DELPHI FINANCIAL GROUP, INC. $250,000,000 7.875% Senior Notes due 2020 UNDERWRITING AGREEMENT
Exhibit 1.1
Execution Version
Execution Version
DELPHI FINANCIAL GROUP, INC.
$250,000,000 7.875% Senior Notes due 2020
January 14, 0000
XXXX XX XXXXXXX SECURITIES LLC
XXXXX FARGO SECURITIES, LLC
As Representatives of the Underwriters
c/x Xxxxx Fargo Securities, LLC
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
XXXXX FARGO SECURITIES, LLC
As Representatives of the Underwriters
c/x Xxxxx Fargo Securities, LLC
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Delphi Financial Group, Inc., a Delaware corporation (the “Company”), proposes to issue and
sell to the several underwriters (the “Underwriters”) named in Schedule 1 attached to this
agreement (this “Agreement”) acting severally and not jointly, the respective amounts set forth in
such Schedule 1 of $250,000,000 aggregate principal amount of its 7.875% Senior Notes due
2020 (the “Securities”). The Securities will be issued pursuant to an Indenture to be dated as of
January 20, 2010 (the “Base Indenture”) between the Company and U.S. Bank National Association, as
trustee (the “Trustee), as supplemented by a first supplemental indenture to be dated as of
January 20, 2010 (the “First Supplemental Indenture” and together with the Base Indenture, the
“Indenture”. This is to confirm the agreement concerning the purchase of the Securities from the
Company by the Underwriters. In the event only a single Underwriter is named in Schedule
1, then all references to the “Underwriters” shall be deemed to mean and refer to such
Underwriter, mutatis mutandis.
1. Representations, Warranties and Agreements of the Company. The Company represents,
warrants and agrees that:
(a) A registration statement on Form S-3 relating to the Securities (i) has been
prepared by the Company in conformity with the requirements of the Securities Act of 1933,
as amended (the “Securities Act”), and the rules and regulations (together, the “Rules and
Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder; (ii)
has been filed with the Commission under the Securities Act; and (iii) is effective under
the Securities Act. Copies of such registration statement and any amendment thereto have
been delivered by the Company to Banc of America Securities LLC and Xxxxx Fargo Securities,
LLC as the representatives (“you or the “Representatives”) of the Underwriters. As used in
this Agreement:
(i) “Applicable Time” means January 14, 2010 at 4:30 p.m. (New York City time);
(ii) “Effective Date” means any date as of which any part of such registration
statement relating to the Securities became, or is deemed to have become, effective
under the Securities Act in accordance with the Rules and Regulations;
(iii) “Issuer Free Writing Prospectus” means each “free writing prospectus” (as
defined in Rule 405 of the Rules and Regulations) prepared by or on behalf of the
Company or used or referred to by the Company in connection with the offering of the
Securities;
(iv) “Preliminary Prospectus” means any preliminary prospectus relating to the
Securities included in such registration statement or filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, including any preliminary
prospectus supplement thereto relating to the Securities;
(v) “Pricing Disclosure Package” means, as of the Applicable Time, the most
recent Preliminary Prospectus, together with the information included in Schedule 2
hereto and each Issuer Free Writing Prospectus filed or used by the Company on or
before the Applicable Time, other than a road show that is an Issuer Free Writing
Prospectus under Rule 433 of the Rules and Regulations;
(vi) “Prospectus” means the final prospectus relating to the Securities,
including any prospectus supplement thereto relating to the Securities, as filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations; and
(vii) “Registration Statement” means, collectively, the various parts of such
registration statement, each as amended as of the Effective Date for such part,
including any Preliminary Prospectus or the Prospectus and all exhibits to such
registration statement.
Any reference to any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to Form S-3 under the
Securities Act as of the date of such Preliminary Prospectus or the Prospectus, as the case
may be, any reference to the Registration Statement shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Form S-3 under the Securities
Act as of the date of this Agreement; and all references to information that is “included”
or “contained” in any Preliminary Prospectus, the Prospectus, the Registration Statement or
the Pricing Disclosure Package (and any similar references) shall mean and include all
information that is incorporated by reference therein pursuant to Form S-3 under the
Securities Act. Any reference to the “most recent Preliminary Prospectus” shall be deemed
to refer to the latest Preliminary Prospectus included in the Registration Statement or
filed pursuant to Rule 424(b) prior to or on the date hereof. Any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any document filed under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), after the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and incorporated by reference in such Preliminary Prospectus
or the Prospectus, as the case may be; and any reference to any amendment to
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the Registration Statement shall be deemed to refer to any document filed under the Exchange
Act after the date of this Agreement that is incorporated by reference in the Registration
Statement. The Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending the effectiveness of the Registration
Statement, and no proceeding or examination for such purpose has been instituted or, to the
Company’s knowledge, threatened by the Commission. The Commission has not notified the
Company of any objection to the use of the form of the Registration Statement.
(b) The Company has been since the time of initial filing of the Registration Statement
and continues to be a “well-known seasoned issuer” (as defined in Rule 405) eligible to use
Form S-3 for the offering of the Securities, including not having been an “ineligible
issuer” (as defined in Rule 405) at any such time or date. The Registration Statement is an
“automatic shelf registration statement” (as defined in Rule 405) and was filed not earlier
than the date that is three years prior to the Closing Date (as defined in Section 4).
