Exhibit 1.1
USF&G CORPORATION
USF&G CAPITAL
Preferred Securities
UNDERWRITING AGREEMENT
To the Underwriters named in Schedule I hereto.
Ladies and Gentlemen:
USF&G Corporation, a Maryland corporation (the "Company"), and USF&G
Capital , a statutory business trust formed under the laws of the State of
Delaware (the "Trust"), propose, subject to the terms and conditions started
herein, that the Trust issue and sell to the Underwriters named in Schedule I
(the "Underwriters") an aggregate of _______________ (the "Firm Securities") of
its ____ % Cumulative Quarterly Income Preferred Securities, Series (liquidation
amount $ _____ per preferred security) (the "Preferred Securities") and, at the
election of the Underwriters, up to an additional _______________ (the "Optional
Securities") of its Preferred Securities. The Firm Securities and the Optional
Securities that the Underwriters elect to purchase pursuant to paragraph 2 are
collectively referred to as the "Securities". The Preferred Securities, which
will have the specific terms set forth in Schedule II, represent undivided
beneficial interests in the assets of the Trust, guaranteed by the Company as to
the payment of distributions, and as to payments on liquidation or redemption,
to the extent the Trust has funds on hand therefor as set forth in a guarantee
agreement (the "Guarantee") between the Company and The Bank of New York, as
trustee (the "Guarantee Trustee"). The proceeds of the sale by the Trust of the
Securities and an aggregate of up to _________ (or assuming full exercise by the
Underwriters of the over-allotment option described herein) of its Common
Securities (liquidation amount $ per common security) (the "Common Securities")
are to be invested in ____ % Deferrable Interest Subordinated Debentures, Series
, Due ______ (the "Debentures") of the Company, to be issued pursuant to an
Indenture, as supplemented by the First Supplemental Indenture (as supplemented,
the "Indenture"), between the Company and The Bank of New York, as trustee (the
"Debenture Trustee").
1. Each of the Trust and the Company, jointly and severally, represents and
warrants to each of the Underwriters that:
(a) ______ A registration statement (as specified in Schedule II
hereto) on Form S-3 in respect of the Securities, the Debentures and the
Guarantee (collectively, the "Registered Securities") has been filed with
the Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto, each in
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the form heretofore delivered or to be delivered to the firms designated as
representatives of the Underwriters in Schedule II hereto (the
"Representatives", which term also refers to a single firm acting as sole
representative of the Underwriters and to Underwriters who act without any
firm being designated as their representative) and, excluding exhibits to
such registration statement, but including all documents incorporated by
reference in the prospectus contained therein, to the Representatives for
each of the other Underwriters have been declared effective by the
Commission in such form; no other document with respect to such
registration statement or document incorporated by reference therein has
heretofore been filed or transmitted for filing with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Act of 1933, as amended
(the "Act") each in the form heretofore delivered to the Representatives);
and no stop order suspending the effectiveness of such registration
statement has been issued and no proceeding for that purpose has been
initiated or, to the best of the Company's or the Trust's knowledge,
threatened by the Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant to Rule 424 of
the rules and regulations of the Commission under the Act , being
hereinafter called a "Preliminary Prospectus"; the various parts of such
registration statement, including all exhibits thereto and the documents
incorporated by reference in the prospectus contained in the registration
statement at the time such part of the registration statement became
effective but excluding the Forms T-1 of the trustees under the Indenture,
the Guarantee and the Trust Agreement (as hereinafter defined), each as
amended at the time such part of the registration statement became
effective, being hereinafter called the "Registration Statement"; the
prospectus as supplemented to specifically refer to the final terms and
conditions of the Securities, in the form in which it has most recently
been filed, or transmitted for filing, with the Commission on or prior to
the date of this Agreement, being hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement);
and any reference to the Preliminary Prospectus, Prospectus or Registration
Statement shall be deemed to mean such document after excluding any
statement in any such document which does not constitute a part thereof
pursuant to Rule 412 of Regulation C under the Act and after substituting
therefor any statement modifying or superseding such excluded statement.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
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Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
the Representatives expressly for use therein.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein.
(d) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission 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 not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through the Representatives expressly for use therein.
(e) None of the Trust, the Company or any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material loss
or interference with its business from fire, explosion, flood or other
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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; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been (i) any material addition, or any
development involving a prospective material addition, to either the
Company's consolidated reserve for property/casualty insurance claims and
claims expense or the consolidated reserve for life insurance policy
benefits, (ii) any change in the capital stock (other than shares of common
stock of the Company issued pursuant to employee benefit, dividend
reinvestment or similar plans or as the result of the conversion of an
outstanding security), short-term debt or long-term debt of the Company or
any of its subsidiaries, or (iii) any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
securityholders' equity or results of operations of the Trust or of the
Company and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus.
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; each of
United States Fidelity and Guaranty Company and Fidelity and Guaranty Life
Insurance Company (each a "Principal Subsidiary" and, collectively, the
"Principal Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation.
(g) The Company has authorized capital stock as set forth in the
Prospectus and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable; all of the outstanding beneficial interests in the assets
of the Trust have been duly authorized and issued, are fully paid and
non-assessable, and conform to the descriptions thereof contained in the
Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims.
(h) Other than as set forth in the Prospectus, 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 of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(i) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
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such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries.
(j) Ernst & Young, who have certified certain financial statements of
the Company and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder.
