows:
(a) Aetna will deliver to you on or prior to the Closing Date
a properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof);
(b) Aetna will pay or cause to be paid all transfer taxes with
respect to the Shares to be sold by Aetna; and
(c) Aetna will take all reasonable actions in cooperation with
the Company and the Underwriters to cause the Registration Statement to
become effective at the earliest possible time, to do and perform all
things to be done and performed under this Agreement prior to the
Closing Date and to satisfy all conditions precedent to the delivery of
the Shares pursuant to this Agreement.
12. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to
Executive Risk Inc., 82 Hopmeadow Street, Simsbury, CT 06070, Attention:
President, (b) if to Aetna, 185 Asylum Street, Hartford, CT 06103, Attention:
______________________ and (c) if to any Underwriter or to the Representatives,
to the Representatives c/o Donaldson, Lufkin & Jenrette Securities Corporation,
277 Park Avenue, New York, New York 10172, Attention: Syndicate Department, or
in any case to such other address as the person to be notified may have
requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of Aetna, the Company, its
officers and directors and of the several Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter or by or on behalf of the Sellers, the officers or directors of
the Company or any
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controlling person of the Sellers, (ii) acceptance of the Shares and payment for
them hereunder and (iii) termination of this Agreement and shall be binding upon
and inure to the benefit of the successors, assigns, heirs, and personal
representatives of each Underwriter and each Seller.
If this Agreement is terminated pursuant to Section 10(c) or
if for any reason the purchase of the Shares by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5(l) and the respective obligations of the
Company, Aetna and the Underwriters pursuant to Section 8 shall remain in
effect. If the purchase of the Shares by the Underwriters is not consummated for
any reason other than solely because of the termination of this Agreement
pursuant to Section 10(b) or 10(c), the Company will reimburse the Underwriters
for all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Shares.
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Sellers, the
Underwriters, each officer of the Company who signs the Registration Statement,
each director of the Company, any controlling persons referred to herein and
their respective successors and assigns, all as and to the extent provided in
this Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Shares from any of the several Underwriters merely
because of such purchase.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the
agreement among the Company, Aetna and the several Underwriters.
Very truly yours,
EXECUTIVE RISK INC.
By:
---------------------------
Title:
AETNA LIFE AND
CASUALTY COMPANY
By:
---------------------------
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CONNING & COMPANY
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
---------------------------
Title:
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SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------
Donaldson, Lufkin & Jenrette
Securities Corporation
Conning & Company
---------
2,000,000
Total
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