Registration of Securities Issued in a Business-Combination Transaction — Form S-4 Filing Table of Contents
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1: S-4 Registration of Securities Issued in a HTML 1.76M
Business-Combination Transaction
2: EX-1.1 Underwriting Agreement HTML 209K
3: EX-5.1 Opinion re: Legality HTML 19K
4: EX-8.1 Opinion re: Tax Matters HTML 9K
5: EX-12.1 Statement re: Computation of Ratios HTML 18K
6: EX-23.2 Consent of Experts or Counsel HTML 6K
7: EX-25.1 Statement re: Eligibility of Trustee HTML 33K
8: EX-99.8 Miscellaneous Exhibit HTML 91K
9: EX-99.9 Miscellaneous Exhibit HTML 23K
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center New York, New York10080
Ladies and Gentlemen:
Crum & Forster Holdings Corp., a corporation organized under the laws of Delaware (the
“Company”), proposes to issue and sell to the several purchasers named in Schedule
I hereto (the “Initial Purchasers”), for whom you are acting as Representative (the
“Representative”), $330,000,000 aggregate principal amount of the Company’s 7
3/4% Senior Notes due 2017 (the “Securities”). The Securities will be issued pursuant to
an Indenture to be dated as of the Closing Date (as defined below) (the “Indenture”)
between the Company and The Bank of New York, as trustee (the “Trustee”).
The Securities will be sold to the Initial Purchasers without being registered under the
Securities Act of 1933, as amended (the “Securities Act”), in reliance on exemptions
therefrom. The Company has prepared a preliminary offering memorandum dated April 23, 2007 (the
“Preliminary Offering Memorandum”) and will prepare an offering memorandum dated the date
hereof (the “Offering Memorandum”) setting forth information concerning the Company and the
Securities. Copies of the Preliminary Offering Memorandum have been, and copies of the Offering
Memorandum will be, delivered by the Company to the Initial Purchasers pursuant to the terms of
this Agreement. The Company hereby confirms that it has authorized the use of the Preliminary
Offering Memorandum, the other information in the Disclosure Package (as defined below) and the
Offering Memorandum in connection with the offering and resale of the Securities by the Initial
Purchasers in the manner contemplated by this Agreement. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Offering Memorandum. References herein
to the Preliminary Offering Memorandum, the Disclosure Package and the Offering Memorandum shall be
deemed to refer to and include any document incorporated by reference therein.
Holders of the Securities (including the Initial Purchasers and their direct and indirect
transferees) will be entitled to the benefits of a Registration Rights Agreement, to be dated as of
the Closing Date and substantially in the form attached hereto as Exhibit B (the “Registration
Rights Agreement”), pursuant to which the Company will agree to file one or more registration
statements with the Securities and Exchange Commission (the “Commission”) providing for the
registration under the Securities Act of the Securities or the Exchange Securities referred to (and
as defined) in the Registration Rights Agreement.
The Company hereby confirms its agreement with each of the Initial Purchasers concerning the
purchase and resale of the Securities, as follows:
Section 1. Representations and Warranties of the Company.
The Company hereby represents and warrants to each Initial Purchaser as follows:
(a) Disclosure Package and Offering Memorandum. As of the Applicable Time (as defined below), neither (x) the Preliminary Offering
Memorandum, as supplemented by the final pricing term sheet in the form attached hereto as
Exhibit C (the “Pricing Supplement”), that has been prepared and delivered by the
Company to the Initial Purchasers in connection with their solicitation of offers to
purchase Securities (collectively, the “Disclosure Package”), nor (y) any
individual Supplemental Offering Materials (as defined below), when considered together
with the Disclosure Package, included any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. “Applicable Time”
means 5:04 P.M. (Eastern time) on April 23, 2007 or such other time as agreed by the
Company and the Representative.
“Supplemental Offering Materials” means any “written communication” (within
the meaning of the regulations promulgated pursuant to the Securities Act) prepared by or
on behalf of the Company, or used or referred to by the Company, that constitutes an offer
to sell or a solicitation of an offer to buy the Securities other than the Preliminary
Offering Memorandum and the Offering Memorandum or amendments or supplements thereto
(including the Pricing Supplement), including, without limitation, any road show materials
relating to the Securities that constitute such a written communication.
As of its issue date and as of the Closing Date, the Offering Memorandum will not
include an untrue statement of a material fact or 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 Disclosure Package or the Offering Memorandum made in reliance upon
and in conformity with written information furnished to the Company by any Initial
Purchaser through the Representative expressly for use therein.
(b) Incorporated Documents. Each of the Preliminary Offering Memorandum and the Offering Memorandum as
delivered from time to time shall incorporate by reference the most recent Annual Report of
the Company on Form 10-K filed with the Commission and each Quarterly Report of the Company
on Form 10-Q and each Current Report of the Company on Form 8-K filed with the Commission since the end of
the fiscal year to which such Annual Report relates. The documents incorporated or deemed
to be incorporated by reference in the Preliminary Offering Memorandum and the Offering
Memorandum at the
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time they were or hereafter are filed with the Commission complied and
will comply in all material respects with the requirements of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and the rules and regulations of the
Commission thereunder, and, when read together with the other information in the Disclosure
Package at the Applicable Time and the other information in the Offering Memorandum at the
Closing Date, did not and will not include 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.
(c) Registration Rights Agreement. The Registration Rights Agreement has been duly authorized by the Company and, when
executed and delivered by the Company, assuming the due authorization, execution and
delivery thereof by the Initial Purchasers, will constitute the legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with its terms,
subject to the Enforceability Exceptions.
(d) The Indenture. The Indenture has been duly authorized by the Company and, when duly executed and
delivered in accordance with its terms by each of the parties thereto, will constitute a
valid and legally binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to the Enforceability Exceptions; and on the Closing
Date, the Indenture will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the “Trust Indenture Act”), and the rules and
regulations of the Commission applicable to an indenture that is qualified thereunder.
(e) The Securities. The Securities have been duly authorized by the Company and, when duly executed,
authenticated, issued and delivered as provided in the Indenture and paid for as provided
herein, will be duly and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company enforceable against the Company in accordance
with their terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture.
(f) The Exchange Securities. On the Closing Date, the Exchange Securities have been duly authorized by the
Company and, when duly executed, authenticated, issued and delivered as contemplated by the
Registration Rights Agreement, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, subject to
the Enforceability Exceptions, and will be entitled to the benefits of the Indenture.
(g) Purchase Agreement. This Agreement has been duly authorized, executed and delivered by, and is a valid
and binding agreement of, the Company, enforceable against the Company in accordance with
its terms, subject to the Enforceability Exceptions, and except that rights to indemnity
and contribution thereunder may be limited by applicable law and public policy.
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(h) Descriptions of the Transaction Documents. Each Transaction Document (as defined below) conforms in all material respects to
the description thereof contained in the Disclosure Package and the Offering Memorandum.
(i) No Material Adverse Effect. Except as otherwise disclosed in the Disclosure Package and the Offering
Memorandum, since the date of the most recent financial statements appearing in the
Disclosure Package and the Offering Memorandum: (i) there has been no material adverse
change, or any development that could reasonably be expected to have a material adverse
effect, on (x) the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, considered as one entity or (y) the
Company’s ability to perform its obligations under the Transaction Documents in the manner
contemplated by the Offering Memorandum (a “Material Adverse Effect”); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any material
liability or obligation, indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the ordinary course
of business; and (iii) there has been no dividend or distribution of any kind declared,
paid or made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or
redemption by the Company or any of its subsidiaries of any class of capital stock.
(j) Independent Accountants. To the Company’s knowledge, PricewaterhouseCoopers LLP, who have expressed their
opinion with respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) of the Company and its subsidiaries included in the
Offering Memorandum are independent public or certified public accountants as required by
the Securities Act.
(k) Preparation of the Financial Statements. The financial statements and the related notes included in the Disclosure Package
and the Offering Memorandum present fairly the consolidated financial position of the
Company and its subsidiaries as of the dates indicated and the results of their operations
and cash flows for the periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles as applied in the United States
(“GAAP”) applied on a consistent basis throughout the periods involved, except as
may be expressly stated in the related notes thereto. The financial data set forth in the
Disclosure Package and Offering Memorandum under the captions “Offering memorandum
summary—Summary financial data,”“Selected historical consolidated financial data,” and
the “Actual” column under “Capitalization” fairly present the information set forth therein
on a basis consistent with that of the financial statements contained in the Disclosure
Package and the Offering Memorandum.
