Exhibit 5.1
September 16, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
SIMPSON THACHER & BARTLETT
425 Lexington Avenue
New York, New York 10017-3954
Re: Symons International Group, Inc./ $139,176,000 9 1/2% Senior Subordinated
Notes
Dear Sirs:
We have acted as counsel for Symons International Group, Inc., an
Indiana corporation (the "Company") in connection with (i) the issuance of
$139,176,000 9 1/2% Senior Subordinated Notes of the Company, and (ii) the
execution of certain documents in connection therewith, including, but not
limited to the Senior Subordinated Indenture, the Amended and Restated
Declaration of Trust, the Preferred Securities Company Guarantee, the Common
Securities Company Guarantee, the Registration Rights Agreement, the Purchase
Agreement, the Preliminary Offering Memorandum and the Offering Memorandum, all
as referred to in the Purchase Agreement, dated August 7, 1997, between you, the
Company and SIG Capital Trust I.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 2
In rendering the legal opinions expressed herein, we have reviewed
applicable law, have made such inquiries as we have deemed relevant and
necessary and have examined the original instruments, documents, certificates
and records we have deemed necessary in rendering these opinions, including but
not limited to the following:
1. Certificate of Existence of the Company, dated August 8, 1997 by the
Secretary of State of Indiana.
2. Articles of Incorporation and By-Laws of the Company, certified by
the Secretary of the Company.
3. Preliminary Offering Memorandum, dated July 23, 1997.
4. Offering Memorandum, dated August 7, 1997.
5. The Operative Documents to be delivered on the Closing Date.
Any term not defined herein shall have the same meaning as set forth in
the Purchase Agreement.
Based upon our examination of the foregoing instruments, documents and
certificates, and in reliance upon the completeness, correctness, accuracy,
truth and authenticity thereof and of the information therein contained and
certain representations made to us by certain officers of the Company,
concerning which information we express no opinion and declare that we have made
no independent investigation of the truth, accuracy or completeness thereof and
assume no obligation to do so, and subject to the limitations, qualifications,
exceptions and assumptions hereinafter set forth, we are of the opinion, as of
the date hereof, that under the federal laws of the United States and the laws
of the States of Indiana and New York (assuming the law of New York is the same
as the law of the State of Indiana:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Indiana, with
all requisite corporate power and authority to own, lease and operate
its properties and to conduct its business as it is currently being
conducted and as described in the Offering Memorandum, and is duly
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 3
qualified and in good standing as a foreign corporation authorized to
do business in each jurisdiction in which the ownership, leasing and
operation of its property and the conduct of its business requires such
qualification.
(ii) the authorized, issued and outstanding capital stock of
the Company has been duly and validly authorized and issued and is
fully paid and nonassessable.
(iii) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Purchase Agreement and the other Operative Documents to which it is a
party and to consummate the transactions contemplated hereby or
thereby, including, without limitation, the corporate power and
authority to issue, sell and deliver the Senior Subordinated Notes, the
Preferred Securities Company Guarantee, the Exchange Notes and the
Exchange Preferred Securities Company Guarantee.
(iv) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(v) The Indenture has been duly and validly authorized,
executed and delivered by the Company and the Indenture constitutes a
legally valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as the enforceability
thereof may be subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general
equitable principles (whether considered in a proceeding in equity or
at law).
(vi) The Senior Subordinated Notes have been duly and validly
authorized by the Company and when the Senior Subordinate Notes are
issued and authenticated in accordance with the terms of the Indenture
and delivered against payment therefor in accordance with the terms
hereof, the Senior Subordinated Notes will be the legally valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the
Indenture, except as the enforceability thereof may be subject to the
effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 4
or at law). The Senior Subordinated Notes, when issued, authenticated
and delivered, will conform to the description thereof in the Offering
Memorandum.
(vii) The Exchange Notes have been duly and validly authorized
by the Company, and when the Exchange Notes are issued and
authenticated in accordance with the terms of the Indenture and the
Registration Rights Agreement, the Exchange Notes will be the legally
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits of
the Indenture, except as the enforceability thereof may be subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law). The Exchange
Notes, when issued, authenticated and delivered, will conform to the
description thereof in the Offering Memorandum.
(viii) The Preferred Securities Company Guarantee has been
duly and validly authorized by the Company and when the Preferred
Securities Company Guarantee is issued and authenticated in accordance
with the terms of the Declaration and delivered against payment
therefor in accordance with the terms hereof, the Preferred Securities
Company Guarantee will be a legally valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and general equitable principles (whether considered
in a proceeding in equity or at law). The Preferred Securities Company
Guarantee, when issued, authenticated and delivered, will conform to
the description thereof in the Offering Memorandum.
