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$100,000,000
ORION CAPITAL CORPORATION
7 1/4% Senior Notes due 2005
UNDERWRITING AGREEMENT
July 12, 1995
LEHMAN BROTHERS INC.
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Orion Capital Corporation, a Delaware corporation (the
"Company"), proposes to sell $100,000,000 of the Company's 7 1/4% Senior Notes
due 2005 (the "Notes"). The Notes are to be issued pursuant to an Indenture
(the "Base Indenture") dated as of July 17, 1995 between the Company and State
Street Bank and Trust Company of Connecticut, National Association as trustee
(the "Trustee"), and a First Supplemental Indenture to the Base Indenture,
dated as of July 17, 1995 (the "Supplemental Indenture", and together with the
Base Indenture and any other amendments or supplements thereto, the
"Indenture"), between the Company and the Trustee.
1. Representations, Warranties and Agreements of the
Company. The Company represents, warrants and agrees (it being understood and
agreed that all representations and warranties by the Company with respect to
Guaranty National Corporation and its subsidiaries (collectively "GNC") are
being made solely to the Company's knowledge) that:
(a) A registration statement on Form S-3 (No.
33-53759), and including a prospectus for
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the registration under the United States Securities Act of
1933, as amended (the "Securities Act"), of up to $100,000,000
of a combination of debt securities (including the Notes)
preferred stock, common stock, depositary shares, and warrants
has (i) been prepared by the Company in conformity, in all
material respects, with the requirements of the Securities Act
and the rules and regulations (the "Rules and Regulations") of
the United States Securities and Exchange Commission (the
"Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become effective under the
Securities Act; and the Indenture has been qualified under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). Copies of such registration statement and any
amendments thereto have been delivered by the Company to you
as the underwriters (the "Underwriters"). As used herein,
"Prospectus Supplement" means a prospectus supplement
specifically relating to the Notes, filed with, or transmitted
for filing to, or to be promptly hereafter filed with or
transmitted for filing to, the Commission pursuant to Rule 424
under the Securities Act; Registration Statement" means the
registration statement as amended to the date of this
Agreement; "Effective Date" means the date and time as of
which the Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared
effective by the Commission; "Base Prospectus" means the
prospectus included in the Registration Statement;
"Prospectus" means the Base Prospectus together with the
Prospectus Supplement; "Preliminary Prospectus" means a
preliminary prospectus supplement specifically relating to the
Notes together with the Base Prospectus. As used herein,
"Base Prospectus," "Prospectus" and "Preliminary Prospectus"
shall include in each case the documents, if any, incorporated
by reference therein. "Supplement," "amendment" and "amend"
as used herein shall be deemed to refer to and include any
documents incorporated by reference pursuant to Item 12 of
Form S-3 under the Securities Act, that are filed subsequent
to the date of the Base Prospectus by the Company with the
Com-
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mission pursuant to the Exchange Act of 1934, as amended (the
"Exchange Act"). Any reference to any amendment to the
Registration Statement shall be deemed to include any annual
report of the Company filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act after the Effective
Date that is incorporated by reference in the Registration
Statement. The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will, when they
become effective or are filed with the Commission, as the case
may be, conform in all material respects to the requirements
of the Securities Act and the Rules and Regulations thereunder
and do not and will not, as of the applicable Effective Date
(as to the Registration Statement and any amendment thereto)
and as of the applicable filing date (as to the Prospectus and
any amendment or supplement thereto) 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 case of the Prospectus, in light
of the circumstances in which they were made), not misleading;
provided, however, that no representation or warranty is made
as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the
Company by or on behalf of any Underwriter specifically for
use in the Registration Statement or the Prospectus; and the
Indenture conforms in all material respects to the
requirements of the Trust Indenture Act and the applicable
rules and regulations thereunder.
(c) The documents (as amended prior to the date
hereof) incorporated or deemed to be incorporated by reference
in the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all
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material respects with the requirements of the Securities Act
or the Exchange Act, as applicable, and the Rules and
Regulations of the Commission thereunder, and when read
together with the other information in the Prospectus at the
time the Registration Statement and any amendments thereto
became effective and at the Closing Date (as defined below),
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 light
of the circumstances in which they were made, not misleading.
(d) The Company and each of the subsidiaries of
the Company set forth on Schedule II (collectively, the
"Principal Subsidiaries") have been duly incorporated and are
validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and
have all power and authority necessary to own, lease or
operate their respective properties and to conduct the
businesses in which they are engaged as described or incor-
porated by reference in the Prospectus; except where the
failure to so qualify would not have a material adverse effect
on the consolidated financial position, stockholders' equity,
results of operations or business of the Company and its
subsidiaries taken as a whole.
(e) The Company has an authorized capitalization
as set forth in the Prospectus under "Description of Capital
Stock," "Description of Preferred Stock" and "Description of
Common Stock" and in the documents incorporated by reference
(except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans referred to
in the Prospectus and in documents incorporated by reference),
and all of the issued and outstanding shares of capital stock
of the Company have been
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duly and validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the
description thereof contained in the Prospectus under such
sections and in documents incorporated therein by reference;
and all of the issued and outstanding shares of capital stock
of the Principal Subsidiaries of the Company have been duly
and validly authorized and issued and are fully paid and
non-assessable and, except as set forth in the Prospectus and
in documents incorporated therein by reference, and except for
restrictions on transfers provided (i) under insurance or
insurance holding company laws or regulations, and (ii) under
federal and state securities laws, are owned directly or
indirectly by the Company, free and clear of any security
interests, mortgages, pledges, liens, encumbrances, equities
or claims.