The North River Insurance Company, Crum & Forster Specialty Insurance Company and Seneca Insurance Company,
Inc. (collectively, the “Material Subsidiaries”) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Disclosure Package and the
Offering Memorandum and, in the case of the Company, to enter into and perform its
respective obligations under this Agreement and the other Transaction Documents to which it
is a party. Other than the Material Subsidiaries, the Company does not have any subsidiary
that is a “significant subsidiary” within the meaning of Rule 405 under the Securities Act.
The Company and each subsidiary of the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, result in a Material Adverse Effect.
(m) Capitalization. The Company has an authorized capitalization as set forth in the Disclosure Package
and the Offering Memorandum in the column entitled “Actual” under the heading
“Capitalization.” All the outstanding shares of capital stock or other equity interests of
each Material Subsidiary have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance or claim.
(n) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals
Required. Neither the Company nor any of its Material Subsidiaries is in violation of its
certificate of incorporation or by-laws. Neither the Company nor any of the Company’s
subsidiaries is in default (or, with the giving of notice or lapse of time or both, would
be in default) (“Default”) under any indenture, mortgage, loan or credit agreement,
note, contract, franchise, lease or other instrument to which any of them is a party or by
which it or any of them may be bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject (each, an “Existing Instrument”),
except for such Defaults as would not, individually or in the aggregate, have a Material
Adverse Effect. The execution, delivery and performance by the Company of its obligations
under this Agreement, the Securities, the Indenture and the Registration Rights Agreement
(collectively, the “Transaction Documents”), the issuance and sale of the
Securities and compliance by the Company with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents (a) have been duly authorized by all
necessary corporate action and will not result in any violation of the provisions of the
certificate of incorporation or by-laws of the Company or any subsidiary of the Company,
(b) will not conflict with or constitute a breach of, or Default under, or, except or any
lien for the benefit of holders of the Securities, result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or any of the
Company’s subsidiaries pursuant to, or require the consent
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of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or
encumbrances as would not, individually or in the aggregate, result in a Material Adverse
Effect and (c) will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any subsidiary of the Company,
except for any violations which would not, individually or in the aggregate, result in a
Material Adverse Effect. No material consent, approval, authorization, other order of,
registration of, filing of or qualification of or with any court or other governmental or
regulatory authority is required for the execution, delivery and performance by the Company
of each of the Transaction Documents to which it is or will be a party, the issuance and
sale of the Securities by the Company and compliance by the Company with the terms thereof
and the consummation of the transactions contemplated by the Transaction Documents, except
for such consents, approvals, authorizations, orders and registrations or qualifications as
may be required (i) under applicable state securities laws in connection with the purchase
and resale of the Securities by the Initial Purchasers and (ii) with respect to the
Exchange Securities under the Securities Act and applicable state securities laws as
contemplated by the Registration Rights Agreement.
(o) No Material Actions or Proceedings. Except as described in the Disclosure Package and the Offering Memorandum, there
are no legal or governmental actions, suits or proceedings pending or, to the best of the
Company’s knowledge, threatened (i) against or, to the best of the Company’s knowledge,
affecting the Company or any of its subsidiaries, (ii) which has as the subject thereof any
officer or director of, or property owned by, the Company or any of its subsidiaries or
(iii) relating to environmental or discrimination matters, where in any such case (A) such action, suit
or proceeding could reasonably be expected to be determined adversely to the Company or
such subsidiary and (B) any such action, suit or proceeding, if so determined adversely,
would reasonably be expected to have a Material Adverse Effect or would reasonably be
expected to adversely affect the consummation of the transactions contemplated by this
Agreement. No labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the best of the Company’s knowledge, is threatened or imminent, which might
reasonably be expected, individually or in the aggregate, to have a Material Adverse
Effect.
(p) Intellectual Property Rights. The Company and its subsidiaries own or possess sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals, trade secrets and other similar rights
(collectively, “Intellectual Property Rights”) reasonably necessary to conduct
their businesses as now conducted; and the expected expiration of any of such Intellectual
Property Rights would not have a Material Adverse Effect. Neither the Company nor any of
its subsidiaries has received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which infringement or conflict, if the subject of
an unfavorable decision, would have a Material Adverse Effect
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(q) All Necessary Licenses. Each of United States Fire Insurance Company, The North River Insurance Company,
Crum and Forster Insurance Company, Crum & Forster Indemnity Company, Crum & Forster
Specialty Insurance Company, Seneca Insurance Company, Inc. and Seneca Specialty Insurance
Company (each an “Insurance Subsidiary” and collectively, the “Insurance
Subsidiaries”) is duly licensed to conduct an insurance business under the insurance
statutes of each jurisdiction in which the conduct of its business requires such licensing,
except for such jurisdictions or licensing requirements for which the failure of the
Insurance Subsidiaries to be so licensed would not, individually or in the aggregate, have
a Material Adverse Effect. Each of the Company and its subsidiaries that is so required
has filed all reports, information statements and other documents with the insurance
regulatory authorities of its jurisdiction of incorporation and domicile as are required to
be filed pursuant to the insurance statutes of such jurisdictions, including the statutes
relating to companies which control insurance companies, and the rules, regulations and
interpretations of the insurance regulatory authorities thereunder (the “Insurance
Laws”), and has duly paid all taxes (including franchise taxes and similar fees) it is
required to have paid under the Insurance Laws, except where the failure to file such
statements or reports or pay such taxes would not, individually or in the aggregate, have a
Material Adverse Effect. Each of the Company and its subsidiaries maintains its books and
records in accordance with the Insurance Laws, except where the failure to so maintain its
books and records would not have a Material Adverse Effect. Each of the Insurance
Subsidiaries has all other necessary authorizations, approvals, orders, consents, certificates, permits, registrations and qualifications
of and from all insurance regulatory authorities necessary to conduct their respective
businesses as described in the Disclosure Package or Offering Memorandum, except where the
failure to have such authorizations, approvals, orders, consents, certificates, permits,
registrations or qualifications would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and each of its Insurance Subsidiaries has not
received any notification from any insurance regulatory authority to the effect that any
additional authorization, approval, order, consent, certificate, permit, registration or
qualification is needed to be obtained by the Company or any of its Insurance Subsidiaries
in any case where it could be reasonably expected that (x) the Company or any of its
Insurance Subsidiaries would be required either to obtain such additional authorization,
approval, order, consent, certificate, permit, registration or qualification or to cease or
otherwise limit the writing of certain business and (y) the failure to obtain such
additional authorization, approval, order, consent, certificate, permit, registration or
qualification or the limiting of the writing of such business would have a Material Adverse
Effect; and no insurance regulatory authority having jurisdiction over the Company or any
of its Insurance Subsidiaries has issued any order or decree impairing, restricting or
prohibiting (i) the payment of dividends by any of the Insurance Subsidiaries to its
parent, other than those restrictions applicable to insurance companies generally, or (ii)
the continuation of the business of the Company or any of the Insurance Subsidiaries in all
material respects as presently conducted.
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(r) Permits. The Company and its subsidiaries possess all licenses, certificates, permits and other
authorizations, issued by, and have made all declarations and filings with, the appropriate
federal, state, local or foreign governmental or regulatory authorities that are necessary
for the ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Disclosure Package and the Offering Memorandum,
except where the failure to possess or make the same would not, individually or in the
aggregate, have a Material Adverse Effect; and except as described in the Disclosure
Package and the Offering Memorandum, neither the Company nor any of its subsidiaries has
received notice of any revocation or material modification of any license, certificate,
permit or authorization that is material to the business of the Company and its
subsidiaries, taken as a whole, or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary course. Each of
the Company and its subsidiaries is in compliance with the requirements of the Insurance
Laws of its jurisdiction of incorporation and the Insurance Laws of other jurisdictions
which are applicable to the Company or such subsidiary, except where the failure to so
comply would not, singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the Disclosure Package or the Offering Memorandum,
the Company and each of the Insurance Subsidiaries has received all material approvals of
acquisition of control and/or affiliate transactions in each jurisdiction where such approvals are required except where the failure to obtain any
such approval would not have a Material Adverse Effect.
(s) Title to Properties. Except as otherwise disclosed in the Disclosure Package and the Offering
Memorandum, the Company and each of its subsidiaries has good and marketable title to all
the properties and assets reflected as owned by each of them in the Disclosure Package and
the Offering Memorandum, in each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, claims and other defects, except such as do not materially
and adversely affect the value of such property and do not materially interfere with the
use made or proposed to be made of such property by the Company or such subsidiary. The
real property, improvements, equipment and personal property held under lease by the
Company or any subsidiary are held under valid and enforceable leases, with such exceptions
as would not have a Material Adverse Effect.
