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Exhibit 1.1
EXECUTIVE RISK INC.
___% Senior Notes Due _________ ___, 20__
UNDERWRITING AGREEMENT
December __, 1997
CHASE SECURITIES INC.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
As Representatives of the several
Underwriters named in Schedule 1
c/o Chase Securities, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Executive Risk Inc., a Delaware corporation (the "Company"), proposes to
issue and sell $75,000,000 principal amount of its ___% Senior Notes Due
_________ ___, 20__ (the "Securities"). The Securities are to be issued pursuant
to an Indenture dated as of December __, 1997 (the "Indenture") to be entered
into between the Company and The Chase Manhattan Bank, as trustee (the
"Trustee"), the form of which has been filed as an exhibit to the Registration
Statement (as defined below). This is to confirm the agreement concerning the
purchase of the Securities from the Company by the several Underwriters named in
Schedule 1 hereto (the "Underwriters") for which Chase Securities Inc. and
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation are acting as
representatives (the "Representatives").
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
The Company represents and warrants to and agrees with the several
Underwriters that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions
of the Securities Act of 1933, as amended, and the rules and regulations
of the Commission thereunder (collectively, the "Act"), a registration
statement on Form S-3 (Registration No. 333-40657), including a
prospectus, relating to the Securities. The Company has filed one or more
amendments thereto, including the related preliminary prospectus, each of
which has previously been furnished to you. The Company will next file
with the Commission either (i) prior to effectiveness of such registration
statement, a further amendment to such registration
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statement (including the form of final prospectus) or (ii) after
effectiveness of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b)(1) or (4). The registration
statement, as amended at the time it became effective, including any
amendment to the registration statement filed pursuant to Rule 462(b)
under the Act increasing the size of the offering registered under the Act
and the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the Act
("Rule 430A Information"), is hereinafter referred to as the "Registration
Statement"; and the prospectus in the form first used to confirm sales of
Securities is hereinafter referred to as the "Prospectus". The terms
"supplement" and "amendment" or "amend" as used in this Agreement with
respect to the Registration Statement, the Prospectus or any Preliminary
Prospectus (as defined below) shall include all documents subsequently
filed by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Exchange Act") that are deemed
to be incorporated by reference in the Prospectus or the Preliminary
Prospectus. For purposes of this Agreement, "Effective Time" means the
date and time as of which the Registration Statement, or the most recent
post-effective amendment thereto, if any, was or is declared effective by
the Commission. "Preliminary Prospectus" means each prospectus included in
the Registration Statement, or amendments thereof, before it became
effective under the Act, any prospectus filed with the Commission by the
Company pursuant to Rule 424(a) and the prospectus included in the
Registration Statement at the Effective Time that omits Rule 430A
Information. Reference made herein to any Preliminary Prospectus, to the
Prospectus or to the Registration Statement shall be deemed to refer to
and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of such
Preliminary Prospectus, the Prospectus or the Registration Statement, as
the case may be.
(b) The Registration Statement has become effective (other than any
Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement); any Rule 462(b) Registration Statement
filed after the effectiveness of this Agreement will become effective no
later than 10:00 P.M., New York City time, on the date of this Agreement;
and no stop order suspending the effectiveness of the Registration
Statement is in effect, and no proceedings for such purpose are pending
before or threatened by the Commission.
(c) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, and on the
Closing Date (as defined below), will not contain any 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; (ii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, and on the Closing Date (as defined below)
will comply in all material respects with the Act and the Trust Indenture
Act of 1939, as amended, and the rules thereunder (collectively, the
"Trust Indenture Act"); (iii) if the Company is required to file a Rule
462(b) Registration Statement after the effectiveness of this Agreement,
such Rule 462(b) Registration Statement and any amendments thereto, when
they become effective (A) will not contain any untrue statement of a
material fact or omit to state a material fact required to be
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stated therein or necessary to make the statements therein not misleading
and (B) will comply in all material respects with the Act; and (iv) the
Prospectus does not contain and, as amended or supplemented, if
applicable, and on the Closing Date will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
set forth in this paragraph (c) do not apply to (x) that part of the
Registration Statement which shall constitute the Statement of Eligibility
and Qualification (Form T-1) of the Trustee under the Trust Indenture Act
or (y) statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to
the Company in writing by such Underwriter through the Representatives
expressly for use therein (the "Underwriters' Information"). The
Underwriters acknowledge that the Underwriters' Information includes the
fourth paragraph under the heading "Underwriting" in the Prospectus and
Preliminary Prospectus and in the Registration Statement.
(d) The documents incorporated by reference in the Registration
Statement or the Prospectus pursuant to Item 12 of Form S-3 under the Act,
at the time they were filed or last amended or hereafter are filed or
amended, as the case may be, with the Commission, complied and will comply
in all material respects with the requirements of the Exchange Act and,
when read together and with the other information in any Preliminary
Prospectus or in the Prospectus, at the time the Registration Statement
became effective and on the Closing Date, did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were or are made, not
misleading; and any documents deemed to be incorporated by reference in
the Registration Statement, any Preliminary Prospectus or the Prospectus,
if and when they were or are filed with the Commission, complied with or
will comply in all material respects with the requirements of the Exchange
Act and did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that the representations and warranties in this paragraph shall
not apply to statements in or omissions from the Registration Statement,
any Preliminary Prospectus or the Prospectus (or any supplement or
amendment to them) made based upon and conforming with the Underwriters'
Information furnished to the Company expressly for use therein.
(e) Each Preliminary Prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Act, complied when so filed in all
material respects with the Act, and did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph (e) do not
apply to statements or omissions in any Preliminary Prospectus based upon
the Underwriters' Information furnished to the Company expressly for use
therein. The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus.
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(f) Each corporation, partnership or other entity in which the
Company owns beneficially at least 50% of the outstanding ownership
interests is listed on Schedule 2 hereto. With the exception of UAP
Executive Partners, each of such entities is referred to herein as a
"Subsidiary" and all of such entities, collectively, are referred to as
the "Subsidiaries." The Company owns 100% of the outstanding capital stock
of Executive Re Inc., a Delaware corporation ("ERI"), 100% of the common
securities of Executive Risk Capital Trust, a Delaware statutory business
trust (the "Trust"), and 70% of the general partnership interests in
Executive Risk Management Associates, a Connecticut general partnership
("▇▇▇▇"), free and clear of all liens, claims, charges, options,
restrictions or other encumbrances of any type or nature. ERI owns 100% of
the outstanding capital stock of Executive Risk Indemnity Inc., a Delaware
corporation ("ERII"), 100% of the outstanding capital stock of ▇▇▇▇▇▇▇
Services Corporation, a Delaware corporation ("▇▇▇▇▇▇▇"), 100% of the
outstanding capital stock of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., a California corporation
("▇▇▇▇▇▇▇▇ ▇▇▇▇▇"), 100% of the issued share capital of Executive Risk
Limited, a company incorporated under the laws of the United Kingdom, 100%
of the outstanding capital stock of Executive Risk N.V., a company
incorporated under the laws of the Netherlands, 100% of the outstanding
capital stock of Executive Risk (Bermuda) Ltd., a company incorporated
under the laws of Bermuda ("Executive Risk Bermuda"), 50% of the
outstanding capital stock of UAP Executive Partners, a French corporation
("UPEX"), and 30% of the general partnership interests in ▇▇▇▇, in each
case free and clear of all liens, claims, charges, options, restrictions
or other encumbrances of any type or nature. ERII owns 100% of the
outstanding capital stock of Executive Risk Specialty Insurance Company, a
Connecticut corporation ("ERSIC"), and 100% of the outstanding capital
stock of Quadrant Indemnity Company, a Connecticut corporation
("Quadrant"), free and clear of all liens, claims, charges, options,
restrictions or other encumbrances of any type or nature. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
owns 100% of the outstanding capital stock of IDFN of Arizona, Inc.
Insurance Brokers, free and clear of all liens, claims, charges, options,
restrictions or other encumbrances of any type or nature. Except as set
forth above, neither the Company nor any Subsidiary (i) owns equity
securities of any other corporation representing in excess of 5% of the
outstanding capital stock of such corporation, (ii) owns any partnership
interest representing in excess of 6% of the voting equity interests in
any partnership or (iii) owns any equity interest representing in excess
of 5% of the voting equity interests in any other legal entity.
(g) The Company and each Subsidiary (other than ▇▇▇▇ and the Trust)
(i) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it was organized and has all
requisite power and authority to conduct its business as it is currently
being conducted and to own, lease and operate its properties and (ii) is
duly qualified as a foreign corporation authorized to transact business
in, and is in good standing in, each jurisdiction in which the nature of
its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have
a material adverse effect on the business, prospects, operations,
properties, net worth, results of operations or condition (financial or
otherwise) of the Company and the Subsidiaries taken as a whole. ▇▇▇▇ is a
duly organized and validly existing general partnership and has all
requisite power and authority to conduct its business as it is currently
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being conducted and to own, lease and operate its properties. The only
partners in ▇▇▇▇ are the Company and ERI.