(c) The Registration Statement conformed and will conform in all material respects on
the Effective Date and on the Closing Date, and any amendment to the Registration Statement
filed after the date hereof will conform in all material respects when filed, to the
requirements of the Securities Act, the Rules and Regulations and the Trust Indenture Act of
1939, as amended, and the rules and regulations of the Commission thereunder (collectively,
the “Trust Indenture Act”). The most recent Preliminary Prospectus conformed, and the
Prospectus will conform, in all material respects when filed with the Commission pursuant to
Rule 424(b) and on the Closing Date to the requirements of the Securities Act and the Rules
and Regulations. The documents incorporated by reference in any Preliminary Prospectus or
the Prospectus conformed, and any further documents so incorporated will conform, when filed
with the Commission, in all material respects to the requirements of the Exchange Act or the
Securities Act, as applicable, and the rules and regulations of the Commission thereunder.
(d) The Registration Statement did not, as of the Effective Date, 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 that no representation
or warranty is made as to information contained in or omitted from the Registration
Statement in reliance upon and in conformity with (i) written information furnished to the
Company through the Representatives by or on behalf of any Underwriters specifically for
inclusion therein, which information is specified in Section 8(e) and (ii) that part of the
Registration Statement that constitutes the Statement of Eligibility and Qualification (the
“Form T-1”) of the Trustee under the Trust Indenture Act.
(e) The Prospectus will not, as of its date and on the Closing Date, contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Prospectus in reliance upon and in conformity
with written information furnished to the Company through the Represen-
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tatives by or on behalf of any Underwriters specifically for inclusion therein, which
information is specified in Section 8(e).
(f) The documents incorporated by reference in any Preliminary Prospectus or the
Prospectus did not, and any further documents filed and incorporated by reference therein
will not, when filed with the Commission, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading.
(g) The Pricing Disclosure Package did not, as of the Applicable Time, contain an
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; provided that no representation or warranty is made as to information contained
in or omitted from the Pricing Disclosure Package in reliance upon and in conformity with
written information furnished to the Company through the Representatives by or on behalf of
any Underwriters specifically for inclusion therein, which information is specified in
Section 8(e).
(h) Each Issuer Free Writing Prospectus (including, without limitation, any road show
that is a free writing prospectus under Rule 433), when considered together with the Pricing
Disclosure Package as of the Applicable Time, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made,
not misleading.
(i) Each Issuer Free Writing Prospectus conformed or will conform in all material
respects to the requirements of the Securities Act and the Rules and Regulations on the date
of first use, and the Company has complied with any filing requirements applicable to such
Issuer Free Writing Prospectus pursuant to the Rules and Regulations. The Company has not
made any offer relating to the Securities that would constitute an Issuer Free Writing
Prospectus without the prior written consent of the Representatives (such consent not to be
unreasonably delayed or withheld). The Company has retained in accordance with the Rules and
Regulations all Issuer Free Writing Prospectuses that were not required to be filed pursuant
to the Rules and Regulations.
(j) Each of the Company and its Significant Subsidiaries (as defined below) has been
duly incorporated, organized or formed and is validly existing in good standing under the
laws of the jurisdiction of its incorporation, organization or formation, with full power
and authority to own, lease and operate its properties and conduct its business; and each of
the Company and its Significant Subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the business conducted by it or the
location of the properties owned, leased or operated by it make such qualification
necessary, except where the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a material adverse effect
on the condition (financial or otherwise), results of operations or business of the Company
and its subsidiaries taken as a whole or on the performance by the Company of this
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Agreement (a “Material Adverse Effect”). The Company does not have any subsidiaries or
control, directly or indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21 to the Company’s Annual Report on Form 10-K for the most
recent fiscal year. None of the subsidiaries of the Company (other than the Significant
Subsidiaries) is a “significant subsidiary” (as defined in Rule 405).
(k) The authorized, issued and outstanding Class A common stock, par value $0.01 per
share (the “Class A Common Stock”), Class B common stock, par value $0.01 per share (the
“Class B Common Stock”), and other capital stock of the Company is as set forth in each of
the most recent Preliminary Prospectus and the Prospectus (except for subsequent issuances,
if any, of Class A Common Stock or Class B Common Stock pursuant to employee or director
stock option or stock purchase plans). The shares of issued and outstanding Class A Common
Stock and Class B Common Stock have been duly authorized and validly issued and were issued
in compliance with federal and state securities laws. All of the outstanding shares of
capital stock of each Significant Subsidiary of the Company that is a corporation have been
duly authorized and validly issued and are fully paid and non-assessable. All of the
outstanding shares of capital stock, partnership interests or other ownership interests of
each Significant Subsidiary of the Company are owned directly or indirectly by the Company,
free and clear of any claim, lien, encumbrance, security interest, restriction upon voting
or transfer, preemptive rights or any other claim of any third party (collectively,
“Liens”), except such Liens as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(l) The Indenture has been duly authorized by the Company and, upon effectiveness of
the Registration Statement, was or will have been duly qualified under the Trust Indenture
Act 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 as enforceability may
be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles relating to enforceability
(collectively, the “Enforceability Exceptions”).
(m) The Securities have been duly authorized by the Company and, when duly executed,
authenticated, issued and delivered as provided in the Indenture and paid for as provided
herein, will be duly and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company, enforceable against the Company in accordance
with their terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture.
(n) The Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Securities and the Indenture
(collectively, the “Transaction Documents”). This Agreement has been duly authorized,
executed and delivered by the Company.