(f) The Notes have been duly and validly
authorized by the Company for issuance and, when duly
executed, issued and delivered by the Company, and
authenticated by the Trustee pursuant to the provisions of
this Agreement and the Indenture, respectively, against
payment therefor as provided herein and in the Registration
Statement will have been duly executed, issued and outstanding
and will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their
terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other
similar laws now or hereafter in effect relating to creditors'
rights generally and general equitable principles (whether
considered in a proceeding in equity or at law); and the
Notes, when issued and delivered, will conform in all material
respects to the description contained in the Prospectus.
(g) Each of the Base and the Supplemental
Indenture has been duly authorized by the Company, and when
duly executed by the proper officers of the Company (assuming
due execution and
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delivery by the Trustee) and delivered by the Company will
constitute a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
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 the Indenture conforms
in all material respects to all statements relating thereto
contained in the Prospectus.
(h) This Agreement has been duly authorized,
executed and delivered and the execution, delivery and
performance of this Agreement and the Indenture by the
Company, including the issuance and delivery of the Notes and
the consummation of the transactions contemplated herein and
therein and compliance by the Company with its obligations
hereunder and thereunder, have been or will be duly authorized
by all necessary corporate actions prior to the date hereof
and do not and will not conflict with or result in a breach
of, or default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets
of the Company (except for the liens provided for in the
Indenture) or any of its subsidiaries pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them is
bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries or, to the
Company's knowledge, any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or
any of their properties or assets; and except for the
registration of the Notes under the Securities Act, the
qualification of the Indenture under
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the Trust Indenture Act, and such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Notes by the Underwriters, no consent,
approval, authorization or order of, or filing, registration
or qualification of or with, any such court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement or the Indenture by the Company
and the consummation of the transactions contemplated hereby
and thereby, or for the offering, issuance or sale of the
Notes.
(i) There are no agreements or understandings
between the Company and any person granting such person the
right to require the Company to file a registration statement
under the Securities Act with respect to any securities of the
Company 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 Securities Act.
(j) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus there has not been (except as disclosed in the
Prospectus Supplement), (A) any material adverse change in the
financial position, stockholders' equity, results of
operations, business or operations of the Company and its
subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, (B) any transaction entered into
by the Company or any of its subsidiaries, other than those in
the ordinary course of business, that is material to the
Company and its subsidiaries taken as a whole, and (C) except
for regular quarterly dividends, any dividend or distribution
of any kind declared, paid or made by the Company on any class
of its capital stock.
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(k) The financial statements (including the
related notes and supporting schedules) filed as part of the
Registration Statement or included or incorporated by
reference in the Prospectus present fairly the financial
condition and results of operations of the Company and its
consolidated subsidiaries and of the Company's interest in GNC
at the dates and for the periods indicated; and except as
noted, have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved; and the supporting schedules
incorporated in the Registration Statement present fairly the
information required to be stated therein.
(l) Deloitte & Touche LLP, who have certified
certain financial statements of the Company, whose report
appears in the Prospectus, or is incorporated by reference
therein and who have delivered the initial letter referred to
in Section 7(g) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(m) Except as described in the Registration
Statement, Prospectus or in documents incorporated therein by
reference, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a
party or of which any property or assets of the Company or any
of its subsidiaries is the subject which is required to be
disclosed in the Registration Statement, Prospectus or in
documents incorporated therein by reference, or which, if
determined adversely to the Company or any of its
subsidiaries, would likely have a material adverse effect on
the consolidated financial position, stockholders' equity,
results of operations or business of the Company and its
subsidiaries taken as a whole or the transactions contemplated
by this Agreement; and to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others; all pending
legal or governmental proceed-
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ings to which the Company or any subsidiary is a party or of
which any of their respective properties or assets is the
subject which are not described in the Registration Statement,
Prospectus, or documents incorporated therein by reference,
excluding routine litigation incidental to the Company's
business, are not material to the Company and its subsidiaries
taken as a whole.
(n) There are no contracts or other documents of
the Company or any of the Principal Subsidiaries which are
required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act
or by the Rules and Regulations which have not been described
in the Prospectus or filed as exhibits to the Registration
Statement or incorporated therein by reference as permitted by
the Rules and Regulations except for this Agreement, the Base
Indenture, and the Supplemental Indenture all of which will be
filed as exhibits to a Form 8-K to be filed by the Company
prior to the Closing Date.
(o) The Company and the Principal Subsidiaries
(i) make and keep accurate books and records and (ii) maintain
internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance
with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation
of their financial statements in conformity with generally
accepted accounting principles and to maintain accountability
for their assets, (C) access to its assets is permitted only
in accordance with management's general or specific
authorization and (D) the reported accountability for their
assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(p) Neither the Company nor any of the Principal
Subsidiaries is (i) in violation of its charter or by-laws, or
(ii) in default, and no event has occurred which, with notice
or
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lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or
condition contained in any contract, indenture, mortgage, deed
of trust, loan agreement, note, lease, or other agreement or
instrument to which the Company or any of the Principal
Subsidiaries is a party or by which it or any of them is or
may be bound or to which any of the properties or assets of
the Company or any of the Principal Subsidiaries is subject,
except for such defaults that would not have a material
adverse effect on the consolidated financial position,
stockholders' equity, results of operations or business of the
Company and its subsidiaries taken as a whole or (iii) in
violation in any respect of any law, ordinance, governmental
rule, regulation or court decree to which it or any of them or
its or any of their property or assets may be subject except
for such violations of any law, ordinance, governmental rule,
regulation or court decree that would not have a material
adverse effect on the consolidated financial position,
stockholders' equity, results of operations or business of the
Company and its subsidiaries taken as a whole.
(q) The Company has complied and will comply with
all the provisions of Florida H.B. 1771, codified as Section
517.075 of the Florida statutes, as contemplated by the
regulations promulgated thereunder relating to issuers doing
business with Cuba.