(h) The Company and each of the Subsidiaries (i) holds such
licenses, consents, certificates, permits, exemptions, franchises and
authorizations from insurance departments and other governmental or
regulatory authorities ("permits") (including, without limitation,
insurance licenses from the insurance regulatory agencies of the various
states or other jurisdictions where it conducts business (the "Insurance
Licenses")) and has made all filings with and notices to, all governmental
or regulatory authorities and self-regulatory organizations and all courts
and other tribunals, including, without limitation, under any applicable
Environmental Laws (as defined below), which are necessary to own, lease,
license and operate its respective properties and to conduct its
businesses as described in the Prospectus (or in the documents
incorporated therein by reference), except to the extent the failure to
hold any such permits or Insurance Licenses or to make any such filing or
notice (either singularly or in the aggregate) would not have a material
adverse effect on the business, prospects, operations, properties, net
worth, results of operations or condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole and (ii) to the Company's
knowledge, have fulfilled and performed all material obligations necessary
to maintain such permits and the Insurance Licenses. There has been, and
there is, no pending or, to the knowledge of the Company, threatened
action, suit, proceeding, investigation or event that may reasonably be
expected to lead to the revocation, termination, suspension or any other
material impairment of the rights of the holder of any such permit or
license (including, without limitation, the Insurance Licenses); and
except as disclosed in the Prospectus (or in the documents incorporated
therein by reference), the Company is not aware of any order or decree of
an insurance regulatory agency or body impairing, restricting or
prohibiting the payment of dividends by any of the Subsidiaries of the
Company to its parent.
(i) All of the outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary of the Company have been, as
applicable, duly authorized and validly issued and, in the case of shares
of capital stock, are fully paid and non-assessable, and all such shares
and other ownership interests owned of record by the Company or by a
Subsidiary of the Company are owned free and clear of any security
interest, lien, claim, encumbrance or adverse interest of any nature. None
of such shares of capital stock or other ownership interests are subject
to any preemptive rights.
(j) The partnership agreement of ▇▇▇▇ has been duly executed and
delivered by each of the parties thereto and is a valid and binding
agreement enforceable in accordance with its terms except as (i) rights to
indemnity and contribution thereunder may be limited by applicable law or
principles of public policy, (ii) the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (iii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding therefor may be
brought. Other than as described in the Prospectus, there are no
outstanding warrants, rights or options to acquire,
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or instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest in the Company or any of the Subsidiaries.
(k) All the outstanding shares of capital stock of the Company have
been duly authorized, validly issued, and are fully paid and
non-assessable.
(l) The Securities and the Indenture conform in all material
respects to the description thereof contained in the Prospectus.
(m) Except as described in the Prospectus or any Preliminary
Prospectus (or in the documents incorporated therein by reference),
neither the Company nor any of the Subsidiaries is (i) in violation of its
respective charter, by-laws or other organizational documents; and except
as described in the Prospectus or any Preliminary Prospectus (or in the
documents incorporated therein by reference) and except to the extent that
any of the following would not have a material adverse effect on the
business, prospects, operations, properties, net worth, results of
operations or financial condition of the Company and the Subsidiaries,
taken as a whole, neither the Company nor any of the Subsidiaries is (ii)
in violation of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the Subsidiaries or any of
their respective properties, (iii) in violation of any judgment,
injunction, order or decree of any court, governmental agency or body
(including, without limitation, any insurance regulatory agency or body)
or arbitrator having jurisdiction over the Company or any of the
Subsidiaries, or (iv) in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture, lease or
instrument to which the Company or any of the Subsidiaries is a party or
by which it or any of the Subsidiaries or their respective property is
bound.
(n) No consent, approval, waiver, license, authorization, order,
filing, registration, qualification or other action of or with any court,
regulatory body, arbitrator, administrative agency or other governmental
agency or body (including, without limitation, any insurance regulatory
agency or body) is required for the issuance and sale of the Securities
being sold by the Company or the execution, delivery and performance of
this Agreement or the Indenture, compliance by the Company with all the
provisions hereof or thereof, or the consummation of the other
transactions contemplated hereby or thereby or by the Registration
Statement or for the use of the proceeds to be received by the Company
from such sale in the manner described under the caption "Use of Proceeds"
contained in the Prospectus and in any Preliminary Prospectus, except such
as have been obtained and made under the Act, the Exchange Act and the
Trust Indenture Act, all of which have been or will be obtained in
accordance with this Agreement and as may be required under the insurance
securities laws or securities or Blue Sky laws of various jurisdictions,
and except to the extent that the failure to obtain such would not have a
material adverse effect on the business, prospects, operations,
properties, net worth, results of operations or financial condition of the
Company and the Subsidiaries, taken as a whole.
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(o) The issuance and sale of the Securities to be sold by the
Company under this Agreement and the application of the net proceeds
therefrom as described under the caption "Use of Proceeds" contained in
the Prospectus and in any Preliminary Prospectus and the execution,
delivery and performance of this Agreement and the Indenture, compliance
by the Company with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby, (i) will
not result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which
any of them is a party or by which any of them may be bound or to which
any of the property or assets of any of them is subject, and (ii) will not
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default (with notice or the passage of time
or both) under, (A) any statute, rule, regulation, judgment, order or
decree of any governmental agency or body (including, without limitation,
any insurance regulatory agency or body) or any court or arbitrator, which
is applicable to the Company or any Subsidiary or any of their respective
properties, (B) any bond, debenture, note, other evidence of indebtedness,
agreement, indenture, lease or other instrument to which the Company or
any such Subsidiary is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties of the Company or
any such Subsidiary is subject, or (C) the organizational documents of the
Company or any such Subsidiary except, in the case of clauses (i) and
(ii), to the extent that any such creation or imposition or any such
breach, violation or default would not (x) require the Company to secure
the Securities equally and ratably, in accordance with the Indenture, or
(y) have a material adverse effect on the business, prospects, operations,
properties, net worth, results of operations or financial condition of the
Company and the Subsidiaries, taken as a whole.
(p) The Company is not (a) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
or (b) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended (the "1935 Act").
(q) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in any securities being
registered pursuant to another registration statement filed by the Company
under the Act, except as provided in the Securityholders Agreement dated
as of January 1, 1994 (the "Securityholders Agreement"), as amended, among
the Company, The Aetna Casualty and Surety Company ("Aetna") and the other
persons named as parties therein. Any rights of Aetna or any of such other
persons under the Securityholders Agreement to require the Company to
include any securities with the Securities being registered pursuant to
the Registration Statement have been waived.
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(r) There is no broker, finder or other party that is entitled to
receive from the Company or any of the Subsidiaries any brokerage or
finder's fee or other similar fee or commission as a result of any of the
transactions contemplated by this Agreement.
(s) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company
enforceable in accordance with its terms except as (i) rights to indemnity
and contribution hereunder may be limited by applicable law or principles
of public policy, (ii) the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(iii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(t) The Indenture has been duly qualified under the Trust Indenture
Act and 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, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. At the Effective Time and on
the Closing Date, the Indenture did and will comply in all material
respects with the requirements of the Trust Indenture Act applicable to an
indenture which is qualified thereunder.
(u) 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 entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The issuance of the Securities is not
subject to preemptive rights.
(v) Except as described in the Prospectus or any Preliminary
Prospectus (or in the documents incorporated therein by reference), there
are no outstanding: (i) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the Company,
(ii) warrants, rights or options to subscribe for or purchase from the
Company any such capital stock or any such convertible or exchangeable
securities or obligations, except for stock options granted by the Company
since September 30, 1997 pursuant to plans of the Company in effect prior
to that date, or (iii) obligations for the Company to issue such shares,
any such convertible or exchangeable securities or obligations, or any
such warrants, rights or obligations.
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(w) To the Company's knowledge, neither A.M. Best Company, Inc. nor
Standard & Poor's Corporation has pending, or has overtly threatened, as
applicable: (i) any downgrading in the ratings of the Subsidiaries or (ii)
any public announcement that its ratings of any of the Subsidiaries are
under surveillance or review.
