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EXHIBIT 1
HARLEYSVILLE GROUP INC.
(a Delaware corporation)
Senior Notes Due 2013
PURCHASE AGREEMENT
Dated: July 7, 2003
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HARLEYSVILLE GROUP INC.
(a Delaware corporation)
$100,000,000
Senior Notes Due 2013
PURCHASE AGREEMENT
July 7, 2003
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
as Representative of the several Underwriters
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Harleysville Group Inc., a Delaware corporation (the "Company"),
confirms its agreement (this "Agreement") with Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the
other Underwriters named in Schedule A hereto (collectively, the "Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom Merrill Lynch is acting as
representative (in such capacity, the "Representative"), with respect to the
issue and sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective principal amounts set forth in said
Schedule A of $100,000,000 aggregate principal amount of the Company's Senior
Notes (the "Securities"). The Securities are to be issued pursuant to an
indenture dated as of July 7, 2003 (the "Indenture") between the Company and The
J.P. Morgan Trust Company, as trustee (the "Trustee"). The term Indenture, as
used herein, includes the Board Resolution (as defined in the Indenture)
establishing the form and terms of the Securities pursuant to Section 2.02 of
the Indenture, as such Board Resolution is certified by the Secretary or an
Assistant Secretary of the Company.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representative deems advisable after
this Agreement has been executed and delivered and the Indenture has been
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-104437), including
the related preliminary prospectus or prospectuses, covering the registration of
the Securities under the Securities Act of 1933, as amended (the "1933 Act").
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus supplement in accordance with the provisions of
paragraph (b) of Rule 424 ("Rule 424(b)") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations"). Each prospectus that
was used after such registration statement became effective and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits and any
schedules thereto, at the time it became effective, and including the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act at such time, is herein called the "Registration Statement." The final
prospectus in the form first furnished to the Underwriters for use in connection
with the offering of the Securities, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act at the time
of the execution of this Agreement, is herein called the "Prospectus." For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
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All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
The Company shall deliver to the Trustee (with a copy to the
Representative) a Senior Note in definitive form, registered in the name of Cede
& Co., as nominee of the Depositary Trust Company ("DTC"), having an aggregate
principal amount of $100,000,000 (the "Global Note") against payment by the
Underwriters of the purchase price therefor by wire transfer, in accordance with
Section 2(b) below.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any post-effective amendment thereto has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or, to the
knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has
been complied with.
At the respective times the Registration Statement and any
post-effective amendments thereto became effective and at the Closing
Time, the Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the 1939
Act and the rules and regulations of the Commission under the 1939 Act
(the "1939 Act Regulations"), and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment
or supplement was issued and at the Closing Time, included or will
include an untrue statement of a material fact or omitted or will omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
written information furnished to the Company by any Underwriter
expressly for use in the Registration Statement (or any amendment
thereto) or to the Prospectus (or any amendment or supplement thereto)
or the information contained in a Statement of Eligibility and
Qualification of the Trustee under the 1939 Act filed as an exhibit to
the Registration Statement.