(o) None of the execution, delivery and performance of the Transaction Documents by the
Company, the issuance, sale and delivery of the Securities by the Company, compliance by the
Company with any of the provisions of the Transaction
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Documents nor the application of the proceeds from the sale of the Securities as
described under “Use of Proceeds” in the most recent Preliminary Prospectus and the
Prospectus will (i) conflict with or result in a breach or violation of any agreement,
indenture or other instrument to which the Company or any of its subsidiaries is a party or
by which any of them is bound, or to which any of their properties is subject; (ii) result
in the creation or imposition of any lien, charge, claim or encumbrance upon any property or
asset of the Company or any of its subsidiaries; (iii) result in a breach or violation of,
or constitute a default under, the certificate of incorporation, by-laws, partnership
agreement or other organizational documents of the Company or any of its subsidiaries; or
(iv) violate any law, rule, administrative regulation or decree of any court or any
governmental agency or body having jurisdiction over the Company or any of its subsidiaries
or any of their respective properties, except, with respect to clauses (i), (ii) and (iv),
conflicts or violations that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(p) No permit, consent, approval, authorization or order of any court, governmental
agency or body or financial institution is required for the issue and sale of the
Securities, the execution, delivery and performance of the Transaction Documents by the
Company, or the application of the proceeds from the sale of the Securities as described
under “Use of Proceeds” in the most recent Preliminary Prospectus and the Prospectus, except
for the registration of the Securities under the Securities Act, the qualification of the
Indenture under the Trust Indenture Act, and such consents, approvals, authorizations,
orders, filings, registrations or qualifications as may be required under the Exchange Act
and applicable state or foreign securities laws in connection with the purchase and sale of
the Securities through the Underwriters.
(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 Securities Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company under the
Securities Act.
(r) The Company has not sold or issued any securities that would be integrated with the
offering of the Securities contemplated by this Agreement pursuant to the Securities Act,
the Rules and Regulations or the interpretations thereof by the Commission.
(s) Since the date of the latest audited financial statements included or incorporated
by reference in the most recent Preliminary Prospectus, neither the Company nor any of its
subsidiaries has (i) sustained any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, (ii) issued or granted any
securities (other than the shares of capital stock issued pursuant to employee benefit
plans, qualified stock option plans or other employee compensation plans existing on the
date hereof or pursuant to currently outstanding options, warrants or rights not issued
under
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one of those plans), (iii) incurred any material liability or obligation, direct or
contingent, other than liabilities and obligations that were incurred in the ordinary course
of business, (iv) entered into any material transaction not in the ordinary course of
business, or (v) declared or paid any dividend on its capital stock (other than regular cash
dividends on the Class A Common Stock or the Company’s Class B Common Stock), and since such
date, there has not been any change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any adverse change, or any development involving a prospective
adverse change, in or affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries taken as a whole, in
each case in this paragraph (s) (except clause (v) hereof) as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(t) The financial statements (including the related notes and supporting schedules)
included or incorporated by reference in the most recent Preliminary Prospectus and the
Prospectus present fairly in all material respects the financial condition, results of
operations and cash flows of the entities purported to be shown thereby at the dates and for
the periods indicated (subject to year-end adjustments in the case of unaudited interim
financial statements) and have been prepared in accordance with U.S. generally accepted
accounting principles applied on a consistent basis throughout the periods indicated and
conform in all material respects with such generally accepted accounting principles, except
as otherwise noted therein; and the supporting schedules included or incorporated by
reference in the Registration Statement present fairly in all material respects the
information required to be stated therein.
(u) Any pro forma financial statements that may be included or incorporated by
reference in the most recent Preliminary Prospectus or the Prospectus include assumptions
that provide a reasonable basis for presenting the significant effects directly attributable
to the transactions and events described therein, the related pro forma adjustments give
appropriate effect to those assumptions, and the pro forma adjustments reflect the proper
application of those adjustments to the historical financial statement amounts in the pro
forma financial statements included or incorporated by reference in the most recent
Preliminary Prospectus or the Prospectus, as the case may be. Any pro forma financial
statements included or incorporated by reference in the most recent Preliminary Prospectus
or the Prospectus comply as to form in all material respects with the applicable
requirements of Regulation S-X under the Securities Act.
(v) Ernst & Young LLP, who have reported on certain financial statements of the Company
included in the most recent Preliminary Prospectus and the Prospectus and whose report
appears in the most recent Preliminary Prospectus and the Prospectus or is incorporated by
reference therein, are independent public accountants as required by the Securities Act and
the rules and regulations thereunder, and were independent public accountants as required by
the Securities Act and the rules and regulations thereunder during the periods covered by
the financial statements on which they reported contained or incorporated by reference in
the most recent Preliminary Prospectus and the Prospectus.
(w) The statistical and market-related data, if any, included in the most recent
Preliminary Prospectus and the Prospectus and the consolidated financial statements of
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the Company and its subsidiaries included or incorporated by reference in the most
recent Preliminary Prospectus and the Prospectus are based on or derived from sources that
the Company believes to be reliable and accurate in all material respects.
(x) Neither the Company nor any subsidiary is, and as of the Closing Date and, after
giving effect to the offer and sale of the Securities and the application of the proceeds
therefrom as described under “Use of Proceeds” in the most recent Preliminary Prospectus and
the Prospectus, none of them will be, (i) an “investment company” within the meaning of such
term under the Investment Company Act of 1940, as amended (the “Investment Company Act”),
and the rules and regulations of the Commission thereunder or (ii) a “business development
company” (as defined in Section 2(a)(48) of the Investment Company Act).
(y) There is no litigation or governmental proceeding to which the Company or any of
its subsidiaries is a party or to which any property or assets of the Company or any of its
subsidiaries is subject or which is pending or, to the knowledge of the Company,
contemplated or threatened against the Company or any of its subsidiaries that would,
individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(z) There are no statutes or regulations, legal or governmental proceedings or
contracts or other documents that would be required to be described in the Registration
Statement, the most recent Preliminary Prospectus or the Prospectus (in each case including,
without limitation, the documents incorporated by reference therein) or, in the case of
documents, to be filed as exhibits to the Registration Statement, that are not described and
filed as required.