(t) Tax Law Compliance. All necessary federal, state and foreign income and franchise tax returns required
to be filed with respect to the Company and its consolidated subsidiaries, other than those
which would not, individually or in the aggregate, have a Material Adverse Effect, have
been filed. Except as would not have a Material Adverse Effect, all taxes required to be
paid by any of them and, if due and payable, any related or similar assessment, fine or
penalty levied against any of them, have been paid, except assessments against which
appeals have been or will be promptly taken in good faith and as to which adequate reserves
have been provided. Adequate charges, accruals and reserves have been made in the
applicable financial statements referred to in Section 1(k)
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above in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax
liability of the Company or any of its consolidated subsidiaries has not been finally
determined.
(u) Company Not “Investment Company”. The Company is not, and after receipt of payment for the Securities, will not be,
required to be registered as an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
(v) Insurance. Except as would not have a Material Adverse Effect, neither the Company nor any of
its subsidiaries has been denied any insurance coverage which it has sought or for which it
has applied. Except as would not have a Material Adverse Effect, the Company and its
subsidiaries have insurance covering their respective properties, operations, personnel and
businesses, including business interruption insurance, which insurance is in amounts and
insures against such losses and risks as are adequate to protect the Company and its subsidiaries and their respective businesses; and neither the Company nor any of
its subsidiaries has (i) received any material notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or necessary to be
made in order to continue such insurance or (ii) any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage at reasonable cost from similar insurers as may be necessary to
continue its business.
(w) No Price Stabilization or Manipulation. Neither the Company nor any of the Company’s subsidiaries has taken and will not
take, directly or indirectly, any action designed to or that might be reasonably expected
to cause or result in stabilization or manipulation of the price of the Securities.
(x) Company’s Accounting System. The Company and its consolidated subsidiaries maintain a system of accounting
controls sufficient to provide reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) ERISA Compliance. The Company and its subsidiaries and each “employee benefit plan” (within the
meaning of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (“ERISA”)) established or
maintained, by the Company, its subsidiaries and their “ERISA Affiliates” (as defined
below) are in compliance with ERISA and the Internal Revenue Code of 1986, as amended, and
the regulations and published interpretations thereunder (the “Code”), except such
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as will not, individually or in the aggregate, have a Material Adverse Effect. “ERISA
Affiliate” means, with respect to the Company and a subsidiary, any member of any group
of organizations described in Sections 414(b), (c), (m) or (o) of the Code of which the
Company or such subsidiary is a member. No “reportable event” (as defined under ERISA) has
occurred or is reasonably expected to occur with respect to any “employee benefit plan” for
which the Company, its subsidiaries or any of their ERISA Affiliates would have any
liability, which might reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. No “employee benefit plan” for which the Company, its
subsidiaries or any of their ERISA Affiliates would have any liability, if such “employee
benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as
defined under ERISA) which might reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect. Neither the Company, its subsidiaries nor any of their
ERISA Affiliates has incurred or reasonably expects to incur any liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan”
or (ii) Sections 412, 4971, 4975 or 4980B of the Code, which might reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect. Each “employee
benefit plan” established or maintained by the Company, its subsidiaries and any of their
ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure to act, which would cause
the loss of such qualification, and which might reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect. No event or series of events of the
nature described in this Section 1(y) has occurred or is reasonably expected to occur for
which the Company, its subsidiaries or any of their ERISA Affiliates would have any
liability which might reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
(z) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the best knowledge of the
Company, any director, officer, agent, employee or other person associated with or acting
on behalf of the Company or any of its subsidiaries has (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
(aa) Solvency. The Company is, and immediately after the Closing Date and immediately upon
consummation of the transactions contemplated herein and in the Preliminary Memorandum and
the Offering Memorandum will be, Solvent. As used in this paragraph, the term
“Solvent” means, with respect to a particular date, that on such date (i) the
present fair market value (or present fair saleable value) of the assets of the Company is
not less than the total amount required to pay the liabilities of the Company on its total
existing debts and
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liabilities (including contingent liabilities) as they become absolute and matured; (ii) the Company is able to realize upon its assets and pay its debts and
other liabilities, contingent obligations and commitments as they mature and become due in
the normal course of business; (iii) assuming consummation of the issuance of the
Securities as contemplated by this Agreement and the Disclosure Package and the Offering
Memorandum, the Company is not incurring debts or liabilities beyond its ability to pay as
such debts and liabilities mature; (iv) the Company is not engaged in any business or
transaction, and does not propose to engage in any business or transaction, for which its
property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the
industry in which the Company is engaged; and (v) the Company is not a defendant in any
civil action that would result in a judgment that the Company is or would become unable to
satisfy.
(bb) No Broker’s Fees. Neither the Company nor any of the Company’s subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would
give rise to a valid claim against any of them or any Initial Purchaser for a brokerage
commission, finder’s fee or like payment in connection with the offering and sale of the
Securities.
(cc) Rule 144A Eligibility. On the Closing Date, the Securities will not be of the same class as securities
listed on a national securities exchange registered under Section 6 of the Exchange Act or
quoted in an automated inter-dealer quotation system; and each of the Disclosure Package
and the Offering Memorandum, as of its respective date, contains or will contain all the
information that, if requested by a prospective purchaser of the Securities, would be
required to be provided to such prospective purchaser pursuant to Rule 144A(d)(4) under the
Securities Act.
(dd) No Integration. Neither the Company nor any of the Company’s affiliates (as defined in Rule 501(b)
of Regulation D of the Securities Act (“Regulation D”) has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect
of, any security (as defined in the Securities Act), that is or will be integrated with the
sale of the Securities in a manner that would require registration of the Securities under
the Securities Act.
(ee) No General Solicitation or Directed Selling Efforts. None of the Company or any of the Company’s affiliates or any other person acting
on any of their behalfs (other than the Initial Purchasers, as to which no representation
is made) has (i) solicited offers for, or offered or sold, the Securities by means of any
form of general solicitation or general advertising within the meaning of Rule 502(c) of
Regulation D or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act or (ii) engaged in any directed selling efforts within the
meaning of Regulation S under the Securities Act (“Regulation S”), and all such
persons have complied with the offering restrictions requirement of Regulation S.
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(ff) Securities Law Exemptions. Assuming the accuracy of the representations and warranties of the Initial
Purchasers contained in Section 2(b) (including Annex A hereto) and their compliance with their agreements set forth therein, it is not necessary, in connection
with the issuance and sale of the Securities to the Initial Purchasers and the offer,
resale and delivery of the Securities by the Initial Purchasers in the manner contemplated
by this Agreement and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act.
(gg) Margin Rules. Neither the issuance, sale and delivery of the Securities nor the application of
the proceeds thereof by the Company as described in the Offering Memorandum will violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors.
(hh) Statistical and Market Data. Nothing has come to the attention of the Company that has caused the Company to
believe that the statistical and market-related data included in the Disclosure Package and
the Offering Memorandum is not based on or derived from sources that are reliable and
accurate in all material respects.
(ii) Employment Agreements. Other than the agreements described in the Disclosure Package and the Offering
Memorandum or listed as an exhibit to any document incorporated by reference therein,
neither the Company nor any of its subsidiaries or parent companies has any written
agreement with any officer (other than the chief executive officer of the Company) that is
named in the “Management” section of the Disclosure Package and the Offering Memorandum
relating to the terms and conditions of such officer’s employment.
(jj) Compliance with the Sarbanes-Oxley Act. There is and has been no failure on the part of the Company or any of the Company’s
directors or officers, in their capacities as such, to comply in all material respects with
any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated
in connection therewith, in each case as applicable to the Company, including Section 402
related to loans and Sections 302 and 906 related to certifications.
Any certificate signed by an officer the Company and delivered to the Representative or to
counsel for the Initial Purchasers shall be deemed to be a representation and warranty by the
Company to each Initial Purchaser as to the matters set forth therein.
Section 2. Purchase and Resale of the Securities; Payment and Delivery.
(a) Sale of Securities. The Company agrees to issue and sell the Securities to each of the Initial
Purchasers as provided in this Agreement, and
12
each Initial Purchaser, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions
set forth herein, agrees, severally and not jointly, to purchase from the Company the
respective principal amount of Securities set forth opposite such Initial Purchaser’s name
in Schedule I hereto at a price equal to 98.75% of the principal amount thereof plus
accrued interest, if any, from May 7, 2007 to the Closing Date. The Company will not be
obligated to deliver any of the Securities except upon payment for all the Securities to be
purchased as provided herein.