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Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
or supplement thereto complied when so filed in all material respects
with the 1933 Act Regulations and each preliminary prospectus and the
Prospectus delivered to the Underwriters for use in connection with
this offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The financial statements included in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the
Company and its consolidated subsidiaries at the dates indicated and
the statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified;
except as otherwise stated in the Registration Statement and the
Prospectus, said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated
therein. The selected financial data and the summary financial
information included in the Prospectus present fairly the information
shown therein and have been applied on a basis consistent with that of
the audited financial statements included in the Registration
Statement. The pro forma financial statements and the related notes
thereto included in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to
pro forma financial statements and have been properly compiled on the
bases described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate
to give effect to the transactions and circumstances referred to
therein.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement
and the Prospectus, except as otherwise stated therein, (A) there has
been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its Subsidiaries (as defined below) considered in
the aggregate, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or any of its Subsidiaries,
other than those in the ordinary course of business, which are material
with respect to the Company and its Subsidiaries considered in the
aggregate, and (C) except for regular quarterly dividends on the common
stock, par value $1.00 per share, of the Company (the "Common Stock")
in amounts per share that are consistent with past practice, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
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(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Each "subsidiary" of the
Company (as such term is defined in Rule 1-02 of Regulation S-X) (each
a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued
and outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance or claim;
none of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any increase, in the aggregate, in the
long-term debt of the Company and its Subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its Subsidiaries, otherwise than as set forth or
contemplated in the Prospectus. The only Subsidiaries of the Company
are listed on Schedule C hereto.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus under
the caption entitled "Capitalization" (except for subsequent issuances,
if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or
pursuant to the exercise of convertible securities or options referred
to in the Prospectus). The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive
or other similar rights of any securityholder of the Company.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
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(x) AUTHORIZATION OF THE INDENTURE. The Indenture has been duly
authorized by the Company and duly qualified under the 1939 Act and,
when duly executed and delivered by the Company and the Trustee, will
constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), rehabilitation, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(xi) AUTHORIZATION OF THE SECURITIES. The Securities have been duly
authorized and, at the Closing Time, will have been duly executed by
the Company and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, will constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), rehabilitation,
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and as
to the indemnification provisions contained therein, principles of
public policy, and will be in the form contemplated by, and entitled to
the benefits of, the Indenture.
(xii) DESCRIPTION OF THE SECURITIES AND THE INDENTURE. The
Securities and the Indenture will conform in all material respects to
the respective statements relating thereto contained in the Prospectus
and will be in substantially the respective forms filed or incorporated
by reference, as the case may be, as exhibits to the Registration
Statement.
(xiii) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any of its Subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its Subsidiaries is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any Subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement, the Indenture and the
Securities and the consummation of the transactions contemplated herein
and in the Registration Statement (including the issuance and sale of
the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company with its obligations hereunder
and under the Indenture and the Securities have been duly authorized by
all necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or a default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to, the Agreements and Instruments (except for such
conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter or by-laws of the Company or any Subsidiary or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or
any Subsidiary.
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(xiv) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees
of the Company or any Subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
Subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, would result in a Material Adverse
Effect.
(xv) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or regulatory
or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company, threatened, against or affecting the
Company or any Subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
might result in a Material Adverse Effect, or which might materially
and adversely affect the consummation of the transactions contemplated
in this Agreement or the performance by the Company of its obligations
hereunder; the aggregate of all pending legal, governmental or
regulatory proceedings to which the Company or any Subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, could
not result in a Material Adverse Effect.
(xvi) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xvii) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
Subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its Subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
Subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xviii) ABSENCE OF MANIPULATION. Neither the Company nor any
affiliate of the Company has taken, nor will the Company or any
affiliate take, directly or indirectly, any action which is designed to
or which has constituted or which would be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(xix) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the
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transactions contemplated by this Agreement or for the due execution,
delivery or performance of the Indenture by the Company, except such as
have been already obtained or as may be required under the 1933 Act or
the 1933 Act Regulations or state securities laws and except for the
qualification of the Indenture under the 1939 Act.
(xx) POSSESSION OF LICENSES AND PERMITS. The Company and its
Subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state or local regulatory agencies or bodies
necessary to conduct the business now operated by them, except where
the failure so to possess would not, singly or in the aggregate, result
in a Material Adverse Effect; the Company and its Subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure to comply would not, singly or in
the aggregate, result in a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not,
singly or in the aggregate, result in a Material Adverse Effect; and
neither the Company nor any of its Subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xxi) NO RESTRICTIONS ON DIVIDEND PAYMENTS. Except as described in
or contemplated by the Prospectus and subject to the insurance laws and
regulations of the jurisdictions which are applicable to each such
Subsidiary, no Subsidiary is currently materially restricted, directly
or indirectly, from paying any dividends to the Company, from making
any other distribution on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary from
the Company or from transferring any of such Subsidiary's property or
assets to the Company or any other Subsidiary, in any case, to any
extent that the Company deems necessary.