(aa) To the knowledge of the Company, after due inquiry, no labor disturbance by or
dispute with the employees of the Company or any of its subsidiaries exists or is imminent
that would reasonably be expected to have a Material Adverse Effect.
(bb) (i) Except as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, (i) each “employee benefit plan” (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”))
for which the Company or any of its subsidiaries would have any liability, including, but
not limited to, any liability relating to the Company or any of its subsidiaries being a
member of a “Controlled Group” (defined as any organization which is a member of a
controlled group of corporations within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended (the “Code”) (each, a “Plan”)), has been maintained in compliance
with its terms and with the requirements of all applicable statutes, rules and regulations
including ERISA and the Code; (ii) no prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan excluding
transactions effected pursuant to a statutory or administrative exemption; (iii) with
respect to each Plan subject to Title IV of ERISA (A) no “reportable event” (within the
meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur, (B)
there has been no failure to satisfy the minimum funding standard under Section 302 of ERISA
or Section 412 of the Code and (C) neither the
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Company or any member of its Controlled Group has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA (other than contributions to the Plan or
premiums to the Pension Benefit Guaranty Corporation in the ordinary course and without
default) in respect of a Plan (including a “multiemployer plan”, within the meaning of
Section 4001(c)(3) of ERISA); and (iv) each Plan that is intended to be qualified under
Section 401(a) of the Code is so qualified and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(cc) The Company and each of its subsidiaries have filed all Federal and all material
state, local and foreign tax returns required to be filed through the date hereof, subject
to permitted extensions, which returns are complete and correct in all material respects,
and have paid all taxes due, and neither the Company nor any subsidiary is in default in the
payment of any taxes which were payable pursuant to said returns or any assessments with
respect thereto, except for any such taxes or assessments which are being contested in good
faith by appropriate proceedings and for which appropriate reserves, if any, have been
established in accordance with U.S. generally accepted accounting principles and statutory
accounting principles, and no tax deficiency has been determined adversely to the Company or
any of its subsidiaries, nor does the Company have any knowledge of any tax deficiencies
that have been, or could reasonably be expected to be, asserted against the Company that
would, in the aggregate, reasonably be expected to have a Material Adverse Effect.
(dd) Neither the Company nor any of its subsidiaries (i) is in violation of its
certificate of incorporation or by-laws or other organizational documents, (ii) is in
default, and no event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement, license or
other agreement or instrument to which it is a party or by which it is bound or to which any
of its properties or assets is subject or (iii) is in violation of any law, ordinance, rule,
regulation or order of any court or governmental agency or body having jurisdiction over it
or its property or assets, except in the case of clauses (ii) and (iii), to the extent any
such conflict, breach, violation or default would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(ee) The Company and, to the knowledge of the Company, its officers and directors are
in compliance in all material respects with the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated in connection therewith.
(ff) Each of the Company and its subsidiaries hold such permits, licenses, patents,
franchises, certificates of need, authorities and other approvals or authorizations from
governmental or regulatory authorities (including, without limitation, insurance licenses
from the insurance regulatory agencies of the various states where it conducts business (the
“Insurance Licenses”)) (collectively, the “Permits”) which are necessary under applicable
law (i) to the conduct of its insurance businesses as presently operated and (ii) to own its
properties and conduct its businesses in the manner described in the most recent Preliminary
Prospectus and the Prospectus; each of the Company and its subsidiaries has fulfilled and
performed all of its obligations necessary to maintain the Per-
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mits; there is no past, pending or, to the knowledge of the Company or any of its
subsidiaries, threatened action, suit, proceeding or investigation that may reasonably be
expected to lead to the revocation, termination or suspension of any Permit (including,
without limitation, the Insurance Licenses); except, in each of the foregoing cases, as to
Insurance Licenses, the failure of which to obtain or maintain would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect; and no insurance
regulatory agency or body has issued any order or decree (specifically applicable to one or
more of the Insurance Subsidiaries (as defined below) as opposed to insurance companies
generally) impairing, restricting or prohibiting the payment of dividends by any of the
Company’s subsidiaries to their respective parent companies. Neither the Company nor any of
its subsidiaries has received notice of any revocation or modification of any such Permits
or has any reason to believe that any such Permits will not be renewed in the ordinary
course.
(gg) The Company and its subsidiaries own or possess, or have the ability to acquire,
all patents, patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently employed by them
in connection with the business now operated by them, except where the failure to own,
possess or have the ability to acquire such patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks, service marks
and trade names would not, individually or in the aggregate, have a Material Adverse Effect,
and none of the Company nor its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the foregoing which,
individually or in the aggregate, if subject to any unfavorable decision, ruling or finding,
would have a Material Adverse Effect.
(hh) The Company and its subsidiaries (i) are in compliance with any and all applicable
foreign, Federal, state and local laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their respective
businesses; and (iii) are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, individually or in the
aggregate, have a Material Adverse Effect.
(ii) Neither the Company nor any of its subsidiaries, nor, to the knowledge of the
Company, any director, officer, agent, employee or other person acting on behalf of the
Company or any of its subsidiaries, has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any bribe or other
unlawful payment.
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(jj) The operations of the Company and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all applicable jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued, administered or
enforced by any applicable governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any of its subsidiaries with respect to
the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(kk) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(ll) The Company has not distributed and, prior to the later to occur of the Closing
Date and completion of the distribution of the Securities, will not distribute any offering
material in connection with the offering and sale of the Securities other than any
Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus to which the
Representatives have consented in accordance with Section 1(i) or 5(a)(vi) (such consent not
to be unreasonably withheld or delayed).
(mm) The Company has not taken and will not take, directly or indirectly, any action
designed to or that has constituted or that could 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.