(x) Subsequent to the dates as of which information is given in the
Registration Statement and the Prospectus, except as disclosed therein:
(i) neither the Company nor any of the Subsidiaries has incurred any
liability or obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, that is material to
the Company and the Subsidiaries taken as a whole, (ii) there has not been
any change in the capital stock of the Company or any payment of or
declaration to pay any dividends other than regular quarterly dividends on
the Company's common stock and the exercise of outstanding stock options
or any other distribution with respect to the Company's capital stock,
except for the grant of stock options by the Company since September 30,
1997 pursuant to plans of the Company in effect prior to that date, and
(iii) there has not been any material adverse change in, nor has any event
occurred which, to the knowledge of the Company, could reasonably be
expected to have a material adverse effect on, the financial condition,
business, operations, properties, prospects, net worth or results of
operations or material increase in the loss and loss adjustment expense
reserves or any material decrease in statutory surplus of the Company and
the Subsidiaries, taken as a whole.
(y) Except as otherwise set forth in the Prospectus or any
Preliminary Prospectus (or in the documents incorporated therein by
reference), there are no material pending legal or governmental actions,
suits or proceedings to which the Company or any of the Subsidiaries is a
party or of which any of their respective property is the subject, and, to
the best of the Company's knowledge, no such actions, suits or proceedings
are threatened or contemplated. No statute, regulation, contract or
document of a character required to be described in the Registration
Statement, any Preliminary Prospectus or the Prospectus or to be filed as
an exhibit to the Registration Statement or incorporated by reference
therein is not so described, filed or incorporated by reference therein as
required. The descriptions of the terms of any such contracts, documents,
statutes or regulations contained in the Registration Statement, any
Preliminary Prospectus or the Prospectus (or with the documents
incorporated therein by reference) are correct in all material respects.
(z) Neither the Company nor any of the Subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), or any federal or state law relating to discrimination in the
hiring, promotion or pay of employees, or any applicable federal or state
wages and hours laws, or any provisions of the United States Employee
Retirement Income Security Act of 1974 and the regulations and published
interpretations thereunder ("ERISA"), which in each case might result in
any material adverse change in the business, prospects, operations,
properties, financial condition, net worth or results of operations of the
Company and the Subsidiaries, taken as a whole.
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(aa) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, any related constraints on operating
activities and any potential liabilities to third parties) which would
have a material adverse effect on the business, prospects, operations,
properties, net worth, results of operations or financial condition of the
Company and its Subsidiaries, taken as a whole.
(bb) Except as otherwise set forth in the Prospectus or any
Preliminary Prospectus (or in the documents incorporated therein by
reference) or such as are not material to the business, prospects,
operations, properties, net worth, results of operations or financial
condition of the Company and the Subsidiaries, taken as a whole, the
Company and each of the Subsidiaries has good and marketable title, free
and clear of all liens, claims, security interests, encumbrances and
restrictions except liens for taxes not yet due and payable, to all
property and assets described in the Registration Statement as being owned
by it. All material leases to which the Company or any of the Subsidiaries
is a party are binding on and enforceable against the Company or any such
Subsidiary, as the case may be, except as such may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
or other laws relating to or affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding at law or
in equity) in all material respects and no default on the part of the
Company or any such Subsidiary, as the case may be, or, to the Company's
knowledge, the other party thereto, has occurred or is continuing
thereunder, which might result in any material adverse change in the
business, prospects, operations, properties, financial condition, net
worth or results of operations of the Company and the Subsidiaries taken
as a whole, and the Company and the Subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which any of them is a
party as lessee with such exceptions as do not materially interfere with
the use made by the Company or such Subsidiary.
(cc) Ernst & Young has informed the Company that they are
independent public accountants with respect to the Company, as required by
the Act.
(dd) The consolidated financial statements, together with related
schedules and notes, forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto) or incorporated
therein by reference, present fairly the consolidated financial position,
results of operations, cash flows and changes in financial position of the
Company and the Subsidiaries on the basis stated in the Registration
Statement at the respective dates or for the respective periods to which
they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein and except that quarterly financial statements contained in the
Registration Statement are subject to year-end adjustments; and the other
financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) is, in all material respects, accurately presented and prepared
on a basis consistent with such financial statements and the books and
records of the Company. The statutory
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11
financial statements of ERII and ERSIC required or permitted to be
prepared in accordance with the insurance laws of the States of Delaware
and Connecticut, respectively (the "Insurance Laws") and the rules and
regulations promulgated thereunder, from which certain ratios and other
statistical data contained in the Registration Statement and the
Prospectus have been derived, have for each relevant period been prepared
in conformity in all material respects with the requirements of the
Insurance Laws and such rules and regulations and present fairly the
information purported to be shown.
(ee) The Company has corporate power and authority to execute and
deliver this Agreement, the Indenture and the Securities and to issue,
sell and deliver the Securities to be sold by it to the Underwriters as
provided herein.
(ff) The Company has not taken and will not take, directly or
indirectly, any action designed to, or which might reasonably be expected
to, cause or result in the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the
Securities pursuant to the distribution contemplated by this Agreement,
and other than as permitted by the Act, the Company has not distributed
and will not distribute, prior to the later to occur of (i) the Closing
Date and (ii) completion of the distribution of the Securities, any
prospectus or other offering material in connection with the offering and
sale of the Securities.
(gg) Each of the Company and the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in all material respects in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles or statutory
accounting principles, as the case may be, 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.
(hh) Each of the Company and the Subsidiaries owns or has valid and
adequate rights to use all patents, trademarks, trademark registration,
service marks, service ▇▇▇▇ registrations, trade names, copyrights,
licenses, inventions, trade secrets and rights described in the Prospectus
as being owned by it or necessary for the conduct of its respective
business, free and clear of all liens, claims, security interests
encumbrances and restrictions that may materially interfere with the
conduct of its business, and neither the Company nor any of the
Subsidiaries is aware of any claim to the contrary or any challenge by any
other person to the rights of the Company and any of the Subsidiaries with
respect to the foregoing which would have a material adverse effect on the
business, prospects, operations, properties, net worth, results of
operations or financial condition of the Company and the Subsidiaries
taken as a whole.
(ii) Except as disclosed in the Registration Statement all
reinsurance treaties, reinsurance contracts and reinsurance agreements to
which the Company or any of the
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Subsidiaries is a party (including without limitation, the Quota Share
Reinsurance Agreement dated as of January 1, 1997 (the "1997 Reinsurance
Agreement") between The Aetna Casualty and Surety Company ("Aetna") and
ERII and including for purposes of this paragraph, the Agency and
Insurance Services Agreement dated as of January 1, 1997 (the "1997 Agency
Agreement") between Aetna and ▇▇▇▇) are in full force and effect and
neither the Company nor any of the Subsidiaries is in violation of, or in
default in the performance, observance or fulfillment of, any obligation,
agreement, covenant or condition contained therein, except where the
failure to be in full force and effect and except where any such violation
or default would not have a material adverse effect on the business,
prospects, operations, properties, net worth, results of operations or
financial condition of the Company and the Subsidiaries taken as a whole;
neither the Company nor any of the Subsidiaries has received any notice
from any of the other parties to such treaties, contracts or agreements
which are material to its business that such other party intends not to
perform in any material respect such treaty, contract or agreement, and
the Company and the Subsidiaries have no reason to believe that any of the
other parties to such treaties, contracts or agreements will be unable to
perform such treaty, contract, agreement or arrangement, except where any
such non-performance would not have a material adverse effect on the
business, prospects, operations, properties, net worth, results of
operations or financial condition of the Company and the Subsidiaries
taken as a whole.
(jj) No relationship, direct or indirect, or agreement, arrangement
or understanding (including, without limitation, any voting agreement),
exists between or among the Company or any of the Subsidiaries and any
other party, which is required by the Act to be described or incorporated
by reference in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement which is not described,
filed or incorporated by reference as required.
(kk) Except to the extent that the failure with respect to the
following would not result in a material adverse effect on the business,
prospects, operations, properties, net worth, results of operations, or
financial condition of the Company and the Subsidiaries taken as a whole,
each of the Company and the Subsidiaries has fulfilled its obligations, if
any, under the minimum funding standards of Section 302 of ERISA with
respect to each "plan" (as defined in ERISA and its regulations and
published interpretations) in which employees of the Company or the
Subsidiaries are eligible to participate and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations,
and has not incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA.
(ll) All United States federal income tax returns of, and
assessments to, the Company and the Subsidiaries required by law to be
filed have been filed and have not been audited and all taxes shown by
such returns or otherwise assessed, which are due and payable, have been
paid, except assessments against which appeals have been or will be
promptly taken or which are being contested in good faith and as to which
adequate reserves have been provided. Each of the Company and the
Subsidiaries has filed all other tax returns that are
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required to have been filed by it pursuant to applicable foreign, state,
local or other laws, except insofar as the failure to file such returns
would not have a material adverse effect on the business, prospects,
operations, properties, net worth, results of operations, or financial
condition of the Company and the Subsidiaries taken as a whole, and has
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company or any Subsidiary, except for such taxes, if any,
as are being contested in good faith and as to which adequate reserves
have been provided. The charges, accruals and reserves on the books of the
Company and the Subsidiaries in respect of any income and corporation tax
liability for any years not finally determined are adequate in the
Company's reasonable judgment to meet any assessments or re-assessments
for additional income tax for any years not finally determined, except to
the extent of any inadequacy that would not have a material adverse effect
on the business, prospects, operations, properties, net worth, results of
operations, or financial condition of the Company and the Subsidiaries
taken as a whole.