(xxii) TITLE TO PROPERTY. The Company and its Subsidiaries have
good and marketable title to all real property owned by the Company and
its Subsidiaries and good title to all other properties owned by them,
in each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Prospectus or (b) do not, singly or in the
aggregate, 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 or any of its Subsidiaries; and all of the leases and
subleases material to the business of the Company and its Subsidiaries,
considered in the aggregate, and under which the Company or any of its
Subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any Subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such Subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease that if successful would materially affect the value of such
property or would interfere with the use made and proposed to be made
of such property by the Company or any of its Subsidiaries.
(xxiii) INVESTMENT COMPANY ACT. The Company is not required, and
upon the issuance and sale of the Securities as herein contemplated and
the application of the net proceeds therefrom as described in the
Prospectus will not be required, to register as, an "investment
company" under the Investment Company Act of 1940, as amended (the
"1940 Act").
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(xxiv) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result
in a Material Adverse Effect, (A) neither the Company nor any of its
Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code or rule of common law
(or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment)
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum
products, asbestos-containing materials or mold (collectively,
"Hazardous Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and its
Subsidiaries have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against
the Company or any of its Subsidiaries and (D) there are no events or
circumstances that would reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by
any private party or governmental body or agency, against or affecting
the Company or any of its Subsidiaries relating to Hazardous Materials
or any Environmental Laws.
(xxv) INTERNAL CONTROLS. The Company and its Subsidiaries maintain
a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization, (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with GAAP and to maintain accountability for assets, (C)
access to assets is permitted only in accordance with management's
general or specific authorization or in accordance with the Company's
charter or by-laws and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxvi) DISCLOSURE CONTROLS. The Company has established and
maintains disclosure controls and procedures (as such term is defined
in Rule 13a-14(c) under the 1934 Act, "Disclosure Controls"); and such
Disclosure Controls are (A) designed to ensure that material
information relating to the Company, including its consolidated
subsidiaries, is properly recorded, processed, summarized and
communicated to the Company's senior management, including its
principal executive officer and its principal financial officer, by
others within those entities as appropriate to allow timely decisions
regarding required disclosure, (B) evaluated by the Company's senior
management on a quarterly basis and (C) to the best knowledge of the
Company, effective in all material respects to perform the functions
for which they were established.
(xxvii) COMPLIANCE WITH INSURANCE LAWS AND REGULATIONS. To the
extent applicable, each of the Company's Subsidiaries is in compliance
with the requirements of the insurance laws and regulations of its
jurisdictions of incorporation and the insurance laws and regulations
of the jurisdictions which are applicable to each such Subsidiary and
has filed all notices, reports, documents or other information required
to be filed thereunder, except where the failure to so comply or file
would not reasonably be expected to result in a Material Adverse
Effect.
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(xxviii) NO MATERIAL CHANGES IN INSURANCE RESERVING PRACTICES. The
Company and its Subsidiaries have made no material changes in their
insurance reserving practices since the most recent audited financial
statements included or incorporated in the Prospectus.
(xxix) VALIDITY OF REINSURANCE TREATIES. All reinsurance treaties
and arrangements to which any Subsidiary is a party are in full force
and effect and no Subsidiary is in violation of or in default in the
performance, observance or fulfillment of, any obligation, agreement,
covenant or condition contained therein except where the violation or
default would not reasonably be expected to result in a Material
Adverse Effect; no Subsidiary has received any notice from any of the
other parties to such treaties, contracts or agreements that such other
party intends not to perform such treaty and the Company has no reason
to believe that any of the other parties to such treaties or
arrangements will be unable to perform such treaty or arrangement;
except, in each of the above cases, (i) to the extent adequately and
properly reserved for in the consolidated financial statements of the
Company included in the Prospectus and (ii) for such violations or
defaults that, singly or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
(xxx) STATUTORY STATEMENTS. The most recent statutory financial
statements of each of the Company's Subsidiaries that is engaged in the
business of insurance, have been properly filed in each jurisdiction
and prepared in all material respects in conformity with required or
permitted or prescribed statutory accounting principles or practices
applied on a consistent basis, except as may otherwise be indicated in
the notes thereto, and present fairly in all material respects the
financial position of such Subsidiaries (on a statutory basis) for the
period covered thereby.