(k) Each of the Principal Subsidiaries is duly licensed to conduct an
insurance business under the insurance laws of each jurisdiction in which
the conduct of its business requires such licensing and of each
jurisdiction in which the failure to be so licensed would have,
individually or in the aggregate, a material adverse effect on the business
operations, consolidated financial position, shareholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole; each of the Company and the Principal Subsidiaries has all consents,
approvals, authorizations, orders, registrations and qualifications of or
with, and is in compliance with, all statutes, orders, rules and
regulations of, all courts and governmental agencies and bodies having
jurisdiction over it and any of its properties, except where the failure to
have any such consent, approval, authorization, order, registration or
qualification, or so to comply, would not, individually or in the aggregate
with all other such failures, have a material adverse effect on the
business operations, consolidated financial position, shareholders' equity
or results of operations of the Company and its subsidiaries, taken as a
whole; and there is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or investigation that reasonably could
lead to the revocation, termination or suspension of, or render invalid or
otherwise ineffective, any such license, consent, approval, authorization,
order, registration or qualification, other than any such revocation,
termination, suspension, invalidity or ineffectiveness that would not,
individually or in the aggregate with all other such revocations,
terminations, suspensions, invalidity and ineffectiveness, have a material
adverse effect on the business operations, consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole.
(l) All property-casualty reinsurance treaties and arrangements to
which any of the Company and the Principal Subsidiaries is the ceding party
are in full force and effect, with such exceptions as would not
individually or in the aggregate have a material adverse effect on the
consolidated financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, and neither the Company nor
any of the Principal Subsidiaries is in violation of, or in default in the
performance, observance or fulfillment of, any obligation, agreement,
covenant or condition contained therein, except to the extent that any such
violation or default would not, individually or in the aggregate with all
such other violations and defaults, have a material adverse effect on the
consolidated financial position, shareholders' equity or results of
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operations of the Company and its subsidiaries; neither the Company nor any
of the Principal Subsidiaries has received any notice from any of the other
parties to such treaties, contracts and arrangements that such other party
intends not to perform in any material respect such treaty, contract or
arrangement, and the Company and the Principal Subsidiaries have no reason
to believe that any of the other parties to such treaties, contracts and
arrangements will be unable to perform in all material respects its
obligations under such treaties, contracts and arrangements.
(m) The statutory financial statements of the Principal Subsidiaries
required or permitted to be prepared in accordance with the insurance laws,
rules and regulations of any jurisdiction to which the Principal
Subsidiaries are subject, and from which certain ratios and other financial
and statistical data contained in the Registration Statement and the
Prospectus have been derived, have, for each relevant period, been prepared
in conformity in all material respects with the requirements of such
insurance laws, rules and regulations and present fairly the information
purported to be shown.
(n) The reserves carried on the books of the Principal Subsidiaries
for payment of all benefits, losses, claims and expenses under outstanding
insurance policies and programs are adequate, under presently accepted
actuarial principles applied on a consistent basis, to cover the total
amount of all reasonably anticipated liabilities under all issued and
outstanding insurance policies and programs under which the Principal
Subsidiaries may have any liability.
(o) None of the Company, the Trust nor any of their affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075 Florida Statutes.
(p) This Agreement has been duly authorized, executed and delivered on
behalf of the Company and the Trust.
(q) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act of
the State of Delaware (the "Delaware Business Trust Act") with the power
and authority to own its property and conduct its business as described in
the Prospectus, and has conducted and will conduct no business other than
the transactions contemplated by this Agreement and described in the
Prospectus; the Trust is not a party to or bound by any agreement or
instrument other than this Agreement, the Amended and Restated Declaration
of Trust (the "Trust Agreement") between the Company and the trustees named
therein (the "Trustees") and the agreements and instruments contemplated by
the Trust Agreement and described in the Prospectus; the Trust has no
liabilities or obligations other than those arising out of the transactions
contemplated by this Agreement and the Trust Agreement and described in the
Prospectus; based on expected operations and current law, the Trust is not
and will not be classified as an association taxable as a corporation for
United States federal income tax purposes; and there are no legal or
governmental proceedings pending to which the Trust is a party or of which
any property of the Trust is the subject and, to the best of the Company's
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and the Trust's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(r) The Securities have been duly and validly authorized by the Trust,
and, when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-assessable undivided
beneficial interests in the assets of the Trust and will conform to the
description thereof contained in the Prospectus; the issuance of the
Securities is not subject to preemptive or other similar rights; the
Securities will have the rights set forth in the Trust Agreement, and the
terms of the Securities are valid and binding on the Trust; the holders of
Securities, as beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
(s) The Common Securities have been duly and validly authorized by the
Trust, and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Prospectus, will be duly and validly
issued and fully paid and non-assessable undivided beneficial interests in
the assets of the Trust and will conform to the description thereof
contained in the Prospectus; the issuance of the Common Securities is not
subject to preemptive or other similar rights; and at each Time of Delivery
(as defined in paragraph 4 hereof), all of the issued and outstanding
Common Securities of the Trust will be directly owned by the Company free
and clear of any liens, encumbrances, claims or equities; and the Common
Securities and the Securities are the only interests authorized to be
issued by the Trust.