(r) Each of the Company and its Principal
Subsidiaries possesses such certificates, authorities or
permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the
business now operated by it, and neither the Company nor any
of the Principal Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any
such certificate, authority or permit which, individually or
in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the
consolidated financial
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position, stockholders' equity, results of operations or
business of the Company and its subsidiaries taken as a whole.
(s) Each of the Company and its Principal
Subsidiaries that is an insurance company has filed all
reports, information statements and other documents with the
insurance regulatory authorities of its jurisdiction of
incorporation and jurisdictions in which it is qualified to do
business as are required to be filed pursuant to the insurance
statutes of such jurisdictions and the rules and regulations
of the insurance regulatory authorities thereunder (the
"Applicable Insurance Laws"), except where the failure to file
such statements or reports would not, individually or in the
aggregate, have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operation
or business of the Company and its subsidiaries taken as a
whole. Except as described in the Prospectus or otherwise
described to the Underwriters in writing, and except for
treaties or agreements the unenforceability of which would
not, individually or in the aggregate, have a material adverse
effect on the consolidated financial position, stockholders'
equity, results of operations or business of the Company and
its subsidiaries taken as a whole, all reinsurance treaties
and all contracts or agreements providing for reinsurance
ceded are in full force and effect and the Company and the
Principal Subsidiaries are not in violation of, or in default
in the performance, observance or fulfillment of, any material
obligation, agreement, covenant or condition contained in any
thereof (except for violations or defaults which would not
have a material adverse effect on the consolidated financial
position, stockholders' equity, results of operations or
business of the Company and its subsidiaries taken as a
whole).
(t) The "A" rating assigned to the Principal
Subsidiaries by A.M. Best & Company, Inc. ("Best") has not
been lowered or, to the Company's knowledge, threatened to be
lowered by Best nor, to the Company's knowledge, have such
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subsidiaries been placed under surveillance or review by Best.
(u) Any certificate signed by any officer of the
Company and delivered to the Underwriters or to counsel for
the Underwriters shall be deemed a representation and warranty
by the Company to each Underwriter as to the matters covered
thereby.
2. Purchase of the Notes by the Underwriters. On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell to the
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company, at the price agreed upon by the Underwriters and the
Company the respective principal amount of the Notes set forth opposite such
Underwriter's name in Schedule I hereto at a price (the "Purchase Price") equal
to 98.555% of their principal amount plus accrued interest, if any from July
17, 1995 to the date of payment and delivery.
3. Offering of Notes by the Underwriters. Upon
authorization by Lehman Brothers Inc. of the release of the Notes, the several
Underwriters propose to offer the Notes for sale upon the terms and conditions
set forth in the Prospectus and any amendment or supplement thereto relating to
the Notes.
4. Delivery of and Payment for the Notes. Delivery of
and payment for the Notes shall be made at the offices of Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York, or at such other place as
shall be agreed upon by the Underwriters and the Company, at 10:00 A.M., New
York City time, on the third full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representative and the Company. This date and time are referred to
as the Closing Date. On the Closing Date, the Company shall deliver or cause
to be delivered to the Representative for the account of each Underwriter
against payment to or upon the order of the Company of the purchase price by
certified or official bank check or checks in, or by wire transfer of,
immediately available funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition
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of the obligation of each Underwriter hereunder. Upon delivery, a single
global Note shall be registered in the name of Cede & Co. The Notes will be
delivered through the book-entry facilities of the Depository Trust Company
("DTC"). The Note will be made available for inspection by the Underwriters
and by DTC by 1:00 P.M., New York time, on the Business Day (as defined herein)
prior to the Closing Date at such place in New York City as the Underwriters
and the Company shall agree.
5. Further Agreements of the Company. The Company
agrees:
(a) To prepare the Prospectus in a form approved
by the Underwriters and to file such Prospectus pursuant to
Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act; to make no further
amendment or supplement to the Registration Statement or to
the Prospectus prior to the Closing Date except as permitted
herein; to advise the Underwriters, promptly after it receives
notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has
been filed and to furnish the Underwriters with copies
thereof; to file promptly all reports and any definitive proxy
or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Notes;
to advise the Underwriters, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order
or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of
the qualification of the Notes for offering or sale in any
jurisdiction, of the initiation or threatening of any
proceeding for any such
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purpose, of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus
or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal.
(b) To furnish promptly to the Underwriters and
to counsel for the Underwriters a copy of the Registration
Statement as originally filed with the Commission, and each
amendment thereto filed with the Commission, including all
consents and exhibits filed therewith.
(c) To deliver promptly to the Underwriters such
number of the following documents as the Underwriters shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits other than
this Agreement and the Indenture), (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented
Prospectus and (iii) any document incorporated by reference in
the Prospectus (excluding exhibits thereto); and, if the
delivery of a prospectus is required at any time after the
Effective Date in connection with the offering or sale of the
Notes and if at such time any events shall have occurred as a
result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary
to amend or supplement the Prospectus (or to file under the
Exchange Act any document incorporated by reference in the
Prospectus) in order to comply with the Securities Act or the
Exchange Act, to notify the Underwriters and, upon their
request, to file such document and to prepare and furnish
without
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charge to each Underwriter and to any dealer in securities as
many copies as the Underwriters may from time to time
reasonably request of an amended or supplemented Prospectus
which will correct such statement or omission or effect such
compliance.
(d) To file promptly with the Commission any
amendment to the Registration Statement or the Prospectus or
any supplement to the Prospectus that may, in the judgment of
the Company and Lehman Brothers Inc., be required by the
Securities Act or requested by the Commission.
(e) Prior to filing with the Commission any
amendment to the Registration Statement or supplement to the
Prospectus, any document incorporated by reference in the
Prospectus or any Prospectus pursuant to Rule 424 of the Rules
and Regulations, to furnish a copy thereof to the Underwriters
and counsel for the Underwriters and obtain the consent of
Lehman Brothers Inc. to the filing.