(xxxi) RATINGS. The various ratings assigned to the Company's
Subsidiaries as of July 7, 2003 have not been lowered or, to the
knowledge of the Company, threatened to be lowered by A.M. Best
Company, Inc. ("A.M. Best"), Standard & Poor's Ratings Services, a
division of McGraw Hill, Inc. ("S&P") or Moody's Investors Service,
Inc. ("Moody's"), as applicable, nor have such ratings been placed
under surveillance or review by A.M. Best, S&P or Moody's, as
applicable, with negative implications.
(xxxii) ERISA. Each of the Company and its Subsidiaries has
fulfilled their respective obligations, if any, under the minimum
funding standards of Section 302 of the United States Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the
regulations and published interpretations thereunder with respect to
each "plan" (as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employees of the Company or any
of its Subsidiaries are eligible to participate and each such plan is
in compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations,
other than such non-fulfillment or non-compliance that would not
reasonably be expected to result in a Material Adverse Effect. The
Company and its respective Subsidiaries have not incurred any unpaid
liability to the Pension Benefit Guaranty Corporation (other than for
the payment of premiums in the ordinary course) or to any such plan
under Title IV of ERISA, except for such liability as would not be
reasonably expected to result in a Material Adverse Effect.
(xxxiii) NO REGISTRATION RIGHTS. There are no holders of securities
(debt or equity) of the Company, or holders of rights (including
without limitation preemptive rights) with registration rights or other
similar rights to have any securities, or any sale, exchange or other
distribution of securities, registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
9
(xxxiv) NO BROKERAGE COMMISSION; FINDER'S FEE. Except as disclosed
in the Prospectus, there are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid
claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this
offering.
(xxxv) TAX RETURNS; PAYMENT OF TAXES. The Company and the
Subsidiaries have filed all foreign, federal, state and local tax
returns that are required to be filed or have requested extensions
therefor (except in any case in which the failure so to file, singly or
in the aggregate, would not have a Material Adverse Effect) and have
paid all taxes required to be paid by them and any other assessment,
fine or penalty levied against them, to the extent that any of the
foregoing is due and payable, except (A) for any such assessment, fine
or penalty that is currently being contested in good faith and for
which the Company or such Subsidiary, as the case may be, has provided
adequate reserves or (B) as would not have, singly or in the aggregate,
a Material Adverse Effect.
(b) OFFICER'S CERTIFICATES. Any certificate signed by a duly authorized
officer of the Company or any of its Subsidiaries delivered to the
Representative or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) SECURITIES. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price set forth in Schedule B, the aggregate principal amount of Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional principal amount of Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) PAYMENT. Payment of the purchase price for, and delivery of the
Global Note for, the Securities shall be made at the offices of LeBoeuf, Lamb,
Greene & MacRae, L.L.P at 125 West 55th Street, New York, New York 10019, or at
such other place as shall be agreed upon by the Representative and the Company,
at 9:00 A.M. (Eastern time) on the fifth business day after the date hereof (as
permitted under Rule 15c6-1 under the 1934 Act) (unless postponed in accordance
with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Representative and
the Company (such time and date of payment and delivery being herein called
"Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Trustee (with a copy to the Representative) of the Global Note. It is
understood that each Underwriter has authorized the Representative, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Securities which it has agreed to purchase. Merrill Lynch,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Securities to be
purchased by any Underwriter whose funds have not been received by the Closing
Time, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(c) DENOMINATIONS; REGISTRATION. The Global Note shall be in the
aggregate principal amount of $100,000,000 and registered in the name of Cede &
Co., as nominee of the DTC. The Global Note, which may be in temporary form,
10
will be made available for examination and packaging by the Representative in
The City of New York not later than 10:00 A.M. (Eastern time) on the business
day prior to the Closing Time.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company, subject to Section 3(b), will notify the Representative immediately,
and confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or any document incorporated by reference therein or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus supplement. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Representative
notice of its intention to file or prepare any amendment to the Registration
Statement or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or to the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will
furnish the Representative with copies of any such documents a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file or use any such document without first obtaining consent from the
Representative or counsel for the Underwriters.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or
will deliver to the Representative and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representative, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act, such number of copies
of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
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(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the Company to amend the Registration Statement or
amend or supplement the Prospectus in order that the Prospectus will not include
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such number
of copies of such amendment or supplement as the Underwriters may reasonably
request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
as the Representative may designate and to maintain such qualifications in
effect for a period of not less than one year from the effective date of the
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or so subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. The
Company will also supply the Underwriters with such information as is necessary
for the determination of the legality of the Securities for investment under the
laws of such jurisdictions as the Underwriters may request.