(t) The Guarantee, the Debentures, the Trust Agreement, the Agreement
as to Expenses and Liabilities between the Company and the Trust (the
"Expense Agreement") and the Indenture (the Guarantee, the Debentures, the
Trust Agreement, the Expense Agreement and the Indenture being collectively
referred to as the "Company Agreements") have each been duly authorized and
when validly executed and delivered by the Company and, in the case of the
Guarantee, by the Guarantee Trustee, and in the case of the Trust
Agreement, by the Trustees and, in the case of the Indenture, by the
Debenture Trustee, and, in the case of the Debentures, when validly
authenticated and delivered by the Debenture Trustee, will constitute valid
and legally binding obligations of the Company, enforceable in accordance
with their respective terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles; the
Debentures are entitled to the benefits of the Indenture; and the Company
Agreements, which will be substantially in the form filed as exhibits to
the Registration Statement, will conform to the descriptions thereof
contained in the Prospectus; and the Trust Agreement, the Indenture and the
Guarantee have been duly qualified under the Trust Indenture Act.
(u) The issue and sale of the Securities and the Common Securities by
the Trust and the Debentures by the Company, the issuance of the Guarantee
by the Company, the compliance by the Trust and the Company with all of
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their respective obligations under the provisions of this Agreement, the
Securities and the Company Agreements, the purchase of the Debentures by
the Trust, the distribution of the Debentures by the Trust in the
circumstances contemplated by the Trust Agreement and the consummation of
the transactions contemplated herein and therein will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement or other agreement or instrument to which the
Trust, the Company or any of its subsidiaries is a party or by which the
Trust, the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Trust, the Company or any of its subsidiaries
is subject, nor will such action result in any violation of the provisions
of the Trust Agreement or the Charter or By-laws of the Company or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Trust, the Company or the
Principal Subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the issue and
sale of the Securities and the Common Securities by the Trust and the
Debentures by the Company, the issuance of the Guarantee by the Company,
the compliance by the Trust and the Company with all of their respective
obligations under the provisions of this Agreement, the Securities and the
Company Agreements, the purchase of the Debentures by the Trust, the
distribution of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement or the consummation of the transactions
contemplated herein or therein except such as have been, or will have been
prior to the First Time of Delivery (as defined in paragraph 4 hereof),
obtained under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or blue sky laws in connection with the
purchase of the Securities and the distribution of the Securities by the
Underwriters.
(v) Neither the Trust nor the Company is, and after giving effect to
the offering and sale of the Securities, neither the Trust nor the Company
will be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act").
2. Subject to the terms and conditions of this Agreement, (a) the Trust and
the Company agree that the Trust shall issue and sell to each of the
Underwriters and each of the Underwriters agrees, severally and not jointly, to
purchase from the Trust, the number of Firm Securities set forth after the name
of such Underwriter in Schedule I hereto, at the purchase price set forth in
Schedule II hereto and (b) in the event and to the extent that the Underwriters
shall exercise the election to purchase Optional Securities as provided below,
the Trust and the Company agree that the Trust shall issue and sell to each of
the Underwriters and each of the Underwriters agrees, severally and not jointly,
to purchase, at the purchase price per Security set forth in clause (a) of this
paragraph 2, that portion of the number of Optional Securities as to which such
election shall have been exercised (to be adjusted by the Representatives so as
to eliminate fractional Securities) determined by multiplying such number of
Optional Securities by a fraction, the numerator of which is the maximum number
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of Optional Securities which such Underwriter is entitled to purchase as set
forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Securities that all of
the Underwriters are entitled to purchase hereunder.
The Trust and the Company hereby grant to the Underwriters the right to
purchase at their election up to ___________ Optional Securities, at the
purchase price per Security set forth in the paragraph above, for the sole
purpose of covering over-allotments in the sale of the Firm Securities. Any such
election to purchase Optional Securities may be exercised only by written notice
from the Representatives to the Company, given within a period of 30 calendar
days after the date of this Agreement, setting forth the aggregate number of
Optional Securities to be purchased and the date on which such Optional
Securities are to be delivered, as determined by the Representatives but in no
event earlier than the First Time of Delivery (as defined in paragraph 4 hereof)
or, unless the Representatives and the Company otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
As compensation to the Underwriters for their commitments hereunder,
and in view of the fact that the proceeds of the sale of the Securities will be
used by the Trust to purchase the Debentures of the Company, the Company hereby
agrees to pay at each Time of Delivery to , for the accounts of the several
Underwriters, an amount equal to $. _____ per Security for the Securities to be
delivered at such Time of Delivery.
3. _______ Upon the authorization by the Representatives of the release
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale upon the terms and conditions set forth in the Prospectus.
4. _______ (a) The Securities to be purchased by each Underwriter
hereunder will be represented by one or more definitive global Securities in
book-entry form which will be deposited by or on behalf of the Trust with The
Depository Trust Company ("DTC") or its designated custodian. The Trust will
deliver the Securities to ____________________ , for the account of each
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor in next day funds, by causing DTC to credit the Securities to the
account of
at DTC. The Trust will cause the certificates representing the
Securities to be made available to the Representatives for checking at least
twenty-four hours prior to the Time of Delivery at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Securities,
a.m., New York City time, on _____________ , 1996 or such other time and date
as the Representatives and the Company may agree upon in writing, and, with
respect to the Optional Securities, _______ a.m., New York City time, on the
date specified by the Representatives in the written notice given by the
Representatives of the Underwriters' election to purchase such Optional
Securities, or such other time and date as the Representatives and the Company
may agree upon in writing. Such time and date for delivery of the Firm
Securities is herein called the "First Time of Delivery", such time and date for
delivery of the Optional Securities, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
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At each Time of Delivery, the Company will pay, or cause to be paid,
the commission payable at such Time of Delivery to the Underwriters under
paragraph 2 hereof in next day funds.