(ix) The Exchange Preferred Securities Company Guarantee has
been duly and validly authorized by the Company, and when the Exchange
Preferred Securities Company Guarantee is issued and authenticated in
accordance with the terms of the Declaration and the Registration
Rights Agreement, the Exchange Preferred Securities Company Guarantee
will be a legally valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms and
entitled to the benefits of the Indenture, except as the enforceability
thereof may be subject to the effects of bankruptcy, insolvency,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 5
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general
equitable principles (whether considered in a proceeding in equity or
at law). The Exchange Preferred Securities Company Guarantee, when
issued, authenticated and delivered, will conform to the description
thereof in the Offering Memorandum.
(x) The Registration Rights Agreement has been duly and
validly authorized, executed and delivered by the Company and the
Registration Rights Agreement constitutes a legally valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law) and
except that any rights to indemnity and contribution thereunder may be
limited by federal and state securities laws or by considerations of
public policy. The Registration Rights Agreement conforms to the
description thereof in the Offering Memorandum.
(xi) The execution, delivery and performance by the Company of
the Purchase Agreement, the Guarantor Agreements and the other
Operative Documents to which it is a party, the issuance and sale of
the Securities and the Exchange Securities, and the consummation of the
transactions contemplated hereby and thereby, will not violate,
conflict with or constitute a breach of any of the terms or provisions
of, or be a default under (or an event that with notice or the lapse of
time, or both, would constitute a default), or require consent under
(other than those that have been or will be obtained prior to the
Closing Date), or result in the imposition of a lien or encumbrance on
any properties of the Company or any of its subsidiaries, or an
acceleration of indebtedness pursuant to, (i) the charter or bylaws or
other organizational documents of the Company or any of its
subsidiaries, (ii) to our knowledge, any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which any
of them or their property is or may be bound, (iii) any United States
federal or State of Indiana statute, rule or regulation applicable to
the Company, any of its subsidiaries or any of their assets or
properties, or (iv) to our knowledge, any judgment, order or decree of
any United States federal or State of Indiana court or United States
federal or State of Indiana governmental agency or authority having
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 6
jurisdiction over the Company, any of its subsidiaries or their assets
or properties except insofar as any of (ii), (iii) or (iv) above would
not reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect. No consent, approval, authorization or
order of, or filing, registration, qualification, license or permit of
or with, any United States federal or State of Indiana court or
governmental agency, body or administrative agency is required for the
execution, delivery and performance of this Agreement and the other
Operative Documents and the consummation of the transactions
contemplated hereby and thereby, except such as have been obtained and
made (or, in the case of the Registration Rights Agreement, will be
obtained and made) under the Securities Act, the Trust Indenture Act,
and state securities or Blue Sky laws and regulations or such as may be
required by the NASD (assuming full and complete compliance by the
Initial Purchasers with the agreements and representations contained in
Section 5(b) of the Purchase Agreement and the related information
contained in the Offering Memorandum). As to such matters relating to
state securities or Blue Sky laws and regulations or as such may be
required by the NASD, we have relied upon the review of such matters by
your counsel and the advice to you by your counsel. To our knowledge,
no consents or waivers from any other person are required for the
execution, delivery and performance of this Agreement and the other
Operative Documents and the consummation of the transactions
contemplated hereby and thereby, other than such consents and waivers
as have been obtained (or, in the case of the Registration Rights
Agreement, will be obtained).
(xii) To our knowledge, no action has been taken and no
statute, rule or regulation or order has been enacted, adopted or
issued by any United States federal or State of Indiana governmental
agency that prevents the issuance of the Securities or Exchange
Securities; to our knowledge, no injunction, restraining order or order
of any nature by a United States federal or State of Indiana court of
competent jurisdiction has been issued that prevents the issuance of
the Securities or Exchange Securities or suspends the sale of the
Securities or Exchange Securities in any jurisdiction referred to in
Section 4(e) of the Purchase Agreement; and to our knowledge, no
action, suit or proceeding is pending against or affecting or
threatened against the Company or any of its subsidiaries before any
United States federal or State of Indiana court or arbitrator or any
governmental body, agency or official which is reasonably likely to
have a Material Adverse Effect; and, to our knowledge, every request of
any securities authority or agency of any jurisdiction for additional
information has been complied with in all material respects.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 7
(xiii) When the Securities are issued and delivered pursuant
to this Agreement, the Declaration and the Indenture, none of the
Securities will be of the same class (within the meaning of Rule 144A
under the Securities Act) as securities of the Company that are listed
on a national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(xiv) Assuming the accuracy of the Initial Purchasers'
representations and warranties contained in Section 5(b) of the
Purchase Agreement and the compliance by the Initial Purchasers with
the agreements contained in such Section 5(b), no registration of the
Securities under the Securities Act, and no qualification of the
Indenture is required under the Trust Indenture Act, is required for
the sale of the Securities to you as contemplated hereby or for the
Exempt Resales solely in the manner contemplated by this Agreement, the
Declaration, the Indenture and the Offering Memorandum.