(g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) RATING OF SECURITIES. The Company shall take all reasonable action
necessary to enable S&P and Moody's to provide their respective credit ratings
of the Securities.
(i) DTC. The Company will cooperate with the Underwriters and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(j) USE OF PROCEEDS. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(k) RESTRICTION ON SALE OF SECURITIES. The Company will not, without
the prior written consent of the Representative, directly or indirectly, issue,
sell, pledge, offer or contract to sell, grant any option for the sale of, or
otherwise transfer or dispose of, any debt securities issued or guaranteed by
the Company, except the Securities, or publicly announce an intention to effect
any such transaction, until the date set forth on Schedule B.
(l) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file all
12
documents required to be filed with the Commission pursuant to the 1934 Act
within the time periods required by the 1934 Act and the 1934 Act Regulations.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the Global Note to the Trustee, (iv) the fees and disbursements of
the Company's counsel, accountants and other advisors, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus and of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and
expenses of the Trustee, including the fees and disbursements of counsel for the
Trustee in connection with the Indenture and the Securities, (ix) the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the Securities, including without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of aircraft and
other transportation chartered in connection with the road show and (x) any fees
payable in connection with the rating of the Securities.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in the certificates of any duly authorized officer of the Company or any
Subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement
has become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters.
(b) OPINION OF OUTSIDE COUNSEL FOR COMPANY. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Drinker Biddle & Reath LLP, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit A-1 hereto. In giving such opinion, such counsel may
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Company and
its Subsidiaries and certificates of public officials.
13
(c) OPINION OF INSIDE COUNSEL FOR COMPANY. At Closing Time, the
Representative shall have received the favorable opinion, dated as of Closing
Time, of Roger A. Brown, Senior Vice President and General Counsel for the
Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters to the effect set forth in Exhibit A-2 hereto.
(d) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representative shall have received the favorable opinion or opinions, dated as
of Closing Time, of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the
Underwriters, together with signed or reproduced copies of such letter for each
of the other Underwriters, with respect to the Purchase Agreement, the
Securities, the Indenture and other related matters as the Representative may
reasonably require. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
New York and the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its Subsidiaries and certificates of
public officials.
(e) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered in the aggregate, whether or not arising
in the ordinary course of business, and the Representative shall have received a
certificate of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company, dated as of Closing Time,
to the effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of Closing Time,
(iii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to Closing Time, and (iv)
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or, to their knowledge, contemplated by the Commission.
(f) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representative shall have received from KPMG LLP a letter dated
such date, in form and substance satisfactory to the Representative, together
with signed or reproduced copies of such letter for each of the other
Underwriters containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(g) BRING-DOWN COMFORT LETTER. At Closing Time, the Representative
shall have received from KPMG LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (f) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(h) MAINTENANCE OF RATING. At Closing Time, the Securities shall be
rated at least "Baa1" by Moody's and "BBB" by S&P, and the Company shall have
delivered to the Representative a letter dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Representative, confirming
that the Securities have such ratings; and since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the
Securities or any of the Company's other debt securities or the Company's
financial strength or claims paying ability by any "nationally recognized
statistical rating agency", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the 1933 Act, and no such organization shall
14
have publicly announced that it has under surveillance or review its rating of
the Securities or any of the Company's other debt securities or the Company's
financial strength or claims paying ability.
(i) ADDITIONAL DOCUMENTS. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Representative and counsel
for the Underwriters.