(f) As soon as practicable after the date of
this Agreement, but in any event not later than the earliest
required filing date by the Company of a Form 10-K after the
end of the 12-month period beginning at the end of the fiscal
quarter of the Company during which this Agreement was
executed, to make generally available to its security holders
and to deliver to the Underwriters an earnings statement,
conforming with the requirements of Section 11(a) of the
Securities Act covering such twelve-month period.
(g) For a period of five years following the
Closing Date, to furnish to the Underwriters, copies of all
materials furnished by the Company to its shareholders and all
public reports and all periodic reports filed by the Company
with the Commission pursuant to the Exchange Act or any Rule
or Regulation of the Commission thereunder.
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(h) Promptly from time to time to take such
action as the Underwriters may reasonably request to qualify
the Notes for offering and sale under the securities laws of
such jurisdictions as the Underwriters may request and to
comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may
be necessary to complete the distribution of the Notes, in
each jurisdiction in which the Notes and have been so
qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not less
than one year from the Closing Date, provided, however, that
in connection therewith the Company shall not be required to
qualify as a foreign corporation in any jurisdiction where it
is not so qualified.
(i) To apply the net proceeds from the sale of
the Notes being sold by the Company as set forth in the
Prospectus.
6. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Notes and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as provided
in this Agreement; (d) the costs of producing and distributing this Agreement
and any other related documents in connection with the offering, purchase, sale
and delivery of the Note; (g) any applicable listing or other fees; (h) the
fees and expenses of qualifying the Notes under the securities laws of the
several jurisdictions as provided in Section 5(h) and of preparing, printing
and distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); and (l) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement;
provided that, except as provided in this Section 6 and in Section 11 the
Underwriters
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shall pay their own costs and expenses, including the costs and expenses of
their counsel, any transfer taxes on the Notes which they may sell and the
expenses of advertising any offering of the Notes made by the Underwriters.
7. Conditions of Underwriters' Obligations. The
respective obligations of the Underwriters hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations and
warranties of the Company contained herein, to the performance by the Company
of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed
with the Commission in accordance with Section 5(a); no stop
order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the
Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) No Underwriter, shall have discovered and
disclosed to the Company on or prior to the Closing Date that
the Registration Statement or the Prospectus or any amendment
or supplement thereto contains an untrue statement of a fact
which, in the opinion of Skadden, Arps, Slate, Meagher & Flom,
counsel for the Underwriters, is material or omits to state a
fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the
statements therein, (in the case of the Prospectus, in light
of the circumstances in which they were made), not misleading.
(c) All corporate proceedings and other legal
matters incident to the authorization, form and validity of
this Agreement, the Indenture, the Notes, the Registration
Statement and the Prospectus, and all other legal matters
relating to this Agreement and the Indenture and the
transactions contemplated hereby and thereby shall be
reasonably satisfactory in all material
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respects to counsel for the Underwriters, and the Company
shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to
pass upon such matters.
(d) Michael P. Maloney, General Counsel to the
Company, shall have furnished to the Underwriters his
favorable opinion, as general counsel to the Company,
addressed to the Underwriters and dated such Closing Date, in
form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company is duly incorporated and
validly existing as a corporation in good standing
under the laws of the State of Delaware.
(ii) The Company has corporate power and
authority to own, lease and operate its properties
and to conduct its business as described in the
Registration Statement or in documents incorporated
therein by reference and to enter into and perform
its obligations under this Agreement and the
Indenture.
(iii) The Company is duly qualified as a
foreign corporation to transact business and is in
good standing in each jurisdiction in which such
qualification is required.
(iv) The authorized, issued and
outstanding capital stock of the Company is, in all
material respects, as set forth in the Prospectus
under "Description of Capital Stock," "Description of
Preferred Stock" and "Description of Common Stock"
and in the documents incorporated by reference
(except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans
referred to in the Prospectus and in documents
incorporated by reference), and the shares of issued
and outstanding Common Stock have
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been duly authorized and validly issued and are fully
paid and nonassessable.
(v) The Notes have been duly authorized
for issuance and sale to the Underwriters pursuant to
this Agreement and are substantially in the form
contemplated by the Indenture. The Notes have been
duly executed, and when issued and delivered by the
Company and when authenticated by the Trustee
pursuant to the provisions of this Agreement and the
Indenture, respectively, against payment therefor
as provided herein and in the Registration Statement,
will have been duly executed and issued and will
constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with
their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and
general equitable principles (whether enforceability
is considered in a proceeding at law or in equity).
Each of the Base and the Supplemental Indenture has
been duly authorized, executed and delivered by the
Company, are substantially in the form heretofore
delivered to you and, when duly executed and
delivered by the Trustee, will constitute a legal,
valid and binding obligation of the Company
enforceable against the Company in accordance with
its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and
general equitable principles (whether enforceability
is considered in a proceeding at law or in equity).
(vi) To the best of his knowledge, there
are no holders of securities (debt or equity) of the
Company who by reason of the
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filing of the Registration Statement under the
Securities Act have the right to request the Company
to register under the Securities Act securities held
by them.
(vii) The Principal Subsidiaries have been
duly incorporated and are validly existing as
corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly
qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which
their respective ownership or lease of property or
the conduct of their respective businesses requires
such qualification and have all corporate power and
authority necessary to own, lease, or operate their
respective properties and conduct the businesses in
which they are engaged as described or incorporated
by reference in the Prospectus; except where the
failure to so qualify would not have a material
adverse effect on the consolidated financial
position, stockholders' equity, results of operations
or business of the Company and its subsidiaries taken
as a whole. All of the issued and outstanding
capital stock of each Principal Subsidiary has been
duly authorized and validly issued, is fully paid and
nonassessable, and except as described in the
Prospectus or in documents incorporated therein by
reference and except for restrictions on transfers
provided (i) under insurance or insurance holding
company laws or regulations and (ii) under federal
and state securities laws.