(mm) To the best knowledge of the Company, no labor problem exists
with its employees or with employees of the Subsidiaries or is imminent
that could reasonably be expected to have a material adverse effect on the
Company and the Subsidiaries taken as a whole.
(nn) No part of the proceeds of the sale of the Securities will be
used for any purpose that violates the provisions of any of Regulation G,
T or X of the Board of Governors of the Federal Reserve System or any
other regulation of such Board of Governors.
(oo) Except as disclosed in the Prospectus or the documents
incorporated by reference therein, the Subsidiaries have made no material
changes in their insurance reserving practices during the last two years.
(pp) Any certificate signed by any officer of the Company or any
Subsidiary and delivered at any closing contemplated by Section 5 hereof
to the Underwriters or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
(qq) Except as disclosed in the Registration Statement and the
Prospectus, the Company does not intend to use any of the proceeds from
the sale of the Securities hereunder to repay any outstanding debt owed to
any affiliate of Chase Securities Inc.
2. PURCHASE BY THE UNDERWRITERS.
On the basis of the representations, warranties and agreements
contained herein, and subject to the terms and conditions set forth herein, the
Company agrees to issue and sell to the Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, the principal
amount of Securities set forth opposite the name of such Underwriter in Schedule
1 hereto at a purchase price equal to _____% of the principal amount thereof
plus accrued interest, if any, from __________ __, 199_ to the Closing Date (as
hereinafter defined).
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The Company shall not be obligated to deliver any of the Securities
except upon payment for all the Securities to be purchased as provided herein.
The Company acknowledges and agrees that each Underwriter may sell
Securities to any of its affiliates and that any such affiliate may sell
Securities purchased by it to an Underwriter.
3. DELIVERY OF AND PAYMENT FOR THE SECURITIES.
Delivery of and payment for the Securities shall be made at the
offices of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., or at such other place as
shall be agreed upon by the Representatives and the Company, at 9:00 A.M., New
York City time, on __________ __, 199 , or at such other date or time, not later
than seven full business days thereafter, as shall be agreed upon by the
Representatives and the Company (such date and time being referred to herein as
the "Closing Date"). On the Closing Date, the Company shall deliver or cause to
be delivered to the Representatives for the account of each Underwriter through
the book-entry facilities of The Depository Trust Company ("DTC") certificates
for the Securities against payment of the purchase price to or upon the order of
the Company by wire or book-entry transfer of same-day funds to such account or
accounts as the Company shall specify prior to the Closing Date. Time shall be
of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. The Securities so to be delivered will be represented by one or more
permanent global certificates registered in the name of DTC or its nominee. The
Company agrees to make such certificate or certificates evidencing the
Securities available for inspection by the Representatives in New York, New
York, at least 24 hours prior to the Closing Date.
4. FURTHER AGREEMENTS OF THE COMPANY.
The Company agrees with each of the Underwriters:
(a) That, if the Effective Time is prior to the execution and
delivery of this Agreement, to file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable and
if consented to by the Representatives, subparagraph (4)) of Rule 424(b)
within the time period prescribed by such rule and will provide evidence
satisfactory to the Representatives of such timely filing;
(b) To advise the Representatives promptly of any proposal to amend
or supplement the Registration Statement or the Prospectus and not to
effect such amendment or supplementation without the consent of the
Representatives; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Securities; to advise the Representatives promptly of the
receipt of any comments from the Commission and of any amendment or
supplementation of the Registration Statement or the Prospectus, or of any
request by the Commission therefor, and of the issuance by the Commission
of any stop order suspending
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the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose of which the Company is aware; to advise the
Representatives promptly of any order preventing or suspending the use of
any prospectus relating to the Securities of which the Company is aware,
of the suspension of the qualification of such Securities for offering or
sale in any jurisdiction and of the initiation or threatening of any
proceeding for any such purpose of which the Company is aware; and to use
its best efforts to prevent the issuance of any stop order or of any such
order preventing or suspending the use of any prospectus relating to the
Securities or suspending any such qualification and, if any such stop
order or order or suspension is issued, to obtain the lifting thereof at
the earliest possible time;
(c) To furnish promptly to each of the Representatives and counsel
for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith;
and to deliver promptly without charge to the Representatives such number
of the following documents as the Representatives may from time to time
reasonably request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in each
case excluding exhibits other than this Agreement and the Indenture); (ii)
each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus; and (iii) any document incorporated by reference
in the Prospectus (excluding exhibits thereto);
(d) If the delivery of a prospectus is required at any time in
connection with the sale of the Securities and if at such time any
condition exists or any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered, not
misleading, or if for any other reason it shall be necessary at such time
to amend or supplement the Prospectus or to file under the Exchange Act
any document incorporated by reference in the Prospectus in order to
comply with the Act or the Exchange Act to notify the Representatives
immediately thereof, and to promptly prepare and file with the Commission
an amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission, effect such compliance, or to file such
document for incorporation by reference into the Prospectus;
(e) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Act or requested by the Commission or
advisable in connection with the distribution of the Securities;
(f) Prior to filing with the Commission any (i) Preliminary
Prospectus, (ii) amendment to the Registration Statement or supplement to
the Prospectus, (iii) any document incorporated by reference in the
Prospectus, or (iv) any Prospectus pursuant to Rule 424 under the Act, to
furnish a copy thereof to the Representatives and counsel for the
Underwriters, and not to file any such document to which the
Representatives shall reasonably and timely object after having been given
reasonable notice of the proposed filing thereof;
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(g) As soon as practicable, to make generally available to the
Company's security holders and to deliver to the Representatives an
earnings statement of the Company and its Subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and
regulations thereunder (including, at the option of the Company, Rule
158);
(h) For so long as any of the Securities are outstanding, to furnish
to the Representatives copies of any annual reports, quarterly reports and
current reports filed by the Company with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and such documents, reports and information as shall be
furnished by the Company to the Trustee, to the holders of the Securities,
or to any national securities exchange on which any class of securities of
the Company is listed, pursuant to the Indenture or the Exchange Act or
any rule or regulation of the Commission thereunder;
(i) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Securities for
offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of the Securities; provided, that in connection therewith the Company and
the Subsidiaries shall not be required to qualify as foreign corporations
in any jurisdictions in which they are not so qualified or to file a
general consent to service of process in any jurisdiction or to take any
action that would subject it to taxation in any jurisdiction in which it
is not now so subject other than as to matters and transactions relating
to the Prospectus, the Registration Statement, any Preliminary Prospectus
or the offering or sale of the Securities;
(j) To apply the net proceeds from the sale of the Securities being
sold by the Company as set forth in the Prospectus under the caption "Use
of Proceeds;"
(k) To do and perform all things required to be done and performed
by it under this Agreement that are within its control prior to or after
the Closing Date, and to use its best efforts to satisfy all conditions
precedent on its part to the delivery of the Securities; and
(l) To not take any action prior to the execution and delivery of
the Indenture which, if taken after such execution and delivery, would
have violated any of the covenants contained in the Indenture.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The respective obligations of the several Underwriters hereunder are
subject to the accuracy, when made and on the Closing Date, of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company made in any certificates delivered
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pursuant hereto, to the performance by the Company of its obligations hereunder,
and to each of the following additional terms and conditions:
(a) If the Effective Time is not prior to the execution and delivery
of this Agreement, the Registration Statement shall have become effective
and the Indenture shall have been qualified under the Trust Indenture Act,
and the Representatives shall have received notice thereof, not later than
(i) 6:00 p.m. New York City time on the date of determination of the
public offering price, if such determination occurred at or prior to 3:00
p.m. New York City time on such date or (ii) 12:00 noon New York City time
on the business day following the day on which the offering price was
determined if such determination occurred after 3:00 p.m. New York City
time on such date. If the Effective Time is prior to the execution and
delivery of this Agreement, the Prospectus shall have been timely filed
with the Commission in accordance with Section 1(a) of this Agreement,
including the Rule 430A Information. Prior to the Closing Date, no stop
order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise
shall have been complied with to the reasonable satisfaction of the
Representatives.