(j) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representative by notice to the Company at
any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. (1) The Company agrees to
indemnify and hold harmless each Underwriter, its affiliates, as such term is
defined in Rule 501(b) under the 1933 Act (each, an "Affiliate"), its selling
agents and each person, if any, who controls any Underwriter within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that (subject to
Section 6(d) below) any such settlement is effected with the written
consent of the Company;
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company or its
15
counsel by any Underwriter expressly for use in the Registration Statement (or
any amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company or its counsel by
such Underwriter expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), it being understood and agreed that the only
such information furnished by any Underwriter consists of the following
information in the Prospectus furnished on behalf of each Underwriter: the
information contained in the first paragraph and the following table under the
caption "Underwriting"; the concession and reallowance figures appearing in the
seventh paragraph under the caption "Underwriting"; and the information
contained in the ninth and tenth paragraphs under the caption "Underwriting".
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
16
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus bear to the aggregate initial public
offering price of the Securities as set forth on the cover of the Prospectus.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 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 Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, 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 any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and each Underwriter's Affiliates and selling agents shall have the
same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The Underwriters' respective obligations to
17
contribute pursuant to this Section 7 are several in proportion to the principal
amount of Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its Subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Underwriter or its
Affiliates or selling agents, any person controlling any Underwriter, its
officers or directors or any person controlling the Company, and (ii) delivery
of and payment for the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus (exclusive
of any supplement thereto), any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered in the aggregate,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Representative, impracticable or inadvisable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the Nasdaq National Market, or if trading generally
on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or a material disruption has occurred in commercial
banking or securities settlement, or (iv) a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, or (v) if a banking moratorium has been declared by either Federal or
New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at Closing Time to purchase the Securities which
it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representative shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representative shall not have completed
such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Securities to be purchased hereunder, each of
the non-defaulting Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
18
(b) if the number of Defaulted Securities exceeds 10% of the aggregate
principal amount of the Securities to be purchased hereunder, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representative or the Company shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. TAX DISCLOSURE. Notwithstanding any other provision of this
Agreement, immediately upon commencement of discussions with respect to the
transactions contemplated hereby, the Company (and each employee, representative
or other agent of the Company) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to the Company relating to such tax
treatment and tax structure. For purposes of the foregoing, the term "tax
treatment" is the purported or claimed federal income tax treatment of the
transactions contemplated hereby, and the term "tax structure" includes any fact
that may be relevant to understanding the purported or claimed federal income
tax treatment of the transactions contemplated hereby.
SECTION 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at 4 World Financial
Center, New York, New York 10080, attention of Scott Hendry; and notices to the
Company shall be directed to it at 355 Maple Avenue, Harleysville, Pennsylvania
19438, attention of General Counsel, with a copy to Henry S. Bryans, Drinker
Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia,
Pennsylvania 19103-6996.
SECTION 13. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME.
19
SECTION 16. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
SECTION 17. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
20
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
HARLEYSVILLE GROUP INC.
By: /S/ BRUCE J. MAGEE
-----------------------------------
Title: Senior Vice President;
Chief Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: GREG LANG
--------------------------------
Authorized Signatory
For itself and as Representative of the other Underwriters named in Schedule A
hereto.
21
SCHEDULE A
PRINCIPAL
AMOUNT OF
NAME OF UNDERWRITER SECURITIES
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................ $75,000,000
Keefe, Bruyette & Woods, Inc............................................ 10,000,000
Sandler O'Neill & Partners, L.P......................................... 10,000,000
BB&T Capital Markets, a division of Scott & Stringfellow, Inc........... 5,000,000
------------
Total................................................................... $100,000,000
============
Sch A-1
SCHEDULE B
HARLEYSVILLE GROUP INC.
$100,000,000 Senior Notes due 2013
1. The initial public offering price of the Securities shall be 99.198%
of the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the Securities
shall be 98.548% of the principal amount thereof.