(viii) This Agreement has been duly
authorized, executed and delivered by the Company.
(ix) The Registration Statement is
effective under the Securities Act and, to the best
of his knowledge, no stop order suspending the
effectiveness of the Registration Statement has been
issued under the
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Securities Act or proceedings therefor initiated or
threatened by the Commission.
(x) To the best of his knowledge, there
are no legal or governmental proceedings pending or
threatened which are required to be disclosed in the
Registration Statement, other than those disclosed
therein, and all pending legal or governmental
proceedings to which the Company or any subsidiary is
a party or to which any of their property is subject
which are not described in the Registration Statement
or documents incorporated by reference therein,
excluding ordinary routine litigation incidental to
the Company's business, are not material to the
Company and its subsidiaries taken as a whole.
(xi) The information in the Base
Prospectus under the heading "Description of Debt
Securities" and in the Prospectus Supplement under
"Description of the Notes" to the extent that they
constitute matters of law, summaries of legal
matters, documents or proceedings, or legal
conclusions, have been reviewed by him and is correct
in all material respects.
(xii) To the best of his knowledge, there
are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments
required to be described or referred to in the
Registration Statement or to be filed as exhibits
thereto other than those described or referred to
therein or filed or incorporated by reference as
exhibits thereto, except for this Agreement, the Base
Indenture and the Supplemental Indenture all of which
will be filed as exhibits to a Form 8-K to be filed
by the Company prior to the Closing Date, the
descriptions thereof or references thereto are
correct, and no material default exists in the due
performance or observance of any material obligation,
agreement, covenant or condition contained
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in any contract, indenture, mortgage, loan agreement,
note, lease or other instrument so described,
referred to, filed or incorporated by reference.
(xiii) No authorization, approval, consent
or order of any court or governmental agency is
required in connection with the sale of the Notes to
the Underwriters, except such as may be required
under the Securities Act, the Rules and Regulations,
the Trust Indenture Act, the rules and regulations
thereunder or state securities laws; and to the best
of his knowledge, the execution and delivery of this
Agreement and the Indenture, including the issuance
and delivery of the Notes, and the consummation of
the transactions contemplated herein and therein do
not and will not conflict with or constitute a breach
of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon
any property or assets of the Company (except for the
liens provided for in the Indenture) or any of the
Principal Subsidiaries pursuant to, any material
contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which the
Company or any of them is a party or by which it or
any of them may be bound, or to which any of the
property or assets of the Company or any of them is
subject, except for any such conflict, violation,
breach or default in any lien, charge, claim or
encumbrance which, individually or in the aggregate,
would not have a material adverse effect on the
consolidated financial position, stockholders'
equity, results of operations or business of the
Company and its subsidiaries taken as a whole, nor
will such action result in any violation of the
provisions of the charter or by-laws of the Company,
or any applicable law or administrative regulation or
administrative or court decree applicable by its
terms to the Company.
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(e) Donovan Leisure Newton & Irvine shall have furnished
to the Underwriters its favorable opinion, as counsel for the Company,
addressed to the Underwriters and dated such Closing Date, in form and
substance satisfactory to counsel for the Underwriters:
(i) The Company is duly incorporated and
validly existing as a corporation in good standing
under the laws of the State of Delaware.
(ii) The Company has corporate power and
authority to enter into and perform its obligations
under this Agreement and the Indenture.
(iii) The Notes have been duly authorized
for issuance and sale to the Underwriters pursuant to
this Agreement and are substantially in the form
contemplated by the Indenture. The Notes have been
duly executed by the Company, and when issued and
delivered by the Company and paid for by the
Underwriters as contemplated by this Agreement and
the Registration Statement and authenticated by the
Trustee, will constitute a valid and binding
obligation of the Company entitled to the benefits of
the Indenture and enforceable against the Company in
accordance with its terms, except as subject to the
effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other
similar laws now or hereafter in effect relating to
creditors' rights generally and general equitable
principles (whether considered in a proceeding at law
or in equity). Each of the Base and the Supplemen-
tal Indenture has been duly authorized, executed and
delivered by the Company, are substantially in the
form heretofore delivered to you and, when duly
executed and delivered by the Trustee, will
constitute a legal, valid and binding obligation of
the Company enforceable against the Company in
accordance with its terms, subject to the effects of
bank-
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ruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors'
rights generally and general equitable principles
(whether in a proceeding at law or in equity).
(iv) This Agreement has been duly
authorized, executed and delivered by the Company.
(v) The Registration Statement is
effective under the Securities Act and, to the best
of such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement has
been issued under the Securities Act or proceedings
therefor initiated nor has such counsel been advised
by the Commission that such proceedings are
threatened by the Commission.
(vi) At the time the Registration
Statement became effective and at the Closing Date,
the Registration Statement (other than the financial
statements and supporting schedules and any other
financial data included or incorporated by reference
therein, as to which no opinion need be rendered) and
the Statement of Eligibility and Qualification of the
Trustee on Form T-1 filed with the Commission
complied as to form in all material respects with the
applicable requirements of the Securities Act, the
Rules and Regulations, the Trust Indenture Act and
the rules and regulations thereunder.
(vii) The Notes conform in all material
respects to the description thereof contained in the
Prospectus.