(b) Resale by Initial Purchasers. The Company understands that the Initial Purchasers intend to offer the Securities
for resale on the terms set forth in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents, warrants and agrees that:
(i) it is a qualified institutional buyer within the meaning of Rule 144A
under the Securities Act (a “QIB”) and an accredited investor within the
meaning of Rule 501(a) under the Securities Act;
(ii) it has not solicited offers for, or offered or sold, and will not solicit
offers for, or offer or sell, the Securities by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) of Regulation
D or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act; and
(iii) it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities as part of their initial
offering except:
(A) within the United States to persons whom it reasonably believes
to be QIBs in transactions pursuant to Rule 144A under the Securities Act
(“Rule 144A”) and in connection with each such sale, it has taken
or will take reasonable steps to ensure that the purchaser of the
Securities is aware that such sale is being made in reliance on Rule 144A;
or
(B) in accordance with the restrictions set forth in Annex A hereto.
(c) Reliance on Representations. Each Initial Purchaser acknowledges and agrees that the Company and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(c) and 5(d), counsel for the Company and counsel for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers, and compliance by the Initial Purchasers with their agreements,
contained in paragraph (b) above (including Annex A hereto), and each Initial Purchaser
hereby consents to such reliance.
13
(d) Acknowledgement. The Company acknowledges and agrees that the Initial Purchasers may offer and sell
Securities to or through any affiliate of an Initial Purchaser and that any such affiliate
may offer and sell Securities purchased by it to or through any Initial Purchaser.
(e) Closing Date. Payment for and delivery of the Securities will be made at the offices of Simpson
Thacher & Bartlett LLP at 10:00 A.M., New York City time, on May 7, 2007, or at such other
time or place on the same or such other date, not later than the fifth business day
thereafter, as the Representative and the Company may agree upon in writing. The time and
date of such payment and delivery is referred to herein as the “Closing Date.”
(f) Payment for Securities. Payment for the Securities shall be made by wire transfer in immediately available
funds to the Company against delivery to the nominee of The Depository Trust Company, for
the account of the Initial Purchasers, of one or more global notes representing the
Securities (collectively, the “Global Note”), with any transfer taxes payable in
connection with the sale of the Securities duly paid by the Company. The Global Note will
be made available for inspection by the Representative not later than 1:00 P.M., New York
City time, on the business day prior to the Closing Date.
The Company hereby covenants and agrees with each Initial Purchaser as follows:
(a) Delivery of Copies. The Company will deliver to the Initial Purchasers as many copies of the Disclosure
Package and the Offering Memorandum (including all amendments and supplements thereto) as
the Representative may reasonably request.
(b) Amendments or Supplements; Preparation of Pricing Supplement; Supplemental
Offering Materials. Before making or distributing any amendment or supplement to the Preliminary
Offering Memorandum, the Disclosure Package or the Offering Memorandum, the Company will
furnish to the Representative and counsel for the Initial Purchasers a copy of the proposed
amendment or supplement for review, and will not distribute any such proposed amendment or
supplement to which the Representative reasonably object. Neither the consent of the
Initial Purchasers, nor an Initial Purchaser’s delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in Section 5
hereof. The Company will prepare the Pricing Supplement, in form and substance
satisfactory to the Representative, and shall furnish as soon as practicable but no later
than a reasonable amount of time prior to the Applicable Time to each Initial Purchaser,
without charge, as many copies of the Pricing Supplement as such Initial Purchaser may
reasonably request. The Company represents and agrees that, unless it obtains the prior
consent of the
14
Representative, it has not made and will not make any offer relating to the
Securities by means of any Supplemental Offering Materials.
(c) Notice to the Representative. Prior to the effectiveness of a Registration Statement registering the Securities
or the Exchange Securities in accordance with the Registration Rights Agreement, the
Company will advise the Representative promptly, and confirm such advice in writing, (i) of
the issuance by any governmental or regulatory authority of any order preventing or
suspending the use of the Preliminary Offering Memorandum, the Disclosure Package or the
Offering Memorandum or the initiation or threatening of any proceeding for that purpose;
(ii) of the occurrence of any event at any time prior to the completion of the initial
offering of the Securities as a result of which the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances existing when the Offering Memorandum is delivered to a purchaser, not
misleading; and (iii) of the receipt by the Company of any notice with respect to any
suspension of the qualification of the Securities for offer and sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose; and the Company will each
use its reasonable best efforts to prevent the issuance of any such order preventing or
suspending the use of the Preliminary Offering Memorandum, the Disclosure Package or the
Offering Memorandum or suspending any such qualification of the Securities and, if any such
order is issued, will obtain as soon as possible the withdrawal thereof.
(d) Ongoing Compliance of the Offering Memorandum. If at any time prior to the completion of the initial offering of the Securities
(i) any event shall occur or condition shall exist as a result of which the Offering
Memorandum as then amended or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements therein,
in the light of the circumstances existing when the Offering Memorandum is delivered to a purchaser, not misleading or (ii) it is
necessary to amend or supplement the Offering Memorandum to comply with law, the Company
will immediately notify the Initial Purchasers thereof and forthwith prepare and, subject
to paragraph (b) above, furnish to the Initial Purchasers such amendments or supplements to
the Offering Memorandum as may be necessary so that the statements in the Offering
Memorandum as so amended or supplemented will not, in the light of the circumstances
existing when the Offering Memorandum is delivered to a purchaser, be misleading or so that
the Offering Memorandum will comply with law.
(e) Clear Market. During the period from the date hereof through and including the date that is 90
days after the date hereof, the Company will not, without the prior written consent of the
Representative, offer, sell, contract to sell or otherwise dispose of any debt securities
issued or guaranteed by the Company and having a tenor of more than one year.
15
(f) Supplying Information. While the Securities remain outstanding and are “restricted securities” within the
meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in
which the Company is not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act, furnish to holders of the Securities and prospective purchasers of the
Securities designated by such holders, upon the request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
(g) Portal and DTC. The Company will assist the Initial Purchasers in arranging for the Securities to
be designated Portal Market securities in accordance with the rules and regulations adopted
by the National Association of Securities Dealers, Inc. (“NASD”) relating to
trading in the Portal Market and for the Securities to be eligible for clearance and
settlement through The Depository Trust Company (“DTC”).
(h) No Resales by the Company. Until the issuance of the Exchange Securities, the Company will not, and will not
permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell
any of the Securities that have been acquired by any of them, except for Securities
purchased by the Company or any of its affiliates and resold in a transaction registered
under the Securities Act.
(i) No Integration. Neither the Company nor any of its affiliates (as defined in Rule 501(b) of
Regulation D) will, directly or through any agent, sell, offer for sale, solicit offers to
buy or otherwise negotiate in respect of, any security (as defined in the Securities Act),
that is or will be integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities Act.
(j) No General Solicitation or Directed Selling Efforts. None of the Company nor any of its affiliates or any other person acting on its or
their behalf (other than the Initial Purchasers, as to which no covenant is given) will (i)
solicit offers for, or offer or sell, the Securities by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in
any manner involving a public offering within the meaning of Section 4(2) of the Securities
Act or (ii) engage in any directed selling efforts within the meaning of Regulation S, and
all such persons will comply with the offering restrictions requirement of Regulation S.
(k) Blue Sky Compliance. The Company shall use its reasonable best efforts in cooperation with the
Representative and counsel for the Initial Purchasers to qualify or register the Securities
for sale under (or obtain exemptions from the application of) the state securities or blue
sky laws of those jurisdictions designated by the Representative, shall comply with such
laws and shall continue such qualifications, registrations and exemptions in effect so long
as required for the distribution of the Securities. Notwithstanding the foregoing,
16
the Company shall not be required to qualify as a foreign corporation or to take any action
that would subject either of them to general service of process in any such jurisdiction
where it is not presently qualified or where it would be subject to taxation as a foreign
corporation.
(l) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Securities in the
manner described in the Disclosure Package and the Offering Memorandum under the caption
“Use of proceeds.”
(m) Future Reports to the Representative. Until the third anniversary of the date hereof, the Company will, to the extent
that any such materials are not publicly available free of charge, furnish to the
Representative: (i) as soon as practicable after the end of each fiscal year, copies of the
Annual Report of the Company containing the balance sheet of the Company as of the close of
such fiscal year and statements of income, stockholders’ equity and cash flows for the year
then ended and the opinion thereon of the Company’s independent public or certified public
accountants; (ii) as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on
Form 8-K or other report filed by the Company with the Commission; and (iii) from time to time, such other public information concerning the Company as the
Representative may reasonably request.