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to paragraph 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by
the Underwriters pursuant to paragraph 7(n) hereof, and the check or checks
specified in subparagraph (a) above, will be delivered at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017 (the
"Closing Location"), and the Securities will be delivered at the Designated
Office, all at such Time of Delivery. A meeting will be held at the Closing
Location at _______ p.m., New York City time, on the New York Business Day
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. "New York Business Day" shall
mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. Each of the Trust and the Company, jointly and severally, agree with
each of the Underwriters:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the 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 424(b) under the
Act; to make no further amendment or any supplement to the Registration
Statement or Prospectus prior to any Time of Delivery which shall be
disapproved by the Representatives promptly after reasonable notice
thereof; to advise the Representatives promptly of any such amendment or
supplement after any Time of Delivery and furnish the Representatives 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 for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Securities, and during such same period to
advise the Representatives, 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 with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any prospectus, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of
the issuance of any such stop order or of any such order preventing or
suspending the use of any prospectus relating to the Securities or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
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(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Registered
Securities, for offering and sale under the securities laws of such
jurisdictions as the Representatives 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 Securities, provided that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York in such
quantities as the Representatives may from time to time reasonably request,
and, if the delivery of a prospectus is required at any time in connection
with the offering or sale of the Securities and if at such time any event
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 during such same period 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 Act, the Exchange
Act or the Trust Indenture Act, to notify the Representatives and upon
their request to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies
as the Representatives may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance;
(d) In the case of the Company, to make generally available to its
security-holders as soon as practicable, but in any event not later than
eighteen months after the effective date of the Registration Statement (as
defined in Rule 158(c)), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including at the option of the Company Rule 158);
(e) During the period beginning on the date of this Agreement and
continuing to and including the earlier of (i) the date, after the First
Time of Delivery, on which the distribution of the Securities ceases, as
determined by the Underwriters and (ii) 30 days after the First Time of
Delivery for the Securities, not to offer, sell, contract to sell or
otherwise dispose of any Securities, any other beneficial interests in the
Trust, any Debentures or any preferred securities or other securities of
the Company, the Trust or any other similar trust that are substantially
similar to the Securities (including any guarantee of the Securities) or
the Debentures or any securities convertible into or exercisable or
exchangeable for, or that represent the right to receive, Securities
(including any guarantee of the Securities), Debentures, preferred
securities or such substantially similar securities of the Company, the
11
Trust or any other similar trust, without the prior written consent of the
Representatives;
(f) During a period of five years from the date of this Agreement, to
furnish to the Underwriters (A) copies of all reports or other
communications (financial or other) generally furnished to stockholders of
the Company, and deliver to the Underwriters (i) as soon as they are
available, copies of any reports and financial statements furnished to or
filed by the Company with the Commission or any national securities
exchange on which the Securities or any class of securities of the Company
is listed and (ii) the documents specified in Section 704 of the Indenture
as in effect at the Time of Delivery; and (B) such additional information
concerning the business and financial condition of the Company and the
Trust as the Representatives may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Trust and the Company and its subsidiaries are consolidated
in reports furnished to its stockholders generally or to the Commission);
(g) To apply the net proceeds from the sale of the Securities, in the
case of the Trust, and the Debentures, in the case of the Company, for the
purposes set forth in the Prospectus;
(h) In the case of the Company, to issue the Guarantee concurrently
with the issue and sale of the Securities as contemplated herein; and
(i) To use its best efforts to list, subject to notice of issuance,
the Securities on the New York Stock Exchange.
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's and the Trust's counsel and accountants in
connection with the registration of the Registered Securities under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Company Agreements, any
Blue Sky and Legal Investment Memoranda and any other documents in connection
with the offering, purchase, sale and delivery of the Registered Securities;
(iii) all expenses in connection with the qualification of the Registered
Securities for offering and sale under state securities laws as provided in
paragraph 5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky and legal investment surveys; (iv) any fees charged by securities
rating services for rating the Securities; (v) any filing fees incident to any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities; (vi) all fees and expenses in connection
with listing the Securities on the New York Stock Exchange and the cost of
registering the Securities under Section 12 of the Exchange Act; (vii) the cost
of preparing certificates for the Securities and the Debentures; (viii) the fees
and expenses of the Trustees, the Debenture Trustee and the Guarantee Trustee
and any agent thereof and the fees and disbursements of their counsel; and (ix)
all other costs and expenses incident to the performance of its obligations
12
hereunder which are not otherwise specifically provided for in this paragraph.
It is understood, however, that, except as provided in this paragraph, paragraph
8 and paragraph 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Securities by them, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Underwriters hereunder, as to the Securities to
be delivered at each Time of Delivery, shall be subject in their discretion to
the condition that all representations and warranties and other statements of
the Company and the Trust herein, or made pursuant to this Agreement, at and as
of such Time of Delivery, are true and correct, the condition that the Company
and the Trust perform all their respective obligations hereunder theretofore to
be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with paragraph
5(a) hereof; 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
all requests for additional information on the part of the Commission shall
have been complied with by the Company and the Trust to the
Representatives' reasonable satisfaction.
(b) Davis Polk & Wardwell, counsel for the Underwriters, shall have
furnished to the Representatives such opinion or opinions (a draft of such
opinion is attached as Annex II(a) hereto), dated such Time of Delivery,
with respect to the matters covered in paragraphs (i), (v), (vi), (x), (xi)
and (xiii) of subparagraph (c) below and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters; provided that in rendering such
opinion, Davis Polk & Wardwell may rely upon the opinion of Richards,
Layton & Finger delivered pursuant to subparagraph (e) hereof as to certain
matters of Delaware law and the opinion of Piper & Marbury delivered
pursuant to subparagraph (d) hereof as to certain matters of Maryland law.