(viii) To the best knowledge of such
counsel, no authorization, approval, consent or order
of any court or governmental agency is required in
connection with the sale of the Notes to the
Underwriters,
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25
except such as may be required under the Securities
Act, the Rules and Regulations, the Trust Indenture
Act, the rules and regulations thereunder or state
securities laws; and to the best of such counsel's
knowledge, the execution and delivery of this
Agreement and the Indenture, including the issuance
and delivery of the Notes, and the consummation of
the transactions contemplated herein and therein do
not and will not conflict with or constitute a breach
of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon
any property or assets of the Company (except for the
liens provided for in the Indenture) pursuant to, the
9 1/8% Senior Notes due 2002 and the Loan Agreement
(assuming payment of the Loan Agreement
simultaneously), except for any such conflict,
violation, breach or default in any lien, charge,
claim or encumbrance which, individually or in the
aggregate, would not have a material adverse effect
on the consolidated financial position, stockholders'
equity, results of operations or business of the
Company and its Principal Subsidiaries taken as a
whole, nor will such action result in any violation
of the provisions of the charter or by-laws of the
Company, or any applicable law or administrative
regulation or administrative or court decree known to
such counsel to be applicable by its terms to the
Company.
(f) The Underwriters shall have received from
Skadden, Arps, Slate, Meagher & Flom, counsel for the
Underwriters, such opinion or opinions, dated such Closing
Date, with respect to the issuance and sale of the Notes, the
Registration Statement, the Prospectus and other related
matters as the Underwriters may reasonably require, and the
Company 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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In rendering their opinions required by subsections (d), (e),
and (f), respectively, of this section, Michael P. Maloney,
Donovan Leisure Newton & Irvine and Skadden, Arps, Slate,
Meagher & Flom may state that their opinions are limited to
matters governed by the federal laws of the United States of
America, the laws of "the State of New York" and "the General
Corporation Law of the State of Delaware" and that such
counsel is not admitted in "the State of Delaware" if such
counsel is not so admitted and, in the case of Donovan Leisure
Newton & Irvine, that such counsel does not opine as to
insurance laws. In rendering his opinion set forth in
subsection (d), Michael P. Maloney may rely on such opinions
of counsel as he may reasonably request, provided that such
counsel is satisfactory to counsel for the Underwriters and
that copies of such opinions are attached to his opinion.
Michael P. Maloney shall also have furnished to the
Underwriters a separate written statements, addressed to the
Underwriters and dated such Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that
(x) Michael P. Maloney has acted as General Counsel and
Donovan Leisure Newton & Irvine has acted as counsel to the
Company on a regular basis (although the Company is also
represented with respect to certain other matters, by other
outside counsel), and such respective counsel have acted as
counsel to the Company in connection with the preparation of
the Registration Statement, and (y) based on the foregoing, no
facts have come to the attention of such counsel which lead
them to believe that the Registration Statement (other than
financial statements and supporting schedules and any other
financial data included or incorporated by reference therein),
as of the Effective Date, contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus contains any
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light
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27
of the circumstances under which they were made, not
misleading or any document incorporated by reference in the
Prospectus or any further amendment or supplement to any such
incorporated document made by the Company prior to such
Closing Date, when they were filed with the Commission
contained, in the case of a registration statement which
became effective under the Securities Act, any untrue state-
ment of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make
the statements therein not misleading, or, in the case of
other documents which were filed under the Exchange Act with
the Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading. The foregoing opinion
and statement may be qualified by a statement to the effect
that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus except for the
statements made in the Prospectus under the caption
"Description of the Notes" and "Description of Debt
Securities" insofar as such statements relate to the Notes and
concern legal matters.
Donovan Leisure Newton & Irvine shall
similarly have furnished to the Underwriters a separate
written statement, addressed to the Underwriters and dated the
Closing Date, to effect that it has participated in
conferences with officers and other representatives of the
Company, representatives of the independent accountants for
the Company, representatives of the Underwriters and of their
legal counsel at which the contents of the Registration
Statement and the Prospectus and related matters were
discussed, and, although such counsel is not passing upon, and
does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and Prospectus and has not made any
independent check or verification
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thereof, on the basis of the foregoing (relying as to
materiality upon the opinions of officers and other
representatives of the Company), nothing has come to such
counsel's attention that would lead them to believe that the
Registration Statement (including the Rule 430A Information)
at the time it became effective or at the Closing Date,
contained an untrue statement of a material fact or omitted to
state 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
(including the Rule 430A Information) at the Closing Date,
included an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading (it being understood that
such counsel need not express any belief with respect to the
financial statements and related schedules or other financial
or statistical data included or incorporated by reference in
the Registration Statement or the Prospectus or with respect
to the Statement of Eligibility and Qualification of Form T-1
of the Trustee or as to matters of insurance law or any
documents of GNC incorporated by reference therein).
(g) At the time of execution of this Agreement,
the Underwriters shall have received from Deloitte & Touche
LLP, a letter, in form and substance satisfactory to the
Underwriters, addressed to the Underwriters and dated the date
hereof (i) confirming that they are independent public
accountants with respect to the Company and its subsidiaries
and GNC within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) it is their opinion that the financial
statements and supporting schedules incorporated in the
Registration Statement and covered by their opinions therein,
including the financial statements and supporting schedules of
GNC and their opinion
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covering such statements and schedules, comply as to form in
all material respects with the applicable accounting
requirements of the Securities Act and the Rules and
Regulations; (iii) based upon limited procedures set forth in
detail in such letter, nothing has come to their attention
which causes them to believe that (A) the unaudited financial
statements and supporting schedules of the Company and its
subsidiaries incorporated in the Registration Statement do not
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules
and Regulations or are not presented in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements incorporated in the Registration Statement, or (B)
at a specified date not more than five days prior to the date
of this Agreement, there has been any change in the capital
stock of the Company or any increase in the long-term debt of
the Company and its subsidiaries or any decrease in
consolidated net assets as compared with the amounts shown in
the March 31, 1995 balance sheet incorporated in the
Registration Statement or, during the period from March 31,
1995 to a specified date not more than five days prior to the
date of this Agreement, there were any decreases, as compared
with the corresponding period in the preceding year, in
consolidated revenues or consolidated net earnings of the
Company and its subsidiaries, except in all instances for
changes, increases or decreases which the Registration
Statement and the Prospectus disclose have occurred or may
occur; and (iv) in addition to the examination referred to in
their opinions and the limited procedures referred to in
clause (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are
included or incorporated in the Registration Statement and
Prospectus and which are specified by the Underwriters and
have found such amounts, percentages and financial information
to be in agreement with the relevant ac-
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counting, financial and other records of the Company and its
subsidiaries identified in such letter.