(n) Commission Filings. If at any time prior to the completion of the initial offering of the Securities,
the Company files with the Commission any report or other document incorporated by
reference in the Disclosure Package, the Offering Memorandum or any amendment or supplement
to the Disclosure Package or the Offering Memorandum, or any amendment to any report or
document incorporated by reference in the Disclosure Package, the Offering Memorandum or
any amendment or supplement to the Disclosure Package or the Offering Memorandum, the
Company will furnish a copy thereof to the Representative and counsel for the Initial
Purchasers and obtain the consent of the Representative prior to the filing of such report
or other document (such consent not to be unreasonably withheld).
Section 4. Payment of Expenses. Whether or not the transactions are consummated or this Agreement is terminated the Company
agrees to pay or cause to be paid all costs, fees and expenses incident to the performance of its
obligations hereunder and in connection with the transactions contemplated hereby, including
without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in connection therewith; (ii) the costs incident
to the preparation and printing of the Disclosure Package and the Offering Memorandum (including
any amendment or supplement thereto) and the distribution thereof; (iii) the fees and expenses of
the Company’s counsel and public or certified public independent accountants and other advisors;
(iv) the reasonable fees and expenses incurred in connection with the registration or qualification
and determination of eligibility for investment of the Securities under the laws of such
jurisdictions as the Representative may designate and the preparation, printing and distribution of
a Blue Sky
17
Memorandum (including the reasonable related fees and expenses of counsel for the
Initial Purchasers); (v) any fees charged by rating agencies for rating the Securities; (vi) the
fees and expenses of the Trustee and any paying agent (including related fees and expenses of any
counsel to such parties); (vii) all expenses and application fees incurred in connection with the
application for the inclusion of the Securities on the Portal Market and the approval of the
Securities for book-entry transfer by DTC; (viii) all expenses incurred by the Company in
connection with any “road show” presentation to potential investors and (ix) all fees and expenses
incurred by or on behalf of the Company in connection with the performance of its obligations under
the Transaction Documents. Except as provided in this Section 4, Section 6 and Section 8 hereof,
the Initial Purchasers shall pay their own expenses, including the fees and disbursements of their
counsel.
Section 5. Conditions of the Obligations of the Initial Purchasers. The obligations of each Initial Purchaser to purchase and pay for the Securities on the
Closing Date shall be subject to the accuracy of the representations and warranties on the part of
the Company set forth in Section 1 hereof as of the date hereof and as of the Closing Date as
though then made, to the timely performance by the Company of its covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants’ Comfort Letter. On the date hereof, the Representative shall have received from
PricewaterhouseCoopers LLP, independent public or certified public accountants for the
Company, a letter dated the date hereof addressed to the Representative, as representative
of the Initial Purchasers, in form and substance satisfactory to the Representative,
containing statements and information of the type ordinarily included in accountants’
“comfort letters” to Initial Purchasers, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited
financial statements and certain financial information contained in the Disclosure Package
and Offering Memorandum.
(b) No Material Adverse Change or Ratings Agency Change. Subsequent to the execution and delivery of this Agreement:
(i) there shall not have occurred any change, or any development that could
reasonably be expected to result in a change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the Company and
its subsidiaries, considered as one entity, the effect of which is, in the judgment
of the Representative, so material and adverse as to make it impractical or
inadvisable to proceed with the offering, sale or delivery of the Securities on the
terms and in the manner contemplated by this Agreement and the Offering Memorandum;
(ii) no downgrading shall have occurred in (x) the rating accorded the
financial strength or claims paying ability of the Company or
18
any of the Material Subsidiaries (including any pooling arrangement in which any such Material
Subsidiaries participates) by A.M. Best Company, Inc. or Standard & Poor’s
Insurance Rating Services or (y) the Securities or any other debt securities or
preferred stock issued or guaranteed by the Company by any “nationally recognized
statistical rating organization,” as such term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act and no such organization shall
have publicly announced that it has under surveillance or review, or has changed
its outlook with respect to, its rating of the financial strength or claims paying
ability of the Company or any of its subsidiaries or the Securities or of any other debt securities or preferred
stock issued or guaranteed by the Company (other than an announcement with positive
implications of a possible upgrading).
(c) Opinions of Outside Counsel for the Company. On the Closing Date the Representative shall have received the opinion and 10b-5
letter of Shearman & Sterling LLP, counsel for the Company, dated as of the Closing Date,
the forms of which are attached as Exhibit A-1.
(d) Opinion of Internal Counsel of the Company. On the Closing Date the Representative shall have received the opinion and 10b-5
letter of James Kraus, Esq., internal counsel of the Company, dated as of the Closing Date,
the forms of which are attached as Exhibit A-2.
(e) Opinion of Counsel for the Initial Purchasers. On the Closing Date the Representative shall have received an opinion of Simpson
Thacher & Bartlett LLP, counsel for the Initial Purchasers, dated as of the Closing Date,
in form and substance satisfactory to the Initial Purchasers.
(f) Officers’ Certificate. On the Closing Date the Representative shall have received a written certificate
executed by the Chief Executive Officer or President of the Company and the Chief
Financial Officer or Controller of the Company, dated as of such Closing Date, to the
effect set forth in subsection (b)(ii) of this Section 5, and further to the effect that:
(i) for the period from and after the date of this Agreement and prior to such
Closing Date, there has not occurred any event or development that could reasonably
be expected to have a Material Adverse Effect;
(ii) the representations and warranties of the Company set forth in Section 1
of this Agreement are true and correct with the same force and effect as though
expressly made on and as of such Closing Date; and
(iii) the Company has complied with all the agreements hereunder and satisfied
all the conditions on its part to be performed or satisfied hereunder at or prior
to such Closing Date.
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(g) Bring-down Comfort Letter. On the Closing Date the Representative shall have received from
PricewaterhouseCoopers LLP, independent public or certified public accountants for the
Company, a letter dated such date, in form and substance satisfactory to the
Representative, to the effect that they reaffirm the statements made in the letter
furnished by them pursuant to subsection (a) of this Section 5, except that the specified
date referred to therein for the carrying out of procedures shall be no more than three
business days prior to the Closing Date.
(h) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any federal, state or foreign governmental or
regulatory authority that would, as of the Closing Date, prevent the issuance or sale of
the Securities; and no injunction or order of any federal, state or foreign court shall
have been issued that would, as of the Closing Date, prevent the issuance or sale of the
Securities.
(i) Good Standing. The Representative shall have received on and as of the Closing Date satisfactory
evidence of the good standing of the Company and the Insurance Subsidiaries in their
respective jurisdictions of organization and their good standing in such other
jurisdictions as the Representative may reasonably request, in each case in writing or any
standard form of telecommunication, from the appropriate governmental authorities of such
jurisdictions.
(j) Registration Rights Agreement. The Initial Purchasers shall have received a counterpart of the Registration Rights
Agreement that shall have been executed and delivered by a duly authorized officer of the
Company.
(k) Portal and DTC. The Securities shall have been approved by the NASD for trading in the Portal
Market and shall be eligible for clearance and settlement through DTC.
(l) Additional Documents. On or before the Closing Date the Representative and counsel for the Initial
Purchasers shall have received such additional certificates, information and other
documents as they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Securities as contemplated herein, or in order to evidence the
accuracy of any of the representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
All opinions, certificates and additional documents mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Initial Purchasers.
If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Representative by
20
notice to the Company at any
time on or prior to the Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 4, Section 6 and Section 7 shall at all times be
effective and shall survive such termination.
Section 6. Reimbursement of Initial Purchasers’ Expenses. If this Agreement is terminated by the Representative pursuant to Section 5, or if the sale
to the Initial Purchasers of the Securities on the Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the Representative upon demand
for all reasonable out-of-pocket expenses that shall have been reasonably incurred by the
Representative and the Initial Purchasers in connection with the proposed purchase and the offering
and sale of the Securities, including but not limited to reasonable fees and disbursements of
counsel, travel expenses, postage, facsimile and telephone charges.
Section 7. Indemnification.
(a) Indemnification of the Initial Purchasers. The Company hereby agrees to indemnify and hold harmless each Initial Purchaser, its affiliates,
directors and officers and each person, if any, who controls such Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages and liabilities (including, without limitation, legal fees and
other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as
such fees and expenses are incurred), that arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum, the
other information in the Disclosure Package, any Supplemental Offering Materials or the Offering
Memorandum (or any amendment or supplement thereto) or any omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such losses, claims,
damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with any information relating
to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the
Representative expressly for use therein.