(nn) The Company and its subsidiaries maintain systems of internal control over
financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that
have been designed by, or under the supervision of, their respective principal executive and
principal financial officers, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting principles and statutory accounting
principles. The Company and its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with U.S.
generally accepted accounting principles and statutory accounting practices and to maintain
accountability for assets; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization and (iv) recorded assets are compared with
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.
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(oo) The Company and its subsidiaries have established and maintain disclosure controls
and procedures (as such term is defined in Rule 13a 15(e) under the Exchange Act) that have
been designed to ensure that material information relating to the Company and its
subsidiaries required to be disclosed in the reports the Company files or submits under the
Exchange Act is made known to the Company’s principal executive officer and principal
financial officer by others within those entities; and such disclosure controls and
procedures are effective in all material respects to perform the functions for which they
were established.
(pp) Since the date of the latest audited financial statements incorporated by
reference in the most recent Preliminary Prospectus, (i) the Company has not been advised of
(x) any fraud, whether or not material, that involves senior management or (y) any material
fraud that involves management or other employees and (ii) there have been no significant
changes in internal controls or in other factors that would significantly affect internal
controls, including any corrective actions with regard to significant deficiencies and
material weaknesses.
(qq) The Company and each of its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by
them, in each case free and clear of all liens, encumbrances and defects, except where the
failure to have such good and marketable title or the existence of any such liens,
encumbrances or defects would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. All assets held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases with such
exceptions as do not materially interfere with the use made and proposed to be made of such
assets by the Company and its subsidiaries, except where the failure of any such leases to
be valid, subsisting or enforceable or the existence of such exceptions would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(rr) The Company is not required to be licensed as an insurance company; Reliance
Standard Life Insurance Company of Texas (“RSLIC-Texas”), Reliance Standard Life Insurance
Company (“RSLIC”), First Reliance Standard Life Insurance Company (“FRSLIC”), Safety First
Insurance Company (“SFIC”) and Safety National Casualty Corporation (“SNCC”; RSLIC-Texas,
RSLIC, FRSLIC, SFIC and SNCC are herein called, collectively, the “Insurance Subsidiaries”,
and RSLIC-Texas, RSLIC, SNCC and SIG Holdings, Inc. are herein called, collectively, the
“Significant Subsidiaries”) are each duly licensed as insurers under the insurance laws and
regulations of Texas, Illinois, New York, Illinois and Missouri, respectively; and the
Insurance Subsidiaries have filed with the appropriate insurance regulatory authorities all
reports, documents and other information required to be filed under the insurance laws of
Texas, Illinois, New York, Illinois and Missouri, respectively, except as to filings the
failure of which to make would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(ss) All reinsurance ceded treaties, contracts, agreements and arrangements to which
the Company or any of the Insurance Subsidiaries is a party are in full force and
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effect, other than those that, by their terms, have expired or otherwise terminated,
or those the failure of which to be in full force and effect would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, and none of the
Company or any of its Insurance Subsidiaries is in violation of, or in default in the
performance, observance or fulfillment of, any material obligation agreement, covenant or
condition contained therein, which violation or default would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; none of the Company or
any of its Insurance Subsidiaries has received any notice from any of the other parties to
such treaties, policies, contracts, agreements or arrangements that such other party intends
not to perform in any material respect such treaty, contract, agreements or arrangements or
will be unable to perform such treaty, contract, agreement or arrangement where the failure
to perform would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(tt) The statutory annual and quarterly statements of each of the Insurance
Subsidiaries and the statutory balance sheets and income statements included in such
statutory annual and quarterly statements most recently filed in any state have been
prepared in conformity with required or permitted statutory accounting principles or
practices consistently followed, except as may otherwise be indicated in the notes thereto,
and present fairly in all material respects the statutory financial position of each
Insurance Subsidiary as at the dates thereof, and on a statutory basis for the periods
covered thereby.
(uu) The Company and each of its subsidiaries carry, or are covered by, liability
insurance and insurance against physical damage to their properties from insurers of
recognized financial responsibility in such amounts and covering such risks as the Company
believes to be adequate for the conduct of the business of the Company and its subsidiaries,
taken as a whole. Except as would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, (i) the Company and its subsidiaries are in
compliance with the terms of such policies in all material respects; (ii) neither the
Company nor any of its subsidiaries has received notice from any insurer or agent of such
insurer that capital improvements or other expenditures are required or necessary to be made
in order to continue such insurance; and (iii) there are no claims by the Company or any of
its subsidiaries under any such policy or instrument as to which any insurance company is
denying liability or defending under a reservation of rights clause.
(vv) No relationship, direct or indirect, exists between or among the Company, on the
one hand, and the directors, officers, stockholders, customers or suppliers of the Company,
on the other hand, that is required to be described in the most recent Preliminary
Prospectus or the Prospectus which is not so described.
(ww) The statements set forth in the most recent Preliminary Prospectus and the
Prospectus under the caption “Description of Debt Securities,” insofar as they purport to
describe the Securities and other documents and legal matters referred to therein, are
accurate in all material respects.
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(xx) 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 Securities Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company under the
Securities Act.
(yy) Neither the Company nor any of its subsidiaries is a party to any contract,
agreement or understanding with any person (other than this Agreement) that would give rise
to a valid claim against any of them or the Underwriters for a brokerage commission,
finder’s fee or like payment in connection with the offering and sale of the Securities.
(zz) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any of its affiliates has taken, directly or indirectly, any action designed to or
that has constituted or that would reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company in connection with
the offering of the Securities.
(aaa) Neither the Company nor any subsidiary is in violation of or has received notice
of any violation with respect to any federal or state law relating to discrimination in the
hiring, promotion or pay of employees, any applicable federal or state wage and hour laws,
or any state law precluding the denial of credit due to the neighborhood in which a property
is situated, the violation of any of which would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Affect.