3. The interest rate on the Securities shall be 5.75% per annum.
4. The date referred to in Section 3(k) after which the Company may
dispose of debt securities without the prior written consent of Merrill Lynch:
August 6, 2003
5. The Company may redeem some or all of the notes at any time or from
time to time at a redemption price equal to the greater of:
o 100% of the principal amount of such Securities; or
o the sum of the present value of the remaining scheduled payments of
principal and interest on the notes, discounted to the redemption date on a
semi-annual basis at the Treasury Rate (as defined in the Prospectus
Supplement dated July 7, 2003) plus 35 basis points;
together in each case with accrued and unpaid interest payments to
the redemption date.
Sch B-1
SCHEDULE C
List of Subsidiaries
Harleysville Insurance Company of New York
Mid-America Insurance Company
Harleysville Worcester Insurance Company
Harleysville Insurance Company of New Jersey
Harleysville Lake States Insurance Company
Harleysville Insurance Company of Ohio
Harleysville Atlantic Insurance Company
Harleysville Insurance Company
Harleysville, Ltd. (a limited partnership)
Harleysville Preferred Insurance Company
Carlton Holding Corporation
Insurance Management Resources L.P.
Harleysville Asset Management L.P.
Sch C-1
Exhibit A-1
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in the Commonwealth of Pennsylvania.
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption "Description of Our
Capital Stock" (except for subsequent issuances, if any, pursuant to the
Purchase Agreement or pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus or pursuant to the exercise of convertible
securities or options referred to in the Prospectus).
(v) Each Subsidiary is validly existing or subsisting as a corporation
in good standing under the laws of the jurisdiction of its incorporation, and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction listed with such Subsidiary's name on Schedule A
hereto.
(vi) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
(vii) The Indenture has been duly authorized, executed and delivered by
the Company and, assuming the due authorization, execution and delivery thereof
by the Trustee, constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), rehabilitation,
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(viii) The Securities are in the form contemplated by the Indenture,
have been duly authorized by the Company and, assuming that the Securities have
been duly authenticated by the Trustee in the manner described in its
certificate delivered to you today, the Securities have been duly executed,
issued and delivered by the Company and constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
rehabilitation, reorganization, moratorium or similar laws affecting enforcement
of creditors' rights generally and except as enforcement thereof is subject to
A-1-1
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and will be entitled to the benefits of the
Indenture.
(ix) The Indenture has been duly qualified under the 1939 Act.
(x) The descriptions of the provisions of the Securities and the
Indenture in the Prospectus fairly summarize such provisions in all material
respects.
(xi) The Registration Statement has been declared effective under the
1933 Act; any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b); and, to
the best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission.
(xii) The Registration Statement, including (A) the Prospectus but
excluding the documents incorporated by reference therein and (B) each amendment
or supplement to the Registration Statement and Prospectus but excluding the
documents incorporated by reference therein, as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included therein or omitted therefrom, and the Trustees' Statements of
Eligibility on Form T-1 (the "Form T-1s"), as to which we need express no
opinion), complied as to form in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations.
(xiii) All descriptions in the Registration Statement, including (A)
the Prospectus but excluding the documents incorporated by reference therein and
(B) each amendment or supplement to the Registration Statement and Prospectus
but excluding the documents incorporated by reference therein, as of their
respective effective or issue dates (other than the financial statements and
supporting schedules included therein or omitted therefrom, and the Form T-1s,
as to which we need express no opinion), of contracts and other documents to
which the Company is or its Subsidiaries are a party fairly summarize such
contracts and other documents in all material respects; to our knowledge, there
are no franchises, contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits to the Registration Statement
other than those described or referred to therein or filed or incorporated by
reference as exhibits thereto.
(xiv) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we need express no opinion), when they were filed
with the Commission complied as to form in all material respects with the
requirements of the 1934 Act and the rules and regulations of the Commission
thereunder.
(xv) The information in the Prospectus under "Description of Debt
Securities" and "Description of the Notes" fairly summarizes in all material
respects the debt securities being offered under the Prospectus.
(xvi) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and the
1933 Act Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states and except for the
qualification of the Indenture under the 1939 Act, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or the due execution, delivery
or performance of the Indenture by the Company or for the offering, issuance,
sale or delivery of the Securities.