(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Securities,
the Indenture, the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material
respects to counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(c) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP shall have furnished to the Representatives
their written opinion, as counsel to the Company, addressed to the
Underwriters and dated the Closing Date, in form and substance reasonably
satisfactory to the Representatives, to the effect that:
(i) The Company and each of ERI, ERII and ▇▇▇▇▇▇▇
(collectively, the "Delaware Subsidiaries") is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware. Each of the Company and the Delaware Subsidiaries has all
requisite power and authority to conduct its business as it is
currently being conducted and to own, lease and operate its
properties. The Company and each of the Delaware Subsidiaries is
duly qualified as a foreign corporation authorized to transact
business in and is in good standing in each jurisdiction in which
the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business,
prospects, operations, properties, net worth, results of operations
or financial condition of the Company and the Subsidiaries
considered as a whole. The partnership agreement of ▇▇▇▇ has been
duly executed and delivered by the Company and ERI. To the best of
such counsel's knowledge, the only partners of ▇▇▇▇ are the Company
and ERI.
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(ii) All of the outstanding shares of capital stock of, or
other ownership interests in, each Delaware Subsidiary of the
Company and the Trust have been, as applicable, duly authorized and
validly issued and, in the case of shares of capital stock, are
fully paid and non-assessable, and all such shares and other
ownership interests owned of record by the Company or by a Delaware
Subsidiary are owned free and clear of any perfected security
interest and, to the best of such counsel's knowledge, any lien,
claim, encumbrance or adverse interest of any nature.
(iii) Other than as described in the Prospectus (or in the
documents incorporated therein by reference), to the best of such
counsel's knowledge, there are no outstanding warrants, rights or
options to acquire, or instruments convertible into or exchangeable
for, or any obligation of the Company to issue, any shares of
capital stock or other equity interests in the Company or any of the
Subsidiaries, except for stock options granted by the Company since
September 30, 1997 pursuant to plans in effect prior to that date.
(iv) All the outstanding shares of capital stock of the
Company have been duly authorized, validly issued, and are fully
paid and non-assessable.
(v) To the best of such counsel's knowledge, there are no
contracts or agreements between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Act, except as provided in the Securityholders
Agreement.
(vi) No consent, approval, waiver, license, authorization,
order, filing, registration, qualification or other action of or
with any court, regulatory body, arbitrator, administrative agency
or other governmental agency or body (including, without limitation,
any insurance regulatory agency or body) is required for the
issuance and sale of the Securities or the execution, delivery and
performance of this Agreement or the Indenture by the Company,
compliance by the Company with all the provisions hereof or thereof
or the consummation of the other transactions contemplated hereby or
thereby or by the Registration Statement, except such as have been
obtained and made under the Act, the Exchange Act and the Trust
Indenture Act, all of which have been or will be obtained in
accordance with this Agreement, and as may be required under the
insurance securities laws or securities or Blue Sky laws of various
jurisdictions, provided that counsel need express no opinion as to
the use of proceeds received by the Company in the manner described
under the caption "Use of Proceeds" contained in the Prospectus or
in any Preliminary Prospectus.
(vii) The issuance and sale of the Securities to be sold by
the Company under this Agreement and the execution, delivery and
performance of this Agreement
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and the Indenture by the Company, compliance by the Company with all
the provisions hereof and thereof and the consummation by the
Company of the transactions contemplated hereby and thereby, (A)
will not, to the best of such counsel's knowledge, result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries
pursuant to the terms of any agreement or instrument to which any of
the Company and its Subsidiaries is a party or by which any of them
may be bound or to which any of the property or assets of any of
them is subject except, in all instances to the extent that any such
creation or imposition would not have a material adverse effect on
the business, prospects, operations, properties, net worth, results
of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, and (B) will not conflict with or
result in a breach or violation of any of the terms and provisions
of, or constitute a default (with notice or the passage of time)
under, (i) to the best of such counsel's knowledge, any statute,
rule, regulation, judgment, order or decree, of any governmental
agency or body (including, without limitation, any insurance
regulatory agency or body) or any court or arbitrator, which is
applicable to the Company or any Subsidiary or any of their
respective properties, (ii) to the best of such counsel's knowledge,
any bond, debenture, note, other evidence of indebtedness,
agreement, indenture, lease or other instrument to which the Company
or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or to which any of the properties of the Company
or any Subsidiary is subject or (iii) the organizational documents
of the Company or any Delaware Subsidiary except, in the case of
clauses (B)(i) and (ii), to the extent that any such breach,
violation or default would not (x) require the Company to secure the
Securities equally and ratably, in accordance with the Indenture, or
(y) have a material adverse effect on the business, prospects,
operations, properties, net worth, results of operations or
financial condition of the Company and the Subsidiaries, taken as a
whole.
(viii) Such counsel has been informed by the staff of the
Commission that the Registration Statement and all post-effective
amendments, if any, have become effective under the Act, the
Prospectus either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein or was included in the Registration Statement (as
the case may be), and to such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement or any
part thereof has been issued and to such counsel's knowledge no
proceedings for that purpose have been instituted or are pending or
are contemplated under the Act.
(ix) Each document filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus, at the time it was
filed or last amended, complied as to form in all material respects
to the requirements of the Exchange Act and the regulations adopted
in connection therewith, provided that such counsel need express no
view on the financial statements and the notes thereto and the
schedules and other financial, statistical and accounting data
included therein (or in the documents incorporated therein by
reference).
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(x) To the best of such counsel's knowledge, except as
otherwise set forth in the Prospectus (or in the documents
incorporated therein by reference), there are no pending legal or
governmental actions, suits or proceedings to which the Company or
any of the Subsidiaries is a party or of which any of their
respective property is the subject and which are required to be
described or incorporated by reference in the Registration Statement
or the Prospectus, and, to the best of such counsel's knowledge, no
such actions, suits or proceedings are threatened or contemplated,
and no contract, document, statute or regulation of a character
required to be described or incorporated by reference in the
Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement is not so described or filed
or incorporated by reference as required, and the descriptions of
the terms of any such contracts, documents, statutes or regulations
contained or incorporated by reference in the Registration Statement
or the Prospectus are correct in all material respects.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company, enforceable in accordance with its terms except as (i)
rights to indemnity and contribution hereunder may be limited by
applicable law or principles of public policy, (ii) the
enforceability hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (iii) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(xii) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered
by the Company and, when duly executed and delivered in accordance
with its terms by each of the other parties thereto, will constitute
a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except to the
extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. At
the Effective Time and on the Closing Date, the Indenture did and
does comply in all material respects with the requirements of the
Trust Indenture Act applicable to an indenture which is qualified
thereunder.
(xiii) The Securities have been duly authorized by the
Company, are in the form contemplated by the Indenture 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 entitled to the benefits of the
Indenture and enforceable against the Company in accordance with
their terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
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moratorium or other similar laws affecting creditors' rights
generally and that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought. To such counsel's knowledge, the
issuance of the Securities is not subject to preemptive rights.
(xiv) The Indenture and the Securities conform in all material
respects to the description thereof contained in the Prospectus.
(xv) The statements under the captions "Risk Factors,"
"Capitalization," "Description of Senior Notes" and "Underwriting"
in the Prospectus and Item 15 of Part II of the Registration
Statement, insofar as such statements constitute a description of
legal matters, documents or proceedings or refer to statements of
regulation, law or legal conclusions, are accurate in all material
respects.
(xvi) Neither the Company nor any of the Delaware Subsidiaries
is (A) in violation of its respective charter or by-laws, or other
organizational documents, or, to the best of such counsel's
knowledge, except as described in the Prospectus (or in the
documents incorporated therein by reference), and except to the
extent that any of the following would not have a material adverse
effect on the business, prospects, operations, properties, net
worth, results of operations or financial condition of the Company
and the Subsidiaries, taken as a whole, (B) in violation of any
judgment, injunction, order or decree of any court, governmental
agency or body (including, without limitation, any insurance
regulatory agency or body) or arbitrator having jurisdiction over
the Company or any of the Subsidiaries, or (C) in default in the
performance of any obligation, agreement or condition contained in
any bond, debenture, note or any other evidence of indebtedness or
in any other agreement, indenture, lease or instrument that is an
exhibit to the Registration Statement.
(xvii) To the best of such counsel's knowledge, all leases to
which the Company or any of the Delaware Subsidiaries is a party are
valid and binding on the Company or such Subsidiary, as the case may
be, and no default has occurred or is continuing thereunder, which
might result in any material adverse change in the business,
prospects, financial condition or results of operation of the
Company and the Subsidiaries taken as a whole.