(bbb) None of the proceeds from the sale of the Securities has been or will be paid to
the Underwriters (except for the payment of the commissions pursuant to this Agreement or
payments to the Underwriters or any affiliate of the Underwriters as a result of payments or
prepayments of outstanding loans under the Company’s revolving credit facility) or, to the
knowledge of the Company, to any affiliate of the Underwriters; and the Company is not an
“affiliate” (as defined in NASD Conduct Rule 2720) of any member of the Financial Industry
Regulatory Authority (“FINRA”).
Any certificate signed by any officer of the Company and delivered to the Underwriters or
counsel for the Representatives in connection with the offering of the Securities shall be deemed a
representation and warranty by the Company to each Underwriter as to matters covered thereby.
2. Purchase of the Securities by the Underwriters. On the basis of the representations and
warranties contained in, and subject to the terms and conditions of, this Agreement, the Company
agrees to sell the Securities at a price equal to 99.345% of the aggregate principal amount
thereof, plus accrued interest, if any, from January 20, 2010, to the several Underwriters, and
each of the Underwriters, severally and not jointly, agrees to purchase the principal amount of the
Securities set forth opposite that Underwriter’s name in Schedule 1 hereto.
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The Company shall not be obligated to deliver any of the Securities to be delivered on the
Closing Date, except upon payment for all such Securities to be purchased on such Closing Date as
provided herein.
3. Offering of Securities by the Underwriters. Upon authorization by the Representatives of
the release of the Securities, the several Underwriters propose to offer the Securities for sale
upon the terms and conditions to be set forth in the Prospectus.
4. Delivery of and Payment for the Securities. Delivery of and payment for the Securities
shall be made at 10:00 A.M., New York City time, on January 20, 2010 or at such other date or place
as shall be determined by agreement between the Representatives and the Company. This date and
time are sometimes referred to as the “Closing Date.” Delivery of the Securities shall be made to
Xxxxx Fargo Securities, LLC against payment by the several Underwriters through the Representatives
of the respective aggregate purchase prices of the Securities being sold by the Company by wire
transfer in immediately available funds to the accounts specified by the Company. 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 Company shall deliver the
Securities through the facilities of Depository Trust Company unless the Representatives shall
otherwise instruct.
5. Further Agreements of the Company and the Underwriters.
(a) The Company agrees:
(i) To prepare the Prospectus in a form approved by the Representatives and to file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the
Commission’s close of business on the second business day following the execution and
delivery of this Agreement; to make no further amendment or any supplement to the
Registration Statement or the Prospectus prior to the Closing Date except as provided
herein; to advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment or supplement to the Registration Statement or the Prospectus has
been filed and to furnish the Representatives with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act 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 after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of the
Prospectus or any Issuer Free Writing Prospectus, of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding or examination for any such purpose, of any notice from the Commission
objecting to the use of the form of the Registration Statement or any post-effective
amendment thereto or of any request by the Commission for the amending or supplementing of
the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus or for
additional information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of the Prospectus or any Issuer Free Writing Prospectus or
suspending
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any such qualification, to use promptly its reasonable best efforts to obtain its
withdrawal;
(ii) To pay the applicable Commission filing fees relating to the Securities within the
time required by Rule 456(b)(1) without regard to the proviso therein;
(iii) To deliver promptly to the Representatives such number of the following documents
as the Representatives shall reasonably request: (A) 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 computation of per share earnings), (B)
each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus, (C)
each Issuer Free Writing Prospectus and (D) any document incorporated by reference in any
Preliminary Prospectus or the Prospectus; and, if the delivery of a prospectus is required
at any time after the date hereof in connection with the offering or sale of the Securities
or any other securities relating thereto and if at such time any events shall have occurred
as a result of which the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply with the Securities
Act or the Exchange Act, to notify the Representatives and, upon their request, to file such
document and to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time reasonably request of
an amended or supplemented Prospectus that will correct such statement or omission or effect
such compliance;
(iv) To file promptly with the Commission any amendment or supplement to the
Registration Statement or the Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the Commission;
(v) Prior to filing with the Commission any amendment or supplement to the Registration
Statement or the Prospectus, any document incorporated by reference in the Prospectus or any
amendment to any document incorporated by reference in the Prospectus, to furnish a copy
thereof to the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing (such consent not to be unreasonably delayed or withheld);
(vi) Not to make any offer relating to the Securities that would constitute an Issuer
Free Writing Prospectus without the prior written consent of the Representatives (such
consent not to be unreasonably delayed or withheld);
(vii) To comply with all applicable requirements of Rule 433 with respect to any Issuer
Free Writing Prospectus; and if at any time after the date hereof any events shall have
occurred as a result of which any Issuer Free Writing Prospectus, as then amended or
supplemented, would conflict with the information in the Registration Statement, the most
recent Preliminary Prospectus or the Prospectus or would include an un-
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true 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, not misleading, or, if for any other reason it shall be necessary to amend or
supplement any Issuer Free Writing Prospectus, to notify the Representatives and, upon their
request, to file such document and to prepare and furnish without charge to each Underwriter
as many copies as the Representatives may from time to time reasonably request of an amended
or supplemented Issuer Free Writing Prospectus that will correct such conflict, statement or
omission or effect such compliance;
(viii) As soon as practicable after the Effective Date and in any event not later than
16 months after the date hereof, 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 Securities Act
and the Rules and Regulations;
(ix) Promptly from time to time to take such action as the Underwriters may reasonably
request to qualify the Securities for offering and sale under the securities or Blue Sky
laws of Canada and such other jurisdictions as the Underwriters may reasonably request, and
to maintain such qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided that in connection therewith the Company shall not
be required to (i) qualify as a foreign corporation in any jurisdiction in which it would
not otherwise be required to so qualify, (ii) file a general consent to service of process
in any such jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it
would not otherwise be subject; and
(x) To apply the net proceeds from the sale of the Securities being sold by the Company
as set forth in the Preliminary Prospectus and the Prospectus.