(h) At the Closing Date, counsel for the
Underwriters shall have been furnished with such documents and
opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Notes
as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Notes as herein
contemplated shall be reasonably satisfactory in form and
substance to the Underwriters and their counsel.
(i) With respect to the letter of Deloitte &
Touche LLP referred to in the preceding paragraph and
delivered to the Underwriters concurrently with the execution
of this Agreement (the "initial letter"), the Company shall
have furnished to the Underwriters a letter (the "bring-down
letter") of such accountants, addressed to the Underwriters
and dated such Closing Date (i) confirming that they are
independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information
is given in the Prospectus, as of a date not more than three
days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the
financial information and other matters covered by the initial
letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
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(j) At the Closing Date, there shall not have
been, since the date hereof or since the respective dates as
of which information is given in the Registration Statement
and the Prospectus, any material adverse change in the
consolidated financial condition, stockholders' equity,
results of operations or business of the Company and its
subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, and the Company shall have
furnished to the Underwriters a certificate of the Chairman of
the Board, the President or a Vice President of the Company
and of the chief financial officer or chief accounting officer
of the Company, dated as of the Closing Date, stating that:
(i) There has been no such material
adverse change;
(ii) the representations, warranties and
agreements of the Company in Section 1 are true and
correct with the same force and effect as though
expressly made at and as of the Closing Date; the
Company has complied in all material respects with
all agreements and satisfied all conditions on its
part to be performed by it at or prior to the Closing
Date;
(iii) in their opinion (A) as of the
Effective Date, the Registration Statement did not
include any untrue statement of a material fact and
did not omit to state a material fact required to be
stated therein or necessary to make the statements
therein, (in the case of the Prospectus, in light of
the circumstances in which they were made), and (B)
since the Effective Date no event has occurred which
should have been set forth or incorporated by
reference in a supplement or amendment to the
Registration Statement or the Prospectus which has
not been so set forth; and
(iv) no stop order suspending the
effectiveness of the Registration Statement
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has been issued and no proceedings for that purpose
have been initiated or, to the knowledge of the
Company, threatened by the Commission.
(k) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Prospectus any
loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated
in the Prospectus or (ii) since such date there shall not have
been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting
the general affairs, management, financial position,
stockholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment
of the Underwriters, so material and adverse as to make it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Notes being delivered on such
Closing Date on the terms and in the manner contemplated in
the Prospectus.
(l) Subsequent to the execution and delivery of
this Agreement and prior to Closing Time, (i) no downgrading
shall have occurred in the rating accorded the Company's
securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the Rules and Regulations and
(ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's securities.
(m) Subsequent to the execution and delivery of
this Agreement there shall not have
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occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities, (iii) the United
States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United
States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic,
political or financial conditions (or the effect of
international conditions on the financial markets in the
United States shall be such) as to make it, in the judgment of
a majority in interest of the several Underwriters,
impracticable or inadvisable to proceed with the public
offering or delivery of the Notes being delivered on such
Closing Date on the terms and in the manner contemplated in
the Prospectus.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in substance reasonably satisfactory to
counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice to the Company at any time at or prior
to Closing Date, and such termination shall be without liability of any party
to any other party except as provided in Section 6 hereof. Notwithstanding any
such termination, the provisions of Sections 1, 5, and 8 shall remain in
effect.
8. Indemnification and Contribution.
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(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Securities Act, from and against any and all losses, claims,
damages or liabilities, joint or several, or any action in respect thereof
(including, but not limited to any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Notes), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of, or bound upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, any material fact required to be stated
therein or necessary to make the statements therein not misleading, or in the
case of the Prospectus in light of the circumstances in which they were made,
and shall reimburse each Underwriter and each such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter, officer, employee or controlling
person in connection with investigating or defending or preparing to defend
against any such losses, claims, damages, liabilities or actions as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such losses, claims, damages,
liabilities or actions arise out of, or are based upon, any untrue statement or
alleged untrue statement or omission or alleged omission in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any such
amendment or supplement, in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through the
Underwriters by or on behalf of any Underwriter specifically for inclusion
therein. The foregoing indemnity agreement is in addition to any liability
which the Company may otherwise have to any Underwriter or to any officer,
employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of
its directors, and each person, if any, who controls the Company within the
meaning of the
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35
Securities Act, from and against any losses, claims, damages or liabilities,
joint or several, or any actions in respect thereof, to which the Company or
any such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of, or are based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any amendment or supplement thereto, any material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information concerning such Underwriter
furnished to the Company through the Underwriters by or on behalf of that
Underwriter specifically for inclusion therein, and shall reimburse the Company
and any such director, officer or controlling person for any legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending or preparing
to defend against any such losses, claims, damages, liabilities or actions as
such expenses are incurred. The foregoing indemnity agreement is in addition
to any liability which any Underwriter may otherwise have to the Company or any
such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify
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the indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Underwriters shall, if they shall be advised by counsel in writing that
defense counsel selected by the Company has a conflict of interest, the
Underwriters shall have the right to employ counsel to represent jointly the
Underwriters and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out
of any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 8 if, in the reasonable judgment of the
Underwriters, it is advisable for the Underwriters and those Underwriters,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company. No indemnifying party shall (i) without
the prior written consent of the indemnified parties (which consent shall not
be unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment for the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
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(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any losses, claims,
damages or liabilities, or any actions in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities, or actions in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Notes 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 fault of the Company on the one hand and the Underwriters on
the other with respect to the statements or omissions which in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Notes purchased under this Agreement (before deducting
expenses) received by the Company on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
Notes purchased under this Agreement, on the other hand, bear to the total
gross proceeds from the offering of the Notes under this Agreement in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section were to be 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 into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or
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liabilities, or actions in respect thereof, referred to above in this Section
shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 8(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm that the
statements with respect to the public offering of the Notes by the Underwriters
set forth on the cover page of, and the concession and reallowance appearing
under the caption "Underwriting" in, the Prospectus are correct and constitute
information concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in the Registration
Statement and the Prospectus.