(xv) Neither the Trust, the Company nor any of its
subsidiaries is (i) an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company
Act and regulations, or (ii) a "holding company" or a "subsidiary
company" or an "affiliate" of a holding company within the meaning of
the Public Utility Holding Act of 1935, as amended.
(xvi) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement
thereto, as of its date (except for the financial statements, including
the notes thereto, and the supporting schedules and appendices and
other financial, statistical and accounting data included therein or
omitted therefrom, as to which no opinion need be expressed), contains
all the information specified in, and meeting the requirements of, Rule
144A(d)(4) under the Securities Act.
(xvii) The statements made in the Offering Memorandum under
the captions "Description of the Preferred Securities," "Description of
the Senior Subordinated Notes," "Relationship Among the Preferred
Securities, the Senior Subordinated Notes and the Preferred Securities
Company Guarantee" and "Plan of Distribution" (except those matters set
forth in the second paragraph of Section 6(c) of the Purchase
Agreement), insofar as they purport to constitute summaries of certain
contracts, agreements or documents,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 8
constitute accurate summaries of such contracts, agreements or
documents in all material respects.
For purposes of rendering the opinions contained in paragraphs (v),
(vi), (vii), (viii), (ix) and (x) above, we have no reason to believe that any
provision of New York law would render any of the documents referred to in such
paragraphs unenforceable in any material respect (subject to each of the other
assumptions and qualifications contained in such opinion), assuming that New
York law is the same as Indiana law, and that we have no reason to believe that
New York law is different from Indiana law (it being understood that no member
of our firm is licensed to practice law in the State of New York).
We have participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, representatives of the Initial Purchasers and their
counsel in connection with the preparation of the Preliminary Offering
Memorandum and the Offering Memorandum and have considered the matters required
to be stated therein and the statements contained therein and, although we have
not independently verified the accuracy, completeness or fairness of such
statements (except as indicated above), we advise you that, on the basis of the
foregoing, no facts have come to our attention that caused us to believe that
the Preliminary Offering Memorandum or the Offering Memorandum (as amended or
supplemented, if applicable), at the time such Preliminary Offering Memorandum
or Offering Memorandum were circulated or at the Closing Date, 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 the light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, we further state that we assume no
responsibility for, and have not independently verified, the accuracy,
completeness or fairness of the financial statements, notes and schedules and
other financial data included in the Preliminary Offering Memorandum or the
Offering Memorandum or any amendment or supplement thereto or the statements
made in the second paragraph of Section 6(c) of the Purchase Agreement.
The opinions contained herein are rendered to you at the request of the
Company.
The foregoing opinion is subject to the following additional
limitations, qualifications, exceptions and assumptions:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 9
(a) Our opinion is based solely on the laws of the States of
New York (assuming the law of New York is the same as the law of the
State of Indiana), Indiana and United States federal law, and we
express no opinion as to matters governed or affected by the laws of
other states or as to the effect of the governing law provisions in the
Operative Documents. All documents opined to hereunder are to be
construed under New York law without regard to conflict of law
provisions which might be contained in such documents. We express no
opinion with respect to the enforceability of any provision which
requires that New York law be applied in connection with the validity
or enforceability of any of the documents opined to hereunder.
(b) We have relied upon information, certificates and
representations made by representatives of the Company and copies of
documents and records furnished to us by the Company and others, and,
for purposes of this opinion, we have assumed that all such information
and copies are true, correct, complete, authentic and accurate and
remain unchanged as of the date hereof, and that all signatures are
genuine, that all persons executing the documents were of legal age and
had the legal capacity to do so, and said matters have not been
independently verified by us. We have also assumed authenticity of the
originals of all documents submitted to us as copies.
(c) We express no opinion as to the status of title to any
property, real or personal, which is the subject matter of the
Operative Documents or as to the relative rights, interests and
priorities of the various parties who have or claim any interest in any
such property.
(d) The opinions expressed herein are based upon certain dated
certificates and certified copies described herein, and we assume that
no act or event has occurred between the dates thereof and the date
hereof which would in any way affect any of the matters opined upon
herein or which would in any manner alter any of said certificates or
certified copies. To our knowledge, no such act or event has occurred.