(xviii) To such counsel's knowledge, each of the Company and
its Delaware Subsidiaries holds such licenses, certificates,
permits, franchises and authorizations from insurance departments
and other governmental or regulatory authorities ("permits")
(including, without limitation, Insurance Licenses) which are
necessary to own, lease and operate its properties and to conduct
its business as described in the Prospectus, except to the extent
the failure to hold any such permits or Insurance Licenses (either
singularly or in the aggregate) would not have a material adverse
effect on the business, prospects, operations, properties, net
worth, results of operations or financial condition of the Company
and the Subsidiaries taken as a
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whole; to the best of such counsel's knowledge, all such permits and
the Insurance Licenses are in full force and effect. Except as
disclosed in the Prospectus, to the best of such counsel's
knowledge, there has been, and there is, no pending or threatened
action, suit, proceeding, investigation or event that may reasonably
be expected to lead to the revocation, termination, suspension or
any other material impairment of the rights of the holder of any
such permit (including, without limitation, the Insurance Licenses);
to the best of such counsel's knowledge, such permits and Insurance
Licenses do not materially restrict the conduct of business of the
Company or any of the Delaware Subsidiaries except as described in
the Prospectus and except for any restrictions customarily found in
insurance licenses generally; and except as disclosed or
incorporated by reference in the Prospectus, to the best of such
counsel's knowledge, no insurance regulatory agency or body has
issued any order or decree impairing, restricting or prohibiting the
payment of dividends by any of the Delaware Subsidiaries of the
Company to its parent.
(xix) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act.
(xx) (i) The Registration Statement and any post-effective
amendment thereto, at the time such Registration Statement or such
post-effective amendment became effective, complied in all material
respects with the provisions of the Act; and (ii) the Prospectus,
and any supplement or amendment thereto, on the date of filing
thereof with the Commission and on the Closing Date, complied and
does comply in all material respects with the provisions of the Act;
provided that such counsel need express no view on the financial
statements and the notes thereto and the schedules and other
financial, statistical and accounting data included therein (or in
the documents incorporated therein by reference).
(xxi) The Company has corporate power and authority to execute
and deliver this Agreement, the Indenture and the Securities and to
issue, sell and deliver the Securities to be sold by it to the
Underwriters as provided herein.
(xxii) To the best of such counsel's knowledge, after due
inquiry, no relationship, direct or indirect, or agreement,
(including, without limitation, any voting agreement), exists
between or among the Company or any of the Subsidiaries and any
other party or any of their respective affiliates, which is required
by the Act to be described or a description of which is required to
be incorporated by reference in the Registration Statement, the
Prospectus or any Preliminary Prospectus to be filed as an exhibit
to the Registration Statement which is not described or incorporated
by reference or filed as required.
Such counsel shall also state that, except to the extent set forth
in clause (xv) above, although such counsel has not undertaken to determine
independently, and therefore does not assume any responsibility explicitly or
implicitly for, the accuracy, completeness or fairness of the statements
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contained in the Registration Statement and in the Prospectus, such counsel has
participated in the preparation of the Registration Statement and the
Prospectus, including review and discussion of the contents thereof, and that
based upon and subject to the foregoing, nothing came to such counsel's
attention that caused them to believe that the Registration Statement, at the
time it became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as of its
date and as of the date of such opinion, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (except in
each case as to the financial statements and the notes thereto and the schedules
and other financial, statistical and accounting data included therein (or in the
documents incorporated therein by reference), and the Underwriters' Information
as to which such counsel need express no belief).
As to factual matters, such counsel may rely on certificates
obtained from officers of the Company and the Subsidiaries and from public
officials and on such other authority as such counsel deems reasonable. In
rendering such opinion counsel may rely upon an opinion or opinions, each dated
the Closing Date, of other counsel retained by them or the Company as to laws of
any jurisdiction other than the United States or the State of New York and the
General Corporation Law of the State of Delaware, provided that (1) each such
local counsel is reasonably acceptable to the Representatives and their counsel,
(2) such reliance is expressly authorized by each opinion so relied upon and a
copy of each such opinion is delivered to the Representatives and is in form and
substance reasonably satisfactory to the Representatives and their counsel.
(d) The Representatives shall have received an opinion (reasonably
satisfactory to you and counsel for the Underwriters), dated the Closing
Date of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, counsel to the Company, on behalf of ▇▇▇▇, ERSIC
and Quadrant, to the effect that:
(i) Each of ERSIC and Quadrant is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction in which it was organized and has all requisite
power and authority to conduct its business as it is currently being
conducted and to own, lease and operate its properties. ▇▇▇▇ is a
partnership duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it was organized and has
all requisite power and authority to conduct its business as it is
currently being conducted and to own, lease and operate its
properties. Each of ERSIC and Quadrant is duly qualified as a
foreign corporation authorized to transact business in and is in
good standing in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not
have a material adverse effect on the business, prospects,
operations, properties, net worth, results of operations or
financial condition of the Company and the Subsidiaries considered
as a whole.
(ii) All of the outstanding shares of capital stock of, or
other ownership interests in, each of ERSIC, Quadrant and ▇▇▇▇ have
been duly authorized and validly issued and, in the case of shares
of capital stock, are fully paid and non-
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assessable; and all of the outstanding shares of capital stock of,
and other ownership interests in, each of ERSIC, Quadrant, ▇▇▇▇,
ERNV and Executive Risk Bermuda are owned of record by the Company
or by a Subsidiary of the Company free and clear of any perfected
security interest and any lien, claim, encumbrance or adverse
interest of any nature.
(iii) Except as otherwise set forth in the Prospectus, there
are no pending legal or governmental actions, suits or proceedings
to which ERSIC, ▇▇▇▇ or Quadrant is a party or of which any of their
respective property is the subject and which are required to be
described in the Registration Statement, the Prospectus or any
Preliminary Prospectus, and, to the best of such counsel's
knowledge, no such actions, suits or proceedings are threatened or
contemplated, and no contract or document of a character required to
be described in the Registration Statement, the Prospectus or any
Preliminary Prospectus or to be filed as an exhibit to the
Registration Statement is not so described or filed as required, and
the descriptions of the terms of any such contracts or documents
contained in the Registration Statement, the Prospectus and any
Preliminary Prospectus are correct in all material respects.
(iv) None of ERSIC, ▇▇▇▇ or Quadrant is (A) in violation of
its respective charter or by-laws, or other organizational
documents, or (B) in violation of any judgment, injunction, order or
decree of any court, governmental agency or body (including, without
limitation, any insurance regulatory agency or body) or arbitrator
having jurisdiction over ERSIC, ▇▇▇▇ or Quadrant or (C) in default
in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture, lease or
instrument that, in the case of either (B) or (C), is material to
the business of the Company and the Subsidiaries taken as a whole.
(v) All material leases to which either of ERSIC, ▇▇▇▇ or
Quadrant is a party are valid and binding on each such Subsidiary,
as the case may be, and no default has occurred or is continuing
thereunder, which might result in any material adverse change in the
business, prospects, financial condition or results of operation of
the Company and the Subsidiaries taken as a whole.
(vi) Each of ERSIC, ▇▇▇▇ and Quadrant holds such licenses,
certificates, permits, franchises and authorizations from insurance
departments and other governmental or regulatory authorities
("permits") (including, without limitation, Insurance Licenses)
which are necessary to own, lease and operate its properties and to
conduct its business as described in the Prospectus, except to the
extent the failure to hold any such permits or Insurance Licenses
(either singularly or in the aggregate) would not have a material
adverse effect on the business, prospects, operations, properties,
net worth, results of operations or financial condition of the
Company and the Subsidiaries taken as a whole; and all such permits
and the Insurance Licenses are in full force and effect. Except as
disclosed in the Prospectus there has been, and
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there is, no pending or, to the best of such counsel's knowledge,
threatened action, suit, proceeding, investigation or event that
could reasonably be expected to lead to the revocation, termination,
suspension or any other material impairment of the rights of the
holder of any such permit (including, without limitation, the
Insurance Licenses); such permits and Insurance Licenses do not
materially restrict the conduct of business of ERSIC, ▇▇▇▇ or
Quadrant except as described in the Prospectus and any Preliminary
Prospectus and except for any restrictions customarily found in
insurance licenses generally; and except as disclosed in the
Prospectus and any Preliminary Prospectus no insurance regulatory
agency or body has issued any order or decree impairing, restricting
or prohibiting the payment of dividends by any of the Subsidiaries
of the Company to its parent.
(vii) No relationship, direct or indirect, or agreement,
(including, without limitation, any voting agreement), exists
between or among any of ERSIC, ▇▇▇▇ or Quadrant and any other party
or any of their respective affiliates, which is required by the Act
to be described in or a description of which is required to be
incorporated by reference in the Registration Statement, the
Prospectus or any Preliminary Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or
incorporated by reference or filed as required.
References to the Prospectus in this paragraph (e) include any
supplements thereto at the Closing Date.