9. Defaulting Underwriters. If on the Closing Date, any
Underwriter defaults in the performance of its obligations under this
Agreement, the remaining non-defaulting Underwriters shall be obligated to
purchase the Notes which the defaulting Underwriter agreed but failed to
purchase on such Closing Date in the respective proportions to the amount of
Notes set opposite the names of each remaining non-defaulting Underwriter in
Schedule I hereto bears to the amount of Notes set opposite the names of all
the remaining non-defaulting Underwriters in Schedule I hereto; provided,
however, that the remaining non-defaulting Underwriters shall not be obligated
to purchase any of the Notes on such Closing Date if the total number of Notes
which the defaulting Underwriter or Underwriters agreed but failed to purchase
on such date exceeds 21% of the total amount of Notes of the Notes be purchased
on such
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Closing Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 127% of the amount of Notes which it agreed to
purchase on such Closing Date pursuant to the terms of Section 2. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Underwriters who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Notes to be purchased on such Closing
Date. If the remaining Underwriters or other underwriters satisfactory to the
Underwriters do not elect to purchase the Notes which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 6 and 11. As used in this Agreement, the term "Underwriter" includes,
for all purposes of this Agreement unless the context requires otherwise, any
party not listed in Schedule I hereto who, pursuant to this Section 9,
purchases Notes which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages caused by
its default. If other underwriters are obligated or agree to purchase the
Notes of a defaulting or withdrawing Underwriter, either the Underwriters or
the Company may postpone the Closing Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement,
the Prospectus or in any other document or arrangement.
10. Termination. The obligations of the Underwriters
hereunder may be terminated by the Underwriters by notice given to and received
by the Company prior to delivery of and payment for the Notes if, prior to that
time, any of the events described in Sections 7(m) shall have occurred or if
the Underwriters shall decline to purchase the Notes for any reason permitted
under this Agreement.
11. Reimbursement of Underwriters' Expenses. If the
Company shall fail to tender the Notes for delivery to
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the Underwriters by reason of any refusal or inability on the part of the
Company to perform any agreement on its part to be performed, or because any
other condition of the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled, the Company will reimburse the
Underwriters for all reasonable out-of-pocket expenses (including fees and
disbursements of counsel) incurred by the Underwriters in connection with this
Agreement and the proposed purchase of the Notes, and upon demand the Company
shall pay the full amount thereof to the Underwriters. If this Agreement is
terminated pursuant to Section 9 by reason of the default of one or more
Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account expenses.
12. Notices, etc. All statements, requests, notices and
agreements hereunder in writing, and:
(a) if to the Underwriters, shall be delivered or
sent by mail, telex or facsimile transmission to Lehman
Brothers Inc., Three World Financial Center, New York, New
York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice pursuant
to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., World Financial Center,
10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent
by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention:
Vincent T. Papa, Vice President and Treasurer; (Fax:(212)
581-7261);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its acceptance telex to the Underwriters, which
address will be supplied to any other party hereto by the Underwriters upon
request. Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The Company shall be entitled to act
and rely upon any request, consent, notice or agreement given or made on behalf
of the Underwriters by Lehman Brothers Inc.
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13. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Company, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriters contained in Section 8(b) of this Agreement shall be deemed to be
for the benefit of the directors of the Company, officers of the Company and
any person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
14. Survival. The respective indemnities,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Notes and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them for a period of six years from the Closing Date.
15. Definition of the Terms "Business Day" and
"Subsidiary". For purposes of this Agreement, (a) "business day" means any day
on which the New York Stock Exchange, Inc. is open for trading and (b)
"subsidiary" has the meaning set forth in Rule 405 of the Rules and
Regulations.
16. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of New York.
17. Counterparts. This Agreement may be executed in one
or more counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.
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18. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
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If the foregoing correctly sets forth the agreement between
the Company and the Underwriters please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
ORION CAPITAL CORPORATION
By /s/ Vincent T. Papa
------------------------------
Name: Vincent T. Papa
Title: Vice President
and Treasurer
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Accepted:
LEHMAN BROTHERS INC.
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
MERRILL LYNCH, PIERCE, FENNER & SMITH
Incorporated
By /s/ Robert H. Swindell
------------------------------
LEHMAN BROTHERS
For itself and on behalf of the several Underwriters
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SCHEDULE I
Principal Amount
of Notes to be
Purchased
---------
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . $ 34,000,000
Donaldson, Lufkin & Jenrette . . . . . . . . . . . . . . . . . . . . 33,000,000
Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith . . . . . . . . . . . . . . . . 33,000,000
Incorporated
------------------------------ ------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000,000
============
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SCHEDULE II
Principal Subsidiaries
Security Insurance Company of Hartford
The Connecticut Indemnity Company