(e) This opinion is limited to the matters expressly stated
herein, and no opinion is inferred or may be implied beyond the matters
expressly stated. This opinion does not constitute a guarantee of
payment, performance or collectability of the aforesaid notes,
securities or documents of any of the obligations or other matters
referred to or opined
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 10
upon herein, and by rendering this opinion we are not guaranteeing or
insuring the payment, performance or collectability said notes,
securities or documents or any of the obligations or other matters
referred to or opined upon herein. We shall have no continuing
obligations hereunder to inform you of changes in law or fact
subsequent to the date hereof or facts of which we become aware after
the date hereof.
(f) The term "enforceable" as used herein or as referred to in
any other Operative Document not specifically referred to herein (i) is
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws as from time to time are in
effect affecting the enforcement of rights of creditors' generally, and
(ii) shall not be deemed to include the availability to any person or
entity of the remedy of specific performance, injunctive relief or
other equitable remedies to the extent general principles of equity
make such remedies unavailable. The unavailability of these remedies
does not render the Operative Documents invalid as a whole, and there
exists in the Operative Documents, or pursuant to applicable law,
legally adequate remedies for the realization of the principal benefits
and/or security intended to be provided by the Operative Documents.
(g) We do not hereby express any opinion as to the strict
enforceability of each and every remedy and provision of the Operative
Documents. Certain rights, remedies and waivers contained in the
Operative Documents may be limited or rendered ineffective by
applicable state laws or judicial decisions governing such provisions,
but such laws and judicial decisions should not render the Operative
Documents invalid as a whole, and there exists in the Operative
Documents, or pursuant to applicable law, legally adequate remedies for
the realization of the principal benefits and/or security intended to
be provided by the Operative Documents.
(h) The enforceability of the covenants and restrictions in
the Operative Documents against the Company may be limited or abrogated
if the party seeking enforcement fails to act in good faith and in a
commercially fair and reasonable manner in seeking to exercise and
enforce its rights and remedies thereunder and our opinion is subject
to the effects of the application of the principles of equity
(regardless of whether enforcement is considered in proceedings at law
or in equity) in regard to covenants or provisions in agreements where
the breach of such covenants or provisions
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 11
imposes restrictions or burdens and it cannot be demonstrated that the
enforcement of such restrictions and burdens is reasonably necessary
for such party's protection.
(i) We express no opinion as to the perfection or relative
priorities of any security interests or liens on any property of the
Company created by the Operative Documents or of any other security
interests or collateral that may be described or referred to in the
Operative Documents or the proceeds thereof.
(j) Any cognovit provisions contained in any of the Operative
Documents, under which the Company has waived service of process and
authorized confession of judgment, are void and unenforceable under
Indiana law assuming Indiana law applies. I.C. ss. 34-2-26-1.
Therefore, we cannot opine with any certainty as to the effect that the
existence of any cognovit provisions in the Operative Documents may
have on the enforceability of the Operative Documents under Indiana
law. We express no opinion as to the validity, legally binding effect
or enforceability of the waiver of rights and defenses contained in
Section 5.15 of the Indenture.
(k) In making our examination of the Operative Documents, we
have assumed that each party thereto, other than the Company, had full
power and authority to execute, deliver and perform all of its
obligations thereunder, and has duly authorized execution, delivery and
performance thereof by all necessary and proper action.
(l) We have assumed that sufficient consideration has been
given for the Operative Documents.
(m) Where there are no definitive court rulings, this opinion
is based upon our understanding of current interpretations of law.
(n) We have assumed that the facts and matters represented and
warranted by the Company in the Operative Documents are true and
correct and we have relied on these representations and warranties in
rendering this opinion.
(o) This firm has been engaged specifically to represent the
Company in connection with this transaction. We have represented the
Company in certain other matters; but we have not made inquiry of the
Company as to any other matters. Whenever
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
CIBC WOOD GUNDY SECURITIES CORP.
MESIROW FINANCIAL, INC.
SIMPSON THACHER & BARTLETT
September 16, 1997
Page 12
our opinion herein with respect to the existence or absence of facts is
intended to be based upon our knowledge or awareness or upon matters
known to us, it is intended to signify that during the course of our
limited representation of the Company, no information has come to our
attention which would give us actual knowledge of the existence or
absence of such facts. Except to the extent expressly set forth herein,
we have not undertaken any independent investigation to determine the
existence or absence of such facts, and no inference as to our
knowledge of the existence or absence of such facts should be drawn
from our representation of the Company.
This opinion is rendered solely for the benefit of each of you, and may
not be relied upon by any other party, nor may copies be delivered to any other
person or filed with any governmental agency, without our prior written consent.
Yours truly,
/s/
DANN PECAR NEWMAN & KLEIMAN,
Professional Corporation