(e) The Representatives shall have received from LeBoeuf, Lamb,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., a limited liability partnership including
professional corporations, as counsel for the Underwriters, such opinion
or opinions, dated the Closing Date, with respect to such matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters.
The opinions of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel to the Company, of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, counsel to the Company on behalf of ▇▇▇▇, ERSIC and Quadrant,
and of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel to the Underwriters,
described in paragraphs (c), (d) and (e), respectively, above shall be rendered
to the Representatives at the request and direction and instruction of the
Company and shall so state therein.
(f) The Company shall have furnished to the Representatives a letter
(the "Initial Letter") of Ernst & Young LLP, addressed to the
Representatives and dated the date hereof, in form and substance
reasonably satisfactory to the Representatives, the substance of which has
been agreed upon and confirmed in writing between the Representatives and
Ernst &Young LLP, (i) stating that they are independent public accountants
within the meaning of the Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, (ii) stating that, in their opinion,
the audited consolidated financial statements of the Company and the
Subsidiaries included or incorporated by reference in the Registration
Statement comply as
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to form in all material respects with the applicable accounting
requirements of the Exchange Act, (iii) if the Effective Time is prior to
the execution and delivery of this Agreement, confirming they have
performed certain procedures with respect to certain amounts, percentages
and financial information specified by the Representatives and deemed to
be a part of the Registration Statement pursuant to Rule 430A(b) and have
found such amounts, percentages and financial information to be in
agreement with the records of the Company and (iv) based upon a reading of
the latest unaudited consolidated financial statements made available by
the Company, the procedures of the AICPA for a review of interim financial
information as described in Statement of Auditing Standards No. 71, a
reading of minutes and inquiries of certain officials of the Company who
have responsibility for financial and accounting matters and certain other
limited procedures requested by the Underwriters and described in detail
in such letter, nothing has come to their attention that causes them to
believe that (A) any unaudited financial statements included or
incorporated by reference in the Registration Statement do not comply as
to form in all material respects with applicable accounting requirements,
(B) any material modifications should be made to the unaudited
consolidated financial statements included or incorporated by reference in
the Registration Statement for them to be in conformity with generally
accepted accounting principles or (C) the information included in the
Registration Statement under the heading "Selected Consolidated Historical
Financial Data" does not conform in all material respects with the
disclosure requirements set forth in Item 301 of Regulation S-K.
(g) The Company shall have furnished to the Representatives a letter
(as used in this paragraph, the "Bring-Down Letter") of Ernst & Young LLP,
dated the Closing Date confirming as of the date of the Bring-Down Letter
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to the date of
the Bring-Down Letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by its
Initial Letter delivered to the Representatives concurrently with the
execution of this Agreement.
(h) The Company shall have furnished to the Representatives a
certificate, dated the Closing Date, of any two of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. Deutsch, solely in their respective
capacities as the Chairman and Chief Executive Officer, the President, and
the Chief Financial Officer of the Company, stating that as of the Closing
Date: (i) the representations and warranties of the Company in this
Agreement are true and correct; (ii) the Company has performed or complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date; (iii) no
stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or,
to the best of his knowledge, are contemplated by the Commission; and (iv)
(A) subsequent to the date of the most recent financial statements
contained in the Registration Statement and the Prospectus (or in the
documents incorporated therein by reference), there has been no material
adverse change in the financial condition, business, operations,
properties, prospects, net worth or results of operations of the Company
or any of ERII, ERSIC, ERMA, ERNV or Executive Risk Bermuda, or any
development involving a prospective change which to the knowledge of the
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Company could reasonably be expected to have a material adverse effect on
the financial condition, business, operations, properties, prospects, net
worth or results of operations of the Company and its Subsidiaries taken
as a whole, except as set forth in the Registration Statement and the
Prospectus, and (B) subsequent to the date of the most recent financial
statements contained in the Registration Statement and the Prospectus (or
in the documents incorporated therein by reference), there has not been
any material decrease in stockholders' equity or any material increase in
the long-term debt of the Company from that set forth in the Registration
Statement and the Prospectus (or in the documents incorporated therein by
reference), and (C) since the date of the latest financial statements
included in the Registration Statement and Prospectus (or in the documents
incorporated therein by reference), and except as disclosed therein, none
of the Company or any of the Subsidiaries shall have incurred any
liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), or entered into any transactions, not in the
ordinary course of business, that are material, individually or in the
aggregate, to the business of the Company and the Subsidiaries taken as a
whole .
(i) The Indenture shall have been duly executed and delivered by the
Company and the Trustee, and the Securities shall have been duly executed
and delivered by the Company and duly authenticated by the Trustee.
(j) At the Closing Date, there shall exist no default or event of
default under the Indenture.
(k) Subsequent to the execution and delivery of this Agreement or,
if earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus
(exclusive of any supplement thereto), there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
Subsidiaries or any change, or any development involving a prospective
change, in or affecting the business, prospects, operations, properties,
financial condition, net worth or results of operations of the Company and
its Subsidiaries taken as a whole, the effect of which, in any such case
described above, is, in the judgment of the Representatives, so material
and adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on the terms and in the
manner contemplated in the Prospectus (exclusive of any supplement).
(l) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Securities
or any of the Company's other debt securities by any "nationally
recognized statistical rating organization," as that term is defined by
the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations
and (ii) no such organization shall have publicly announced that it has
under surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Securities or any
of the Company's other debt securities.
(m) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock
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Exchange, the American Stock Exchange or the over-the-counter market shall
have been suspended or limited, or minimum prices shall have been
established on either of such exchanges or such market by the Commission,
by such exchanges or market or by any other regulatory body or
governmental authority having jurisdiction, or trading in securities of
the Company on any exchange or in the over-the-counter market shall have
been suspended, (ii) a general moratorium on commercial banking activities
shall have been declared by Federal or New York State authorities or (iii)
an outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the United
States shall be such) as to make it, in the judgment of the
Representatives, impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in the manner
contemplated in the Prospectus.
(n) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance and sale
of the Securities; and no injunction, restraining order or order of any
other nature by a federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance
or sale of the Securities.
(o) The Company shall have furnished or caused to be furnished to
the Representatives and their counsel such further certificates and
documents as they shall have reasonably requested.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
6. EFFECTIVENESS AND TERMINATION.
This Agreement shall become effective (other than Sections 8 and 12,
which shall become effective upon the execution hereof) upon the later of (i)
the receipt by the Company and the Representatives of notification as to the
effectiveness of the Registration Statement and (ii) the execution of this
Agreement. The obligations of the Underwriters hereunder may be terminated by
the Representatives, in their absolute discretion, by notice given to and
received by the Company prior to delivery of and payment for the Securities if,
prior to that time, any of the events described in Sections 5(k), (l), (m)or (n)
shall have occurred.
7. DEFAULTING UNDERWRITERS.
(a) If, on the Closing Date, any Underwriter or Underwriters default
in the performance of its or their obligations under this Agreement, the
Representatives may make arrangements for the purchase of such Securities by
other persons satisfactory to the Company and the Representatives, including any
of the Underwriters, but if no such arrangements are made by the Closing Date,
then each remaining non-defaulting Underwriter shall be severally obligated to
purchase
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the Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase on the Closing Date in the respective proportions which the
principal amount of Securities set forth opposite the name of each remaining
non-defaulting Underwriter on Schedule 1 hereto bears to the aggregate principal
amount of Securities set forth opposite the names of all the remaining
non-defaulting Underwriters in Schedule 1 hereto; provided, however, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Securities on the Closing Date if the aggregate principal amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such date exceeds one-eleventh of the aggregate principal amount of
the Securities to be purchased on the Closing Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase in total more than
110% of the principal amount of the Securities which it agreed to purchase on
the Closing Date pursuant to the terms of Section 2. If the foregoing maximums
are exceeded and the remaining Underwriters or other underwriters satisfactory
to the Representatives and the Company do not elect to purchase the Securities
which the defaulting Underwriter or Underwriters agreed but failed to purchase,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will continue
to be liable for the payment of expenses (except with respect to any defaulting
Underwriter) to the extent set forth in Sections 8 and 12 and except that the
provisions of Sections 9 and 10 shall not terminate and shall remain in effect.
As used in this Agreement, the term "Underwriter" includes, for all purposes of
this Agreement unless the context otherwise requires, any party not listed on
Schedule 1 hereto who, pursuant to this Section 7, purchases Securities which a
defaulting Underwriter agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have for damages caused by its default. If other
underwriters are obligated or agree to purchase the Securities of a defaulting
Underwriter, either the Representatives or the Company may postpone the Closing
Date for up to seven full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Underwriters may be
necessary in the Registration Statement, the Prospectus or in any other document
or arrangement, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or the Prospectus that effects any such
changes.