(c) Piper & Marbury, L.L.P. counsel for the Company and the Trust, or
other counsel satisfactory to the Representatives, shall have furnished to
the Representatives their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form and
substance satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority
to own its properties and conduct its business as described in the
Prospectus; each of the Principal Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation;
13
(ii) The Company has authorized capital stock as set forth in the
Prospectus and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; all of the issued and outstanding Common
Securities of the Trust are owned directly by the Company, free and
clear of any liens, encumbrances, equities or claims; (such counsel
being entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such counsel
shall state that they believe that both the Representatives and they
are justified in relying upon such opinions and certificates);
(iii) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, 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 of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(iv)The Trust is not a party to or bound by any agreement or
instrument other than the Trust Agreement, this Agreement and the
agreements and instruments contemplated by the Trust Agreement and
described in the Prospectus; and to the best of such counsel's
knowledge, there are no legal or governmental proceedings pending to
which the Trust is a party or of which any property of the Trust is
the subject and no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and duly executed and delivered by the Trust;
(vi) The Company Agreements have each been duly authorized,
executed and delivered by the Company and such Agreements constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; the Debentures are entitled to the benefits
of the Indenture; the Company Agreements conform in all material
respects to the descriptions thereof contained in the Prospectus; and
the Trust Agreement, the Indenture and the Guarantee have been duly
qualified under the Trust Indenture Act;
(vii) The issue and sale of the Securities and the Common
Securities by the Trust and the Debentures by the Company, the
issuance of the Guarantee by the Company, the compliance by the Trust
14
and the Company with all of their respective obligations under the
provisions of this Agreement, the Securities and the Company
Agreements, the purchase of the Debentures by the Trust, the
distribution of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement and the consummation of the
transactions contemplated herein and therein will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust,
sale/leaseback agreement, loan agreement or other agreement or
instrument known to such counsel to which the Trust, the Company or
any of its subsidiaries is a party or by which the Trust, the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Trust, the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the Trust Agreement or the Charter or By-laws of the
Company or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Trust, the Company or the Principal Subsidiaries
or any of their properties;
(viii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Securities and the
Common Securities by the Trust and the Debentures by the Company, the
issuance of the Guarantee by the Company, the compliance by the Trust
and the Company with all of their respective obligations under the
provisions of this Agreement, the Securities and the Company
Agreements, the purchase of the Debentures by the Trust, the
distribution of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement or the consummation of the
transactions contemplated herein or therein except such as have been,
or will have been prior to the First Time of Delivery, obtained under
the Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or blue sky laws in connection with the
purchase of the Securities and the distribution of the Securities by
the Underwriters;
(ix) Neither the Trust nor the Company is an "investment company"
or an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act;
(x) The Securities and the Common Securities conform in all
material respects to the descriptions thereof contained in the
Prospectus;
(xi) The statements set forth in the Prospectus under the
captions "Description of the Preferred Securities", "Description of
the Guarantee", "Description of the Debentures" and "Relationship
Among the Preferred Securities, the Debentures and the Guarantee"
insofar as they purport to constitute a summary of the terms of the
securities, documents and instruments therein described, under the
15
caption "Underwriting" in the Prospectus Supplement (other than
statements based on information furnished by an Underwriter expressly
for use therein), insofar as they purport to describe the provisions
of the laws and documents referred to therein, and under the caption
"United States Taxation", insofar as they purport to constitute a
summary of the laws referred to therein, are accurate, complete and
fair;
(xii) The documents incorporated by reference in the Prospectus
(other than the financial statements, related schedules and other
financial information therein, as to which such counsel need express
no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and
(xiii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Trust or the
Company prior to such Time of Delivery (other than the financial
statements, related schedules and other financial information therein,
as to which such counsel need express no opinion) comply as to form in
all material respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations thereunder; and they do
not know of any amendment to the Registration Statement required to be
filed or any contracts or other documents of a character required to
be filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be
described in the Registration Statement or the Prospectus which are
not filed or incorporated by reference or described as required.
(d) General Counsel of the Company or other counsel satisfactory to the
Representatives, shall have furnished the Representatives their written opinion
(a draft of such opinion is attached as Annex II(c) hereto), dated such Time of
Delivery, in form and substance satisfactory to the Representatives to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus;
(ii) The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the
failure to be so qualified in any jurisdiction (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such counsel
16
shall state that they believe that both the Representatives and they
are justified in relying upon such opinions and certificates);
(iii) All of the issued shares of capital stock of the Principal
Subsidiaries have been duly and validly authorized and issued, are
fully paid and non-assessable, and are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims;
(iv) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, 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 of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others; and
(v) Each of the Principal Subsidiaries is duly licensed to
conduct an insurance business under the insurance laws of each
jurisdiction in which the conduct of its business requires such
licensing and of each jurisdiction in which the failure to be so
licensed would have, individually or in the aggregate, a material
adverse effect on the business operations, consolidated financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole; each of the Company and the
Principal Subsidiaries has all consents, approvals, authorizations,
orders, registrations and qualifications of or with, and is in
compliance with, all statutes, orders, rules and regulations of, all
courts and governmental agencies and bodies having jurisdiction over
it and any of its properties, except where the failure to have any
such consent, approval, authorization, order, registration or
qualification, or so to comply, would not, individually or in the
aggregate with all other such failures, have a material adverse effect
on the business operations, consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; and, to the best of such counsel's
knowledge, there is no pending or threatened action, suit, proceeding
or investigation that reasonably could lead to the revocation,
termination or suspension of, or render invalid or otherwise
ineffective, any such license, consent, approval, authorization,
order, registration or qualification, other than any such revocation,
termination, suspension, invalidity or ineffectiveness that would not,
individually or in the aggregate with all other such revocations,
terminations, suspensions, invalidity and ineffectiveness, have a
material adverse effect on the business operations, consolidated
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole.