(b) Indemnification of the Company. Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless
the Company, its directors and officers and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses,
claims, damages or liabilities that arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in conformity with any
information relating to such Initial Purchaser furnished to the Company in writing by such Initial
Purchaser through the Representative expressly for use in the Preliminary Offering Memorandum, the
other information in the Disclosure Package, any Supplemental Offering Materials or the Offering
Memorandum (or any amendment or supplement thereto), it being understood and agreed that the only
such
21
information consists of the following: the information contained in the third sentence of the
second paragraph under the heading “Plan of distribution,” the third sentence of the first
paragraph and the first sentence of the second paragraph under the heading “Plan of distribution —
New Issue of Notes,” the first paragraph under the heading “Plan of distribution — Price
Stabilization and Short Positions,” and the final sentence of the paragraph under the heading “Plan
of distribution — Other Relationships.”
(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any person in respect of which indemnification
may be sought pursuant to either paragraph (a) or (b) above, such person (the “Indemnified
Person”) shall promptly notify the person against whom such indemnification may be sought (the
“Indemnifying Person”) in writing; provided that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have under this Section 7
except to the extent that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it may have to an
Indemnified Person otherwise than under this Section 7. If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof,
the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others entitled to indemnification pursuant to this
Section 7 that the Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those available to the
Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded
parties) include both the Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for any Initial Purchaser, its affiliates, directors and officers and any control
persons of such Initial Purchaser shall be designated in writing by the Representative and any such
separate firm for the Company and any control persons of the Company shall be designated in writing
by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person
from and against any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Person shall have requested that an
Indemnifying Person reimburse
22
the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 30
days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request prior to the date
of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have been sought
hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of such proceeding and (y) does
not include any statement as to or any admission of fault, culpability or a failure to act by or on
behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an
Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchasers on the other from the offering of the Securities 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) but also the
relative fault of the Company on the one hand and the Initial Purchasers on the other in connection
with the statements or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Initial Purchasers on the other shall be deemed to be in the same
respective proportions as the net proceeds (before deducting expenses) received by the Company from
the sale of the Securities and the total discounts and commissions received by the Initial
Purchasers in connection therewith, as provided in this Agreement,
bear to the aggregate offering price of the Securities. The relative fault of the Company on
the one hand and the Initial Purchasers on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the Company or by the
Initial Purchasers and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) Limitation on Liability. The Company and the Initial Purchasers agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by prorata allocation
(even if the Initial Purchasers were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in
23
connection with any such action or claim. Notwithstanding the provisions of this Section 7, in no
event shall an Initial Purchaser be required to contribute any amount in excess of the amount by
which the total discounts and commissions received by such Initial Purchaser with respect to the
offering of the Securities exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Initial Purchasers’ obligations to contribute pursuant
to this Section 7 are several in proportion to their respective purchase obligations hereunder and
not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or
remedies that may otherwise be available to any Indemnified Person at law or in equity.
Section 8. Termination of this Agreement. This Agreement may be terminated in the absolute discretion of the Representative, by
notice to the Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially limited on the New York
Stock Exchange or the over-the-counter market; (ii) trading of any securities issued or guaranteed
by the Company shall have been suspended on any exchange or in any over-the-counter market; (iii) a
general moratorium on commercial banking activities shall have been declared by federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis, either within or outside the United
States, that, in the judgment of the Representative, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or delivery of the
Securities on the terms and in the manner contemplated by this Agreement and the Offering
Memorandum.
Section 9. Defaulting Initial Purchaser.
(a) If, on the Closing Date, any Initial Purchaser defaults on its obligation to purchase the
Securities that it has agreed to purchase hereunder, the non-defaulting Initial Purchasers may in
their discretion arrange for the purchase of such Securities by other persons satisfactory to the
Company on the terms contained in this Agreement. If, within 36 hours after any such default by
any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase of
such Securities, then the Company shall be entitled to a further period of 36 hours within which to
procure other persons satisfactory to the non-defaulting Initial Purchasers to purchase such
Securities on such terms. If other persons become obligated or agree to purchase the Securities of
a defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or the Company may
postpone the Closing Date for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in
the Offering Memorandum or in any other document or arrangement, and the Company agrees to promptly
prepare any amendment or supplement to the Offering Memorandum that effects any such changes. As
used in this
24
Agreement, the term “Initial Purchaser” includes, for all purposes of this Agreement
unless the context otherwise requires, any person not listed in Schedule I hereto that, pursuant to
this Section 9, purchases Securities that a defaulting Initial Purchaser agreed but failed to
purchase.
(b) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the
Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the
Securities, then the Company shall have the right to require each non-defaulting Initial Purchaser
to purchase the principal amount of Securities that such Initial Purchaser agreed to purchase
hereunder plus such Initial Purchaser’s prorata share (based on the principal
amount of Securities that such Initial Purchaser agreed to purchase hereunder) of the Securities of
such defaulting Initial Purchaser or Initial Purchasers for which such arrangements have not been
made.
(c) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the
Company as provided in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities,
or if the Company shall not exercise the right described in paragraph (b) above, then this
Agreement shall terminate without liability on the part of the non-defaulting Initial Purchasers.
Any termination of this Agreement pursuant to this Section 9 shall be without liability on the part
of the Company, except that the Company will continue to be liable for the payment of expenses as
set forth in Section 4 hereof and except that the provisions of Section 7 hereof shall not
terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it
may have to the Company or any non-defaulting Initial Purchaser for damages caused by its default.
Section 10. Representations and Indemnities to Survive Delivery. The respective indemnities, rights of contribution, agreements, representations, warranties
and other statements of the Company, its officers, and each of the Initial Purchasers set forth in
or made pursuant to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or the Company or any of their
respective partners, officers, directors or controlling persons, as the case may be, and will
survive delivery of and payment for the Securities sold hereunder and any termination of this
Agreement.
Section 11. Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or
telecopied and confirmed to the parties hereto as follows:
25
If to the Initial Purchasers:
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center New York, New York10080
Facsimile: 212-499-2227
Attention: Liability Management
with a copy to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue New York, New York10017
Facsimile: 212-455-2502
Attention: Peter J. Gordon, Esq.
Shearman & Sterling LLP
Commerce Court West
199 Bay Street
P.O. Box 247
Toronto, Ontario M5L 1E8
Facsimile: 416-360-2958
Attention: Christopher Cummings
Any party hereto may change the address for receipt of communications by giving written notice to
the others.
Section 12. Successors; Third Party Beneficiary. This Agreement will inure to the benefit of and be binding upon the parties hereto,
including any substitute Initial Purchasers pursuant to Section 9 hereof, and their respective
successors, and to the benefit of the employees, officers and directors and controlling persons
referred to in Section 7, and to any third party beneficiary designated below and any successor of
such third party beneficiary, and no other person will have any right or obligation hereunder. The
term “successors” shall not include any purchaser of the Securities as such from any of the Initial
Purchasers merely by reason of such purchase.
26
Section 13. Partial Unenforceability. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section, paragraph or provision
hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to
be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such
minor changes) as are necessary to make it valid and enforceable.
Section 14. No Advisory or Fiduciary Relationship. The Company acknowledges and agrees that (a) the purchase and sale of the Securities
pursuant to this Agreement, including the determination of the offering price of the Securities and
any related discounts and commissions, is an arm’s-length commercial transaction between the
Company, on the one hand, and the several Initial Purchasers, on the other hand, (b) in connection
with the offering contemplated hereby and the process leading to such transaction each Initial
Purchaser is and has been acting solely as a principal and is not the agent or fiduciary of the
Company, or its stockholders, creditors, employees or any other party, (c) no Initial Purchaser has
assumed or will assume an advisory or fiduciary responsibility in favor of the Company with respect
to the offering contemplated hereby or the process leading thereto (irrespective of whether such
Initial Purchaser has advised or is currently advising the Company on other matters) and no Initial
Purchaser has any obligation to the Company with respect to the offering contemplated hereby except
the obligations expressly set forth in this Agreement, (d) the Initial Purchasers and their
respective affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of each of the Company, and (e) the
Initial Purchasers have not provided any legal, accounting, regulatory or tax advice with respect
to the offering contemplated hereby and the Company has consulted its own legal, accounting,
regulatory and tax advisors to the extent it deemed appropriate.