(b) Each Underwriter severally agrees that such Underwriter shall not include any “issuer
information” (as defined in Rule 433) in any “free writing prospectus” (as defined in Rule 405)
used or referred to by such Underwriter without the prior consent of the Company (any such issuer
information with respect to whose use the Company has given its consent, “Permitted Issuer
Information”); provided that (i) no such consent shall be required with respect to any such issuer
information contained in any document filed by the Company with the Commission prior to the use of
such free writing prospectus and (ii) “issuer information,” as used in this Section 5(b), shall not
be deemed to include information prepared by or on behalf of such Underwriter on the basis of or
derived from issuer information.
6. Expenses. The Company agrees, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all costs, expenses, fees and
taxes incurred by the Company and, to the extent expressly provided in this Section 6 and in
Sections 8 and 11, incurred by the Underwriters incident to and in connection with (a) the
authorization, issuance, sale and delivery of the Securities and any stamp duties or other taxes
payable in that connection, and the preparation and printing of the Securities; (b) the
preparation, printing and filing under the Securities Act of the Registration Statement (including
any exhibits thereto), any Preliminary Prospectus, the Prospectus, any Issuer Free Writing
Prospectus, the Indenture, the Form T-1 and any amendment or supplement thereto; (c) the
distribution
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of the Registration Statement (including any exhibits thereto), any Preliminary Prospectus,
the Prospectus, any Issuer Free Writing Prospectus, the Indenture, the Form T-1 and any amendment
or supplement thereto, or any document incorporated by reference therein, all as provided in this
Agreement; (d) the production and distribution of this Agreement and any other related documents in
connection with the offering, purchase, sale and delivery of the Securities; (e) any required
review by FINRA of the terms of sale of the Securities (including related reasonable and reasonably
documented fees and expenses of counsel to the Underwriters); (f) the qualification of the
Securities under the securities laws of the several jurisdictions as provided in Section 5(a)(ix)
and the preparation, printing and distribution of a Blue Sky Memorandum (including related
reasonable and reasonably documented fees and expenses of counsel to the Underwriters not to exceed
$5,000); (g) the preparation, printing and distribution of one or more versions of the Preliminary
Prospectus and the Prospectus for distribution in Canada, often in the form of a Canadian
“wrapper”; (h) the fees, costs and charges of the Trustee, including the reasonable and documented
fees and expenses of counsel for the Trustee; (i) the investor presentations on any “road show”
undertaken in connection with the marketing of the Securities, including, without limitation,
expenses associated with any electronic road show, travel and lodging expenses of the
representatives and officers of the Company and the cost of any aircraft chartered in connection
with the road show; (j) any fees required to be paid to rating agencies incurred in connection with
the ratings of the Securities; and (k) all other costs and expenses incident to the performance of
the obligations of the Company under this Agreement; provided that, except as expressly provided in
this Section 6 and in Sections 8 and 11, 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.
7. Conditions of Underwriters’ Obligations. The respective obligations of the Underwriters
hereunder are subject to the accuracy, when made and on the date of the Prospectus and on the
Closing Date, of the representations and warranties of the Company contained herein, to the
performance by the Company of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in accordance with
Section 5(a)(i); the Company shall have complied with all filing requirements applicable to
any Issuer Free Writing Prospectus used or referred to after the date hereof; no stop order
suspending the effectiveness of the Registration Statement or preventing or suspending the
use of the Prospectus or any Issuer Free Writing Prospectus shall have been issued and no
proceeding or examination for such purpose shall have been initiated or threatened by the
Commission; any request of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or any document incorporated by reference therein
or otherwise shall have been complied with; and the Commission shall not have notified the
Company of any objection to the use of the form of the Registration Statement.
(b) No Underwriter shall have discovered and disclosed to the Company on or prior to
the Closing Date that the Registration Statement, the Prospectus or the Pricing Disclosure
Package, or any amendment or supplement thereto, contains an untrue statement of a fact
which, in the reasonable opinion of Sidley Austin LLP, counsel for the
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Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the authorization,
form and validity of this Agreement, the Securities, the Indenture, the Registration
Statement, the Prospectus and any Issuer Free Writing 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.
(d) Xxxxxx Xxxxxx & Xxxxxxx llp shall have furnished to the Underwriters its
written opinion and letter, as counsel to the Company, addressed to the Underwriters and
delivered and dated the Closing Date, in form and substance reasonably satisfactory to the
Underwriters, substantially in the forms attached hereto as Exhibit A-1 and Exhibit A-2.
(e) Xxxx X. Xxxxxxx, Esq., General Counsel of the Company and Xxxxxxx Xxxx, Esq.,
General Counsel of Safety National Casualty Corporation, as applicable, shall have furnished
their written opinions addressed to the Underwriters and delivered and dated the Closing
Date, in form and substance reasonably satisfactory to the Underwriters, substantially in
the form attached hereto as Exhibit A-3.
(f) The Representatives shall have received from Sidley Austin LLP, counsel for the
Underwriters, such opinion or opinions, dated the Closing Date, with respect to the issuance
and sale of the Securities, the Registration Statement, the Prospectus and the Pricing
Disclosure Package and other related 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.