17
In addition to the matters set forth above, the opinions
delivered pursuant to paragraphs (b), (c) and (d) above shall also
contain a statement to the effect that while such counsel are not
passing upon, and do not assume responsibility for, the accuracy,
completeness or fairness of the Registration Statement or the
Prospectus, or any further amendment or supplement thereto, including
the documents incorporated by reference therein, except as set forth
above, based upon the procedures referred to in such opinion nothing
has come to the attention of such counsel which leads them to believe
(i) that the Registration Statement as of its effective date or the
Prospectus as of its date or any further amendment or supplement
thereto made by the Company or the Trust prior to such Time of Delivery
(other than the financial statements, related schedules and other
financial information therein, as to which such counsel need express no
belief) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) that as of such Time
of Delivery, either the Registration Statement or the Prospectus (or
any such further amendment or supplement thereto) contains an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or (iii) that any of the documents incorporated by
reference in the Prospectus which were effective or filed with the
Commission prior to such Time of Delivery (other than the financial
statements, related schedules and other financial information therein,
as to which such counsel need express no belief), as of the respective
dates when they became effective or were filed with the Commission, as
the case may be, in each case after excluding any statement in any such
document which does not constitute part of the Registration Statement
or the Prospectus pursuant to Rule 412 of Regulation C under the Act
and after substituting therefor any statement modifying or superseding
such excluded statement, contained, in the case of a registration
statement which became effective under the Act, an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and in the case of other documents which were filed under
the 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 the light of the circumstances under which they
were made when such documents were so filed, not misleading.
(e) Richards, Layton & Finger, special Delaware counsel for the Trust and
the Company, shall have furnished to the Representatives their written opinion
(a draft of such opinion is attached as Annex II(d) hereto), dated such Time of
Delivery, in form and substance satisfactory to the Representatives, to the
effect that:
(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust
Act, and all filings required under the laws of the State of Delaware
with respect to the creation and valid existence of the Trust as a
business trust have been made;
(ii) Under the Delaware Business Trust Act and the Trust
Agreement, the Trust has the power and authority to own its property
and conduct its business as described in the Prospectus;
18
(iii) The Trust Agreement constitutes a valid and binding
obligation of the Company and the Trustees and is enforceable against
the Company and the Trustees, in accordance with its terms subject, as
to enforcement, to (a) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights and remedies of
creditors generally, (b) principles of equity, including applicable
law relating to fiduciary duties (regardless of whether considered and
applied in a proceeding in equity or at law), and (c) the effect of
applicable public policy on the enforceability of provisions relating
to indemnification or contribution;
(iv) Under the Delaware Business Trust Act and the Trust
Agreement, the Trust has the power and authority to (a) execute and
deliver, and to perform its obligations under, this Agreement and (b)
issue and perform its obligations under the Securities and the Common
Securities;
(v) Under the Delaware Business Trust Act and the Trust
Agreement, the execution and delivery by the Trust of this Agreement,
and the performance by the Trust of its obligations thereunder, have
been duly authorized by all necessary action on the part of the Trust;
and this Agreement has been duly authorized by the Trust;
(vi) The Securities have been duly authorized by the Trust and
are duly and validly issued and, subject to the qualifications set
forth herein, fully paid and non-assessable undivided beneficial
interests in the assets of the Trust; the holders of Securities, as
beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of
the State of Delaware; provided that such counsel may note that the
holders of Securities may be obligated, pursuant to the Trust
Agreement, to (a) provide indemnity and/or security in connection with
and pay taxes or governmental charges arising from transfers or
exchanges of Securities certificates and the issuance of replacement
Securities certificates and (b) provide security and indemnity in
connection with requests of or directions to the Property Trustee (as
defined in the Trust Agreement) to exercise its rights and remedies
under the Trust Agreement;
(vii) The Common Securities have been duly authorized by the
Trust and are duly and validly issued and fully paid and
non-assessable undivided beneficial interests in the assets of the
Trust;
(viii) Under the Delaware Business Trust Act and the Trust
Agreement, the issuance of the Securities is not subject to preemptive
rights;
(ix) The issuance and sale by the Trust of the Securities and the
Common Securities, the execution, delivery and performance by the
19
Trust of this Agreement, the consummation by the Trust of the
transactions contemplated hereby and compliance by the Trust with its
obligations hereunder will not violate (a) any of the provisions of
the Certificate of Trust of the Trust or the Trust Agreement, or (b)
any applicable Delaware law or administrative regulation;
(x) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets,
activities (other than maintaining the Delaware trustee as required by
the Delaware Business Trust Act and the filing of documents with the
Secretary of State of the State of Delaware) or employees in the State
of Delaware, no authorization, approval, consent or order of any
Delaware court or governmental authority or agency is required to be
obtained by the Trust solely in connection with the issuance and sale
of the Securities and the Common Securities; provided that in
rendering the opinion expressed in this paragraph (x), such counsel
need express no opinion concerning the securities laws of the State of
Delaware; and
(xi) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets,
activities (other than maintaining the Delaware trustee as required by
the Delaware Business Trust Act and the filing of documents with the
Secretary of State of the State of Delaware) or employees in the State
of Delaware, the holders of the Securities (other than those holders
of the Securities who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State
of Delaware solely as a result of their participation in the Trust,
and the Trust will not be liable for any income tax imposed by the
State of Delaware.