Section 15. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
Section 16. General Provisions. This Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the Section headings herein are for the convenience of the
parties only and shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 7, and is fully informed regarding
said provisions. Each of the parties hereto
27
further acknowledges that the provisions of Section 7
hereto fairly allocate the risks in light of the ability of the parties to investigate the Company,
its affairs and its business in order to assure that adequate disclosure has been made in the
Disclosure Package and Offering Memorandum (and any amendments and supplements thereto).
Section 17. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term
“affiliate” has the meaning set forth in Rule 405 under the Securities Act; (b) the term
“business day” means any day other than a day on which banks are permitted or required to
be closed in New York City or Wilmington, Delaware; (c) the term “Exchange Act” means the
Securities Exchange Act of 1934, as amended; and (d) the term “subsidiary” has the meaning
set forth in Rule 405 under the Securities Act.
Section 18. Authority of the Representative. Any action by the Initial Purchasers hereunder may be taken by the Representative on behalf
of the Initial Purchasers, and any such action taken by the Representative shall be binding upon
the Initial Purchasers.
28
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
Restrictions on Offers and Sales Outside the United States
In connection with offers and sales of Securities outside the United States:
(a) Each Initial Purchaser acknowledges that the Securities have not been registered under the
Securities Act and may not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except pursuant to an exemption from, or in transactions not subject to,
the registration requirements of the Securities Act.
(b) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:
(i) Such Initial Purchaser has offered and sold the Securities, and will offer and
sell the Securities, (A) as part of their distribution at any time and (B) otherwise until
40 days after the later of the commencement of the offering of the Securities and the
Closing Date, only in accordance with Regulation S under the Securities Act
(“Regulation S”) or Rule 144A or any other available exemption from registration
under the Securities Act.
(ii) None of such Initial Purchaser or any of its affiliates or any other person
acting on its or their behalf has engaged or will engage in any directed selling efforts
with respect to the Securities, and all such persons have complied and will comply with the
offering restrictions requirement of Regulation S.
(iii) At or prior to the confirmation of sale of any Securities sold in reliance on
Regulation S, such Initial Purchaser will have sent to each distributor, dealer or other
person receiving a selling concession, fee or other remuneration that purchase Securities
from it during the distribution compliance period a confirmation or notice to substantially
the following effect:
“The Securities covered hereby have not been registered under the U.S. Securities
Act of 1933, as amended (the “Securities Act”), and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise until 40
days after the later of the commencement of the offering of the Securities and the
date of original issuance of the Securities, except in accordance with Regulation
S or Rule 144A or any other available exemption from registration under the
Securities Act. Terms used above have the meanings given to them by Regulation
S.”
(iv) Such Initial Purchaser has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of the
Securities, except with its affiliates or with the prior written consent of the
Company.
Terms used in paragraph (a) and this paragraph (b) and not otherwise defined in this Agreement have
the meanings given to them by Regulation S.
(c) Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:
(i) it has only communicated or caused to be communicated and will only communicate or
cause to be communicated any invitation or inducement to engage in investment activity
(within the meaning of Section 21 of the United Kingdom Financial Services and Markets Act
2000 (the “FSMA”)) received by it in connection with the issue or sale of any
Securities in circumstances in which Section 21(1) of the FSMA does not apply to the
Company; and
(ii) it has complied and will comply with all applicable provisions of the FSMA with
respect to anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom.
(d) Each Initial Purchaser acknowledges that no action has been or will be taken by the
Company that would permit a public offering of the Securities, or possession or distribution of the
Disclosure Package, the Offering Memorandum or any other offering or publicity material relating to
the Securities, in any country or jurisdiction where action for that purpose is required.
SCHEDULE I
Aggregate Principal
Amount of Securities
Initial Purchasers
to be Purchased
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Opinion of Shearman & Sterling LLP, counsel for the Company, to be delivered pursuant to
Section 5(c) of the Purchase Agreement.
1. The Company is a corporation duly incorporated, validly existing and in good standing
under the law of the State of Delaware.
2. The Company (a) has the corporate power to execute, deliver and perform each Opinion
Document to which it is a party and (b) has taken all corporate action necessary to authorize
the execution, delivery and performance of each Opinion Document to which it is a party.
3. The Indenture has been duly executed and delivered and is the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with its terms.
4. The Notes have been duly executed by the Company and, when authenticated by the
Trustee in accordance with the Indenture and delivered and paid for as provided in the
Purchase Agreement, the Notes will be the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to the benefits of
the Indenture.
5. The Registration Rights Agreement has been duly executed and delivered and is the
legal, valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
6. The Purchase Agreement has been duly executed and delivered by the Company.
7. The execution and delivery by the Company of each Opinion Document to which it is a
party do not, and the performance by the Company of its obligations thereunder will not, (a)
result in a violation of the Company’s certificate of incorporation or by-laws, (b) result in
a violation of Generally Applicable Law.
8. No authorization, approval or other action by, and no notice to or filing with, any
United States federal or New York governmental authority or regulatory body is required for
the due execution, delivery or performance by the Company of any Opinion Document to which it
is a party, except as may be required under the Securities Act of 1933, as amended (the
“Securities Act”), and the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), in connection with the registration statement described in the Offering
Memorandum and contemplated by the Registration Rights Agreement and as may be required under
the securities or blue sky laws of any jurisdiction in the United States in connection with
the offer and sale of the Notes.
9. The statements in the Disclosure Package and the Final Offering Memorandum under the
caption “Description of the notes” and “Exchange offer and registration rights agreement”, in
each case, insofar as such statements constitute summaries of documents referred to therein,
fairly summarize in all material respects the documents referred to therein. The statements
in the Disclosure Package and the Final Offering Memorandum under the caption “Certain U.S.
federal income tax considerations”, insofar as such statements constitute summaries of legal
matters referred to therein, fairly summarize in all material respects the legal matters
referred to therein.
10. The Company is not required to register as an investment company under the Investment
Company Act of 1940, as amended (the “Investment Company Act”).
11. Based upon the representations, warranties and agreements of the Company and you in
the Purchase Agreement and assuming compliance with the offering and transfer procedures and
restrictions described in the Disclosure Package and the Final Offering Memorandum, it is not
necessary in connection with the offer and sale of the Notes to you under the Purchase
Agreement or in connection with the initial resale of such Notes by you in the manner
contemplated by the Purchase Agreement to register the Notes under the Securities Act or to
qualify the Indenture under the Trust Indenture Act, it being understood that no opinion is
expressed as to any subsequent resale of any Notes.
Such counsel shall also state that they have reviewed and participated in discussions
concerning the preparation of the Disclosure Package and the Offering Memorandum (in each case
other than the documents incorporated by reference therein) with certain officers or employees of
the Company, and with the Company’s auditors, and with your representatives and counsel. The
limitations inherent in the independent verification of factual matters and in the role of outside
counsel are such, however, that such counsel cannot and do not assume any responsibility for the
accuracy, completeness or fairness of any of the statements made in the Disclosure Package or the
Offering Memorandum, except as expressly provided above, and that subject to such limitations, on
the basis of the information such counsel gained in the course of performing the services referred
to above, no facts came to such counsel’s attention which gave such counsel reason to believe that
(a) the Disclosure Package (other than the financial statements, related schedules and other
financial data included therein or omitted therefrom, as to which such counsel have not been
requested to comment), at the Applicable Time, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (b) the Offering Memorandum (other
than the financial statements, related schedules and other financial data included therein or
omitted therefrom, as to which such counsel have not been requested to comment), as of its date or
the Closing Date, contained or contains 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.
In rendering such opinion, such counsel may rely as to matters of fact on certificates of
responsible officers of the Company and public officials that are furnished to the Initial
Purchasers.
The opinion of Shearman & Sterling LLP described above shall be rendered to the Initial
Purchasers at the request of the Company and shall so state therein.
EXHIBIT A-2
[Form of Opinion of Internal Counsel of the Company]
Opinion of James Kraus, Esq., internal counsel of the Company, licensed to practice law in the
State of California and licensed to practice law as an in-house counsel in the State of New Jersey,
to be delivered pursuant to Section 5(d) of the Purchase Agreement.
1. The Company is duly qualified as a foreign corporation to transact business and is in good
standing in the State of Delaware and 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 for such jurisdictions where the failure to so qualify or to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect.
2. The Company has corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Disclosure Package and the Offering Memorandum and to
enter into and perform its obligations under this Agreement and the other Transaction Documents.
3. Each Material Subsidiary has been duly incorporated 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 Disclosure Package and the Offering Memorandum and, to the best knowledge of such
counsel, 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 for such jurisdictions where the failure to
so qualify or to be in good standing would not, individually or in the aggregate, have a Material
Adverse Effect.
4. All of the issued and outstanding capital stock of each Material 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.