(g) At the time of execution of this Agreement, the Representatives shall have received
from Ernst & Young LLP a letter, in form and substance reasonably satisfactory to the
Representatives, addressed to the Underwriters and dated the date hereof (i) confirming that
they are independent public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S X of the Commission, and (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since the respective dates as
of which specified financial information is given in the most recent Preliminary Prospectus,
as of a date not more than three days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other matters ordinarily
covered by accountants’ “comfort letters” to underwriters in connection with registered
public offerings.
(h) With respect to the letter of Ernst & Young LLP referred to in the preceding
paragraph and delivered to the Representatives concurrently with the execution of this
Agreement (the “initial letter”), the Company shall have furnished to the Representatives
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a letter (the “bring-down letter”) of such accountants, addressed to the Underwriters
and dated the Closing Date (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or, with respect
to matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not more than three
days prior to the date of the bring-down letter), the conclusions and findings of such firm
with respect to the financial information and other matters covered by the initial letter,
(iii) covering financial information in the Prospectus and (iv) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(i) The Company shall have furnished to the Representatives a certificate, dated the
Closing Date, of any two of its Chief Executive Officer, President, Executive Vice
President, Vice President-Finance, General Counsel or Treasurer to the effect that:
(A) The representations and warranties of the Company in Section 1 are true and
correct on and as of the Closing Date, and the Company has complied in all material
respects with all its agreements contained herein and satisfied all the conditions
on its part to be performed or satisfied hereunder at or prior to the Closing Date;
(B) No stop order suspending the effectiveness of the Registration Statement
has been issued; no proceedings or examination for that purpose have been instituted
or, to the knowledge of such officers, threatened; and the Commission has not
notified the Company of any objection to the use of the form of the Registration
Statement or any post-effective amendment thereto; and
(C) They have examined the Registration Statement, the Prospectus and the
Pricing Disclosure Package, and, in their opinion, (A) (1) the Registration
Statement, as of each Effective Date, (2) the Prospectus, as of the date of the
Prospectus Supplement and as of the Closing Date, and (3) the Pricing Disclosure
Package, as of the Applicable Time and as of the Closing Date, did not and do not
contain any untrue statement of a material fact and did not and do not omit to state
a material fact required to be stated therein or necessary to make the statements
therein (except in the case of the Registration Statement, in the light of the
circumstances under which they were made) not misleading, and (B) no event has
occurred that should have been set forth in a supplement or amendment to the
Registration Statement, the Prospectus or any Issuer Free Writing Prospectus that
has not been so set forth.
(j) Except as described in the most recent Preliminary Prospectus and the Prospectus,
(i) neither the Company nor any of its subsidiaries shall have sustained, since the date of
the latest audited financial statements included or incorporated by reference in the most
recent Preliminary Prospectus, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree or (ii) since such date there
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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 condition (financial or otherwise), results of operations, stockholders’
equity, business or prospects of the Company and its subsidiaries taken as a whole, the
effect of which, in any such case described in clause (i) or (ii), is, individually or in
the aggregate, in the judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or sale of the Securities being
delivered on the Closing Date on the terms and in the manner contemplated in the Prospectus.
(k) Subsequent to the execution and delivery of this Agreement, no downgrade in the
rating of the Company or any of its Insurance Subsidiaries or their respective financial
strength or claims paying ability or the rating of any of the Company’s securities by A.M.
Best Company, Inc. (“A.M. Best”) or by any other “nationally recognized statistical rating
organization”, as that term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act (together with A.M. Best, the “Rating Agencies”) shall have
occurred or be pending.
(l) 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
Exchange or the NASDAQ National Market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or materially limited
or the settlement of such trading generally shall have been materially disrupted or minimum
prices shall have been established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority having jurisdiction,
(ii) a general moratorium on commercial banking activities shall have been declared by
federal or New York state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving the United States
or there shall have been a declaration of a national emergency or war by the United States
or (iv) there shall have occurred such a material adverse change in general economic,
political or financial conditions, including, without limitation, as a result of terrorist
activities after the date hereof (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 offering or sale of the
Securities being delivered on the Closing Date on the terms and in the manner contemplated
in the Prospectus.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter, its directors, officers
and employees and each person, if any, who controls any Underwriter within the meaning of Section
15 of the Securities Act, from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, but not limited to, any loss, claim,
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damage, liability or action relating to purchases and sales of Securities), to which that
Underwriter or that affiliate, director, officer, employee or controlling person may become
subject, under the Securities Act 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 (A) any Preliminary Prospectus, the Registration Statement, the
Prospectus or in any amendment or supplement thereto, (B) any Issuer Free Writing Prospectus or in
any amendment or supplement thereto or (C) any Permitted Issuer Information used or referred to in
any “free writing prospectus” (as defined in Rule 405) used or referred to by any Underwriter, or
(D) any “road show” (as defined in Rule 433) not constituting an Issuer Free Writing Prospectus (a
“Non-Prospectus Road Show”) or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in
any amendment or supplement thereto or in any Permitted Issuer Information or any Non-Prospectus
Road Show, any 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 and each such director, officer, employee or controlling person promptly
upon demand for any legal or other expenses reasonably incurred by the Underwriter or that
affiliate, director, officer, employee or controlling person in connection with investigating or
defending or preparing to defend against 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,
any untrue statement or alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing
Prospectus or in any such amendment or supplement thereto or in any Permitted Issuer Information or
any Non-Prospectus Road Show, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the Representatives by or on behalf of
any Underwriter specifically for inclusion therein, which information consists solely of the
information specified in Section 8(e). The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to any Underwriter or to any affiliate, director,
officer, employee or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, its directors, officers and employees, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the Company or any such
director, officer, employee or controlling person may become subject, under the Securities Act 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, the Prospectus, any Issuer Free Writing
Prospectus or in any amendment or supplement thereto or in any Non-Prospectus Road Show, or (ii