(f) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 10:00 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and at each Time of Delivery, Ernst & Young shall have
furnished to the Representatives a letter or letters, dated the respective dates
of delivery thereof, to the effect set forth in Annex I hereto and as to such
other matters as the Representatives may reasonably request and in form and
substance satisfactory to the Representatives (a copy of the letter to be
delivered prior to the execution of this Agreement is attached as Annex I(a)
hereto and a draft form of letter to be delivered as of each effective date of
any post-effective amendment and each Time of Delivery is attached as Annex I(b)
hereto).
(g) The Company Agreements shall have been executed and delivered, in each
case in a form satisfactory to the Representatives.
(h) (i) None of the Trust, the Company or any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or interference
20
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,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been (x) any addition, or any development
involving a prospective addition, to either the Company's consolidated reserve
for property/casualty insurance claims and claims expense or the consolidated
reserve for life insurance policy benefits, (y) any change in the capital stock
(other than shares of common stock of the Company issued pursuant to employee
benefit, dividend reinvestment or similar plans or as the result of the
conversion of an outstanding security), short-term debt or long-term debt of the
Company or any of its subsidiaries, or (z) any change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, securityholders' equity or results of operations of the
Trust or 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 Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus.
(i) On or after the date of this Agreement (i) no downgrading shall have
occurred in the rating accorded the Securities or any of the Company's debt
securities or preferred stock by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of the Securities or any of the Company's debt
securities or preferred stock.
(j) On or after the date of this Agreement there shall not have occurred
any of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general moratorium
on commercial banking activities in New York declared by either Federal or New
York State authorities; (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war if the effect of any such event specified in this
Clause (iii) in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus; or (iv) the occurrence of any material
adverse change in the existing financial, political or economic conditions in
the United States or elsewhere which, in the judgment of the Representatives
would materially and adversely affect the financial markets or the market for
the Securities and other debt or equity securities.
(k) On or after the date of this Agreement, (i) no downgrading shall have
occurred in the ratings accorded the claims paying ability or financial strength
of either of the Principal Subsidiaries by Standard & Poor's Corporation,
Moody's Investors Service, Inc., Duff & Phelps Inc. or A.M. Best Company Inc.;
21
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 claims paying ability of the Principal Subsidiaries.
(l) The Company and the Trust shall have complied with the provisions of
paragraph 5(c) hereof with respect to the furnishing of Prospectuses on the New
York Business Day next succeeding the date of this Agreement.
(m) The Securities to be sold by the Trust at such Time of Delivery shall
have been duly listed, subject to notice of issuance, on the New York Stock
Exchange.
(n) The Trust and the Company shall have furnished or caused to be
furnished to the Representatives at such Time of Delivery a certificate or
certificates of officers of the Company and the Trust satisfactory to the
Representatives as to the accuracy of the representations and warranties of the
Company and the Trust herein at and as of such Time of Delivery, as to the
performance by the Company and the Trust of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, as to the
matters set forth in subparagraphs (a) and (h) of this paragraph and as to such
other matters as the Representatives may reasonably request.
8. (a) The Company and the Trust, jointly and severally, will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus, or in any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company and the Trust will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus,
or in any amendment or supplement thereto, in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through the
Representatives expressly for use therein; and provided, further, that the
Company shall not be liable to any Underwriter under the indemnity agreement in
this subparagraph (a) with respect to any Preliminary Prospectus to the extent
that any such loss, claim, damage or liability of such Underwriter results from
the fact that such Underwriter sold Securities to a person as to whom it shall
be established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) in any case where such delivery
22
is required by the Act if the Company has previously furnished copies thereof in
sufficient quantity to such Underwriter and the loss, claim, damage or liability
of such Underwriter results from an untrue statement or omission of a material
fact contained in the Preliminary Prospectus and corrected in the Prospectus
(excluding documents incorporated by reference) or in the Prospectus as then
amended or supplemented (excluding documents incorporated by reference).