A-1-2
(xvii) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Securities and the consummation of the
transactions contemplated in the Purchase Agreement and in the Registration
Statement (including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus under
the caption "Use Of Proceeds") and compliance by the Company with its
obligations under the Purchase Agreement, the Indenture and the Securities do
not and will not, whether with or without the giving of notice or lapse of time
or both, result in any violation of the provisions of the charter or by-laws of
the Company.
(xviii) The Company is not required, and upon the issuance and sale of
the Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be required, to register as an
"investment company" under the 1940 Act.
We further advise you that we have participated in conferences with
officers and other representatives of the Company and its Subsidiaries and
representatives of the independent public accountants of the Company and
representatives of the Representative at which the contents of the Registration
Statement and Prospectus and related matters were discussed and, although we
have not undertaken to investigate or verify independently, and do not assume
any responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus, nothing has come to our
attention that would lead us to believe that the Registration Statement or any
amendment thereto (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which we need make no statement), at the time
such Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or that the Prospectus or any amendment or supplement thereto (except for
financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom and the Form T-1, as to
which we need make no statement), at the time the Prospectus was issued, at the
time any such amended or supplemented prospectus was issued or at the Closing
Time, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
A-1-3
Exhibit A-2
FORM OF OPINION OF ROGER A. BROWN
TO BE DELIVERED PURSUANT TO
SECTION 5(c)
(i) The shares of issued and outstanding capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable. None of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.
(ii) Each Subsidiary has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus. All of the issued and outstanding capital stock of each Subsidiary
has been duly authorized and validly issued, is fully paid and non-assessable
and, to the best of my knowledge, is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of capital stock of
any Subsidiary was issued in violation of the preemptive or similar rights of
any securityholder of such Subsidiary.
(iii) There is not pending or, to the best of my knowledge, threatened
any action, suit, proceeding, inquiry or investigation, to which the Company is
a party or, to the best of my knowledge, pending or threatened any action, suit,
proceeding, inquiry or investigation to which any Subsidiary is a party, or to
which the property of the Company or any Subsidiary is subject, before or
brought by any court or governmental agency or body, domestic or foreign, which
would reasonably be expected to result in a Material Adverse Effect, or which
would reasonably be expected to materially and adversely affect the properties
or assets thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Company of its obligations
thereunder.
(iv) All descriptions in the Registration Statement of contracts and
other documents to which the Company is or its Subsidiaries are a party are
accurate in all material respects.
(v) Each of the Subsidiaries of the Company is duly incorporated, each
of the Subsidiaries that is an insurance company is duly organized and licensed
as an insurance company in its respective jurisdiction of incorporation and each
such Subsidiary is duly licensed or authorized as an insurance company in each
jurisdiction listed opposite such Subsidiary's name on Schedule A hereto. The
Company is not required to be licensed as an insurance company in any
jurisdiction, including its jurisdiction of organization.
(vi) The information in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002 under "Business--Regulation," "Legal
Proceedings," and "Properties," and in the Registration Statement under Item 15,
to the extent that it constitutes matters of law, summaries of legal matters,
the Company's charter and bylaws or legal proceedings, or legal conclusions,
fairly summarizes in all material respects the matters referred to therein.
(vii) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Securities and the consummation of the
transactions contemplated in the Purchase Agreement and in the Registration
Statement (including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectus under
the caption "Use Of Proceeds") and compliance by the Company with its
obligations under the Purchase Agreement, the Indenture and the Securities do
A-1
not and will not, whether with or without the giving of notice or lapse of time
or both, conflict with or constitute a breach of, or default or Repayment Event
(as defined in Section 1(a)(xiii) of the Purchase Agreement) under or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any Subsidiary pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any Subsidiary is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any Subsidiary is subject (except for such
conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in result in any violation of the provisions of the charter or
by-laws of any of the Subsidiaries, nor any violation of any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their respective
properties, assets or operations.
Nothing has come to my attention that would lead me to believe that the
Registration Statement or any amendment thereto (except for financial statements
and schedules and other financial data included or incorporated by reference
therein or omitted therefrom and the Form T-1, as to which we need make no
statement), at the time such Registration Statement or any such amendment became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any amendment or
supplement thereto (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which we need make no statement), at the time
the Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
A-2