8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.
If (a) notice shall have been given pursuant to Section 7
terminating this Agreement, (b) the Company shall fail to tender the Securities
for delivery to the Underwriters for any reason permitted under this Agreement
or (c) the Underwriters shall decline to purchase the Securities for any reason
permitted under this Agreement (including the termination of this Agreement
pursuant to Section 6), the Company shall reimburse the Underwriters for the
reasonable fees and expenses of their counsel and for such other reasonable
out-of-pocket expenses as shall have been reasonably incurred by them in
connection with this Agreement and the proposed purchase of the Securities, and
upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 7 by reason
of the default of one or more Underwriters, the Company shall not be obligated
to reimburse any defaulting Underwriter on account of those expenses.
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9. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Underwriter,
its affiliates, their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act (all of such parties being collectively referred
to for the purposes of this Section 9 and Section 10 as the Underwriter) from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, without limitation, any loss, claim,
damage, liability or action relating to purchases and sales of the Securities),
to which that Underwriter may become subject, whether commenced or threatened,
under the Securities Act, the Exchange Act, any other federal or state statutory
law or regulation, at common law or otherwise, insofar as such loss, claim,
damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Underwriter for any legal or
other expenses reasonably incurred by that Underwriter in connection with
investigating or preparing to defend or defending against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with Underwriters'
Information furnished to the Company through the Representatives by or on behalf
of such Underwriter specifically for use therein; provided, further, that the
indemnification contained in this paragraph (a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Securities by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
Rules and Regulations, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the several Underwriters in requisite quantity on a
timely basis to permit such delivery or sending.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, each of its directors, each officer of the Company
who signed the Registration Statement, each of its employees, representatives
and agents and each person, if any, who controls the Company within the meaning
of the Securities Act (all of such persons being collectively referred to for
the purposes of this Section 9 and Section 10 as the Company), from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration
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Statement or the Prospectus or in any amendment or supplement thereto or (ii)
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances which they were made, not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with Underwriters'
Information furnished to the Company through the Representatives by or on behalf
of that Underwriter specifically for use therein, and shall reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or preparing to defend or defending against or
appearing as third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 9 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 party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the
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indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without the
prior written consent of the indemnified party (which consent shall not be
unreasonably withheld or delayed), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
The obligations of the Company and the Underwriters in this Section
9 and in Section 10 are in addition to any other liability that the Company or
the Underwriters may otherwise have, including in respect of any breaches of
representations, warranties and agreements made herein by such party.
10. CONTRIBUTION.
If the indemnification provided for in Section 9 is unavailable or
insufficient to hold harmless an indemnified party under Section 9(a) or 9(b),
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other with respect to the statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Securities purchased under this Agreement (before
deducting expenses) received by or on behalf of the Company, on the one hand,
and the total underwriting discounts and commissions received by the
Underwriters with respect to the Securities purchased under this Agreement, on
the other, bear to the total gross proceeds from the sale of the Securities
under this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to, 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 the
Company or information supplied by the Company on the one hand or to any
Underwriters' Information on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section 10
were to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party
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as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 10 shall be deemed to include, for
purposes of this Section 10, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 10, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total underwriting discounts and commissions
received by such Underwriter with respect to the Securities purchased by it
under this Agreement exceeds the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 10 are several in proportion to their respective
underwriting obligations and not joint.
11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Company, and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriters and the Company and
their respective successors and the controlling persons, officers, directors and
other parties referred to in Sections 9 and 10 hereof, and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 11, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
The term "successors" shall not include a purchaser of any of the Securities
from any of the Underwriters merely because of such purpose.
12. EXPENSES.
The Company agrees with the Underwriters to pay (a) the costs
incident to the authorization, issuance, sale, preparation and delivery of the
Securities and any taxes payable in that connection; (b) the costs incident to
the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), any Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus, all as provided in this Agreement; (d) the costs
of printing, reproducing and distributing this Agreement and any other
underwriting and selling group documents by mail, facsimile or other means of
communications; (e) the fees and expenses of qualifying the Securities under the
securities laws of the several jurisdictions as provided in Section 4(i) and of
preparing, printing and distributing Blue Sky Memoranda and Legal Investment
Surveys (including related reasonable fees and expenses of counsel to the
Underwriters); (f) any fees charged by securities rating services for rating the
Securities; (g) all fees and expenses of the Trustee and any paying agent or
registrar; (h) all expenses incurred in connection with the approval of the
Securities for book-entry transfer by DTC; and (i) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement; provided that, except as otherwise provided
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in this Section 12 and in Section 9, the Underwriters shall pay their own costs
and expenses, including the costs and expenses of their counsel, any transfer
taxes on the Securities which they may sell and the expenses of advertising any
offering of the Securities made by the Underwriters.
13. SURVIVAL.
The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement or any certificate delivered pursuant hereto, shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
14. NOTICES, ETC.
All statements, requests, notices and agreements hereunder shall be
in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
nationally recognized overnight courier or confirmed telecopy transmission
to:
Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to the Company, shall be delivered or sent by mail,
nationally recognized overnight courier or confirmed telecopy transmission
to:
Executive Risk Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
provided, however, that any notice to an Underwriter pursuant to Section 9(c)
shall be delivered or sent by mail or confirmed telecopy transmission to such
Underwriter at its address set forth in its acceptance to the Representatives,
which address will be supplied to any other party hereto by the
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Representatives upon request and, in the case of Chase Securities Inc., shall be
sent to 1 Chase Manhattan Plaza - 25th Floor, New York, New York 10081,
Attention: Legal Department. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by the Representatives.
15. DEFINITIONS OF CERTAIN TERMS.
For purposes of this Agreement, (a) "business day" means any day on
which the New York Stock Exchange, Inc. is open for trading and (b) the term
"affiliate" has the meaning set forth in Rule 405 under the Securities Act.
16. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS THEREOF.
17. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, (which
may include counterparts delivered by telecopier), each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
18. AMENDMENTS.
No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective
unless the same shall be in writing and signed by the parties hereto.
19. HEADINGS.
The headings herein are inserted for convenience of reference only
and are not intended to be part of, or to affect the meaning or interpretation
of, this Agreement.
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If the foregoing is in accordance with your understanding of the agreement
between the Company and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
EXECUTIVE RISK INC.
By
------------------------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
By: CHASE SECURITIES INC.
By:
------------------------------
Name:
Title:
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SCHEDULE 1
Principal
Amount
Underwriters of Securities
------------ -------------
Chase Securities Inc. $
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation ___________
Total $75,000,000
===========
38
SCHEDULE 2
SUBSIDIARIES OF EXECUTIVE RISK INC.
--------------------------------------------------------------------------------------------
Percentage of Securities/
Name of Entity Type of Entity Legal Owner Interests Owned
-------------- -------------- ----------- ---------------
--------------------------------------------------------------------------------------------
Executive Re Inc. Corporation Executive Risk Inc. 100%
--------------------------------------------------------------------------------------------
Executive Risk Capital Statutory Executive Risk Inc.* 100%
Trust Business Trust of Common Securities*
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. Corporation Executive Re Inc. 100%
--------------------------------------------------------------------------------------------
Executive Risk Corporation Executive Re Inc. 100%
Indemnity, Inc. ("ERII")
--------------------------------------------------------------------------------------------
Executive Risk Corporation ERII 100%
Speciality Insurance
Company
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Services Corporation Executive Re Inc. 100%
Corporation
--------------------------------------------------------------------------------------------
Executive Risk Limited English Executive Re Inc. 100%
Corporation
--------------------------------------------------------------------------------------------
Executive Risk Bermuda Executive Re Inc. 100%
(Bermuda) Ltd. Corporation
--------------------------------------------------------------------------------------------
Executive Risk General Partnership See below** 100%**
Management Associates
--------------------------------------------------------------------------------------------
Executive Risk N.V. Netherlands Executive Re Inc. 100%
Corporation
--------------------------------------------------------------------------------------------
Quadrant Indemnity Corporation ERII 100%
Company
--------------------------------------------------------------------------------------------
UAP Executive Partners Corporation See below*** 50%***
--------------------------------------------------------------------------------------------
IDFN of Arizona, Inc. Corporation ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. 100%
Insurance Brokers
--------------------------------------------------------------------------------------------
* 100% of the preferred securities issued by the Trust (Capital Securities)
are publicly owned.
** 70% of the general partnership interests in ▇▇▇▇ are directly owned by the
Company and 30% of the general partnership interests are indirectly owned
by the Company through Executive Re.
*** The remaining 50% of the shares of UPEX are owned by Union des Assurances
de Paris -- Incendie-Accidents