5. To the best knowledge of such counsel, except as described in the Disclosure Package and
the Offering Memorandum, there are no legal or governmental actions, suits or proceedings pending
or threatened (i) against or affecting the Company or any of its subsidiaries, (ii) which has as
the subject thereof any officer or director of, or property owned by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters, where in any such case
(A) such action, suit or proceeding could reasonably be expected to be determined adversely to the
Company or such subsidiary and (B) any such action, suit or proceeding, if so determined adversely,
would reasonably be expected to have a Material Adverse Effect or would reasonably be
expected to adversely affect the consummation of the transactions contemplated by the Purchase
Agreement.
6. Each of United States Fire Insurance Company, The North River Insurance Company, Crum and
Forster Insurance Company, Crum & Forster Indemnity Company, Crum & Forster Specialty Insurance
Company, Seneca Insurance Company, Inc. and Seneca Specialty Insurance Company (each an
“Insurance Subsidiary” and collectively, the “Insurance Subsidiaries”) is duly
licensed to conduct an insurance under the insurance statutes of each jurisdiction in which the
conduct of its business requires such licensing, except for such jurisdictions in which the failure
of the Insurance Subsidiaries to be so licensed would not, individually or in the aggregate, have a
Material Adverse Effect. Each of the Company and its subsidiaries that is so required has filed
all reports, information statements and other documents with the insurance regulatory authorities
of its jurisdiction of incorporation and domicile as are required to be filed pursuant to the
insurance statutes of such jurisdictions, including the statutes relating to companies which
control insurance companies, and the rules, regulations and interpretations of the insurance
regulatory authorities thereunder (the “Insurance Laws”), and has duly paid all taxes
(including franchise taxes and similar fees) it is required to have paid under the Insurance Laws,
except where the failure to file such statements or reports or pay such taxes would not,
individually or in the aggregate, have a Material Adverse Effect. Each of the Company and its
subsidiaries maintains its books and records in accordance with the Insurance Laws, except where
the failure to so maintain its books and records would not reasonably be expected to have a
Material Adverse Effect. Each of the Insurance Subsidiaries has all other necessary
authorizations, approvals, orders, consents, certificates, permits, registrations and
qualifications of and from all insurance regulatory authorities necessary to conduct their
respective businesses as described in the Disclosure Package or the Offering Memorandum, except
where the failure to have such authorizations, approvals, orders, consents, certificates, permits,
registrations or qualifications would not, individually or in the aggregate, have a Material
Adverse Effect. The Company and each of its Insurance Subsidiaries has not received any
notification from any insurance regulatory authority to the effect that any additional
authorization, approval, order, consent, certificate, permit, registration or qualification is
needed to be obtained by the Company or any of its Insurance Subsidiaries in any case where it
could be reasonably expected that (x) the Company or any of its Insurance Subsidiaries would be
required either to obtain such additional authorization, approval, order, consent, certificate,
permit, registration or qualification or to cease or otherwise limit the writing of certain
business and (y) the failure to obtain such additional authorization, approval, order, consent,
certificate, permit, registration or qualification or the limiting of the writing of such business
would have a Material Adverse Effect; and no insurance regulatory authority having jurisdiction
over the Company or any of its Insurance Subsidiaries has issued any order or decree impairing,
restricting or prohibiting (i) the payment of dividends by any of the Insurance Subsidiaries to its
parent, other than those restrictions applicable to insurance companies generally, or (ii) the
continuation of the business of the Company or any of the Insurance Subsidiaries in all material
respects as presently conducted. The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or
regulatory authorities that are necessary for the ownership or lease of their respective properties
or the conduct of their respective businesses as described in the Disclosure Package and the
Offering Memorandum, except where the failure to possess or make the same would not, individually
or in the aggregate, have a Material Adverse Effect; and except as described in the Disclosure
Package and the Offering Memorandum, neither the Company nor any of its subsidiaries has received
notice of any revocation or modification of any such license, certificate, permit or authorization
or has any reason to believe that any such license, certificate, permit or authorization will not
be renewed in the ordinary course. Each of the Company and its subsidiaries is in compliance with
the requirements of the Insurance Laws of its jurisdiction of incorporation and the Insurance Laws
of other jurisdictions which are applicable to the Company or such subsidiary, except where the
failure to so comply would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the Disclosure Package or the Offering Memorandum,
the Company and each of the Insurance Subsidiaries has received approvals of acquisition of control
and/or affiliate transactions in each jurisdiction where such approvals are required.
7. The descriptions in the Disclosure Package and the Offering Memorandum of insurance
statutes and regulations are accurate in all material respects and fairly summarize in all material
respects the information required to be shown and such counsel does not know of any insurance
statutes or regulations required to be described in the Disclosure Package and the Offering
Memorandum that are not described as required.
8. To the best knowledge of such counsel, neither the Company nor any subsidiary is in
violation of its certificate of incorporation or by-laws or any law, administrative regulation or
administrative or court decree applicable to the Company or any subsidiary or is in Default in the
performance or observance of any obligation, agreement, covenant or condition contained in any
material Existing Instrument, except in each such case for such violations or Defaults as would
not, individually or in the aggregate, have a Material Adverse Effect.
Such counsel shall also state that he has reviewed and participated in discussions concerning
the preparation of the Disclosure Package and the Offering Memorandum certain officers or employees
of the Company and the Company’s auditors, and with your representatives and counsel. The
limitations inherent in the independent verification of factual matters and in the role of general
counsel are such, however, that such counsel cannot and does not assume any responsibility for the
accuracy, completeness or fairness of any of the statements made in the Disclosure Package or the
Offering Memorandum, except as expressly provided above, and that subject to such limitations, on
the basis of the information such counsel gained in the course of performing the services referred
to above, no facts came to such counsel’s attention which gave such counsel reason to believe that
(a) the Disclosure Package (other than the financial statements, related schedules and other
financial data included therein or omitted therefrom, as to which such counsel has not been
requested to comment), at the Applicable Time, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements therein, in the light of
the
circumstances under which they were made, not misleading or (b) the Offering Memorandum (other
than the financial statements, related schedules and other financial data included therein or
omitted therefrom, as to which such counsel has not been requested to comment), as of its date or
the Closing Date, contained or contains 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.
In rendering such opinion, such counsel may rely as to matters of fact on certificates of
responsible officers of the Company and public officials that are furnished to the Initial
Purchasers.
The opinion described above shall be rendered to the Initial Purchasers at the request of the
Company and shall so state therein.
Pricing Supplement dated April 23, 2007 to the Preliminary Offering Memorandum dated April 23, 2007 (the “Preliminary Offering Memorandum”) of the Issuer
This Pricing Supplement is qualified in its entirety by reference to the Preliminary Offering
Memorandum.
The information in this Pricing Supplement supplements the Preliminary Offering Memorandum and
supersedes the information in the Preliminary Offering Memorandum to the extent inconsistent with
the information in the Preliminary Offering Memorandum.
Capitalized terms used but not defined in this Pricing Supplement have the meanings assigned to
them in the Preliminary Offering Memorandum.
The notes have not been registered under the Securities Act of 1933 and are being offered only to
(1) “qualified institutional buyers” as defined in Rule 144A under the Securities Act and (2)
outside the United States to non-U.S. persons in compliance with Regulation S under the Securities
Act.
Principal Amount:
$330,000,000 of 73/4% Senior Notes due 2017
(the “Notes”).
The Notes will be subject to redemption
at the option of the Issuer, in whole or
in part, at any time or from time to time
on or after May 1, 2012 upon not less
than 30 nor more than 60 days’ prior
notice, at the redemption prices set
forth below (expressed as a percentage of
principal amount), plus accrued and
unpaid interest thereon (if any) to the
redemption date (subject to the right of
holders of record on the relevant record
date to receive interest due on the
relevant interest payment date), if
redeemed during the twelve months
beginning May 1, of the years indicated
below:
Year
Redemption Price
2012
103.875%
2013
102.583%
2014
101.292%
2015 and thereafter
100.000%
Initial Purchasers:
Each Initial Purchaser named below has
severally agreed to purchase, and the
Issuer has agreed to sell to that Initial
Purchaser, the principal amount of
Securities set forth opposite that
Initial Purchaser’s name.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
144A and Regulation S with registration rights as set
forth in the Preliminary Offering Memorandum
Use of Proceeds:
The Issuer will use the net proceeds from the offering,
together with available cash on hand, to purchase its
103/2% Senior Notes due 2013 pursuant to a tender offer.
Dates Referenced Herein and Documents Incorporated by Reference