(b) Each Underwriter will indemnify and hold harmless the Company and the
Trust against any losses, claims, damages or liabilities to which the Company or
the Trust may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus, or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus, or in any amendment or supplement thereto, in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use therein; and will
reimburse the Company and the Trust for any legal or other expenses reasonably
incurred by the Company and the Trust in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subparagraph (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subparagraph, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subparagraph. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subparagraph for any legal expenses
of other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
23
liability arising out of such action or claim and (ii) does not include any
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this paragraph 8 is unavailable
to or insufficient to hold harmless an indemnified party under subparagraph (a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall 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) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Trust on the one hand and the Underwriters on
the other from the offering of the Securities to which such loss, claim, damage
or liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subparagraph (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Trust on the one hand and the Underwriters of the
Securities on the other in connection with the statements or omissions which
resulted 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 and the Trust on the one hand and such
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from such offering (before deducting expenses) received by
the Company and the Trust bear to the total underwriting discounts and
commissions received by such Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Trust on
the one hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Trust and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this subparagraph
(d) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subparagraph (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subparagraph (d) shall be deemed to include
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 subparagraph (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Underwriters in this
subparagraph (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
24
(e) The obligations of the Company and the Trust under this paragraph 8
shall be in addition to any liability which the Company or the Trust may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this paragraph 8 shall be in addition
to any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and the Trust and to each person, if any, who controls the Company or
the Trust within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder at a Time of Delivery, the
Representatives may in their discretion arrange for themselves or another party
or other parties to purchase such Securities on the terms contained herein. If
within thirty-six hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Underwriter's
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to the
Representatives to purchase such Securities on such terms. In the event that,
within the respective prescribed period, the Representatives notify the Company
that they have so arranged for the purchase of such Securities or the Company
notifies the Representatives that it has so arranged for the purchase of such
Securities the Representatives or the Company shall have the right to postpone
such Time of Delivery for such Securities for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents or
arrangements, and the Company and the Trust agree to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subparagraph (a) above, the
aggregate number of such Securities which remains unpurchased does not exceed
one-eleventh of the aggregate number of the Securities to be purchased at such
Time of Delivery, then the Company and the Trust shall have the right to require
each non-defaulting Underwriter to purchase the number of Securities which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Securities which such Underwriter agreed to
purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by the Representatives
and the Company as provided in subparagraph (a) above, the aggregate number of
Securities which remains unpurchased exceeds one-eleventh of the aggregate
number of all Securities to be purchased at such Time of Delivery or if the
Company shall not exercise the right described in subparagraph (b) above to
require non-defaulting Underwriters to purchase Securities of a defaulting
Underwriter or Underwriters then this Agreement shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter, the Company or
25
the Trust, except for the expenses to be borne by the Company, the Trust and the
Underwriters as provided in paragraph 6 hereof and the indemnity and
contribution agreements in paragraph 8 hereof; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Trust and the Underwriters, as set forth in
this Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of any investigation
(or any statement as to the results thereof) made by or on behalf of any
Underwriter or any controlling person of any Underwriter, or the Company or the
Trust, or any of their officers, directors or controlling persons and shall
survive delivery of and payment for the Securities hereunder.
11. If this Agreement shall be terminated pursuant to paragraph 9 hereof,
neither the Company nor the Trust shall then be under any liability to any
Underwriter except as provided in paragraphs 6 and 8 hereof; but, if for any
other reason, any Securities are not delivered by or on behalf of the Company
and the Trust as provided herein, the Company and the Trust will reimburse the
Underwriters through the Representatives for all out-of-pocket expenses approved
in writing by the Representatives, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Securities, but the Company and the Trust shall then be
under no further liability to any Underwriter except as provided in paragraphs 6
and 8.
12. In all dealings hereunder, the Representatives of the Underwriters
shall act on behalf of each of such Underwriters, and the parties hereto shall
be entitled to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by such Representatives jointly or by
such of the Representatives, if any, as may be designated for such purpose in
Schedule II.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the Representatives at the address specified in
Schedule II hereto, and, if to the Company or the Trust, shall be delivered or
sent to the Company or the Trust, attention of John F. Hoffen, Jr., Secretary,
at 100 Light Street, Baltimore, Maryland, 21202; provided, however, that any
notice to an Underwriter pursuant to paragraph 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Trust and, to the extent provided in
paragraphs 8 and 10 hereof, the officers or directors of the Company or the
Trust and each person who controls the Company, the Trust or any Underwriter,
and their respective heirs, executors, administrators, successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
26
Agreement. No purchaser of any of the Securities from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties hereto
and thereto in any number of counterparts, each of which shall be deemed to be
an original, but all such respective counterparts shall together constitute one
and the same instrument.
27
Please confirm that the foregoing correctly sets forth the
agreement between us by signing in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company,
the Trust and each of the Underwriters in accordance with its terms. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company and the Trust
for examination upon request, but without warranty on your part as to the
authority of the signers thereof.
Very truly yours,
USF&G CORPORATION
By_________________________
Name:
Title:
USF&G CAPITAL
By: USF&G, as Depositor
By________________________
Name:
Title:
Confirmed as of the date of this Agreement specified in Schedule II hereto:
By:
________________________
On behalf of themselves and as Representatives of the several Underwriters named
in Schedule I hereto.
28
SCHEDULE I
Maximum Number
Number of Firm of Optional
Securities to be Securities which
Underwriter Purchased may be Purchased
----------- --------- ----------------
Total
--------- ---------
========= =========
SCHEDULE II
Preferred Securities
Title: % Cumulative Quarterly Income Preferred Securities,
Series (liquidation amount $ per preferred
security)
Distribution Rate: %, from and including the original date of issue.
Redemption Provisions:
Other Terms: The Securities shall have such other terms as are
stated in the Prospectus.
Purchase Price: $ per Security.
Date and Time of Closing: A.M., New York City time, on , 199 .
Names of Representatives:
(with address for notices)
Date of Underwriting
Agreement:
Registration Statement: Registration No.
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Trust and the Company and its subsidiaries within the
meaning of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined
by them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been furnished to the Representatives and are attached hereto;
(iii)They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
reports on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which are attached
hereto; and on the basis of specified procedures including inquiries
of officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of
items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements
of cash flows included in the Prospectus and/or included or
incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly Reports on Form
10-Q incorporated by reference in the Prospectus, for them to be
in conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
2
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with the
basis for the audited financial statements included or
incorporated by reference in the Company's Annual Report on Form
10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except
in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the
Prospectus to the specified date referred to in Clause (E) there
were any decreases in consolidated net revenues or operating
profit or the total or per share amounts of consolidated net
income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with the comparable period of the preceding year
and with any other period of corresponding length specified by
the Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
3
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus (excluding
documents incorporated by reference), or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives
or in documents incorporated by reference in the Prospectus specified by
the Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
All references in this Annex I to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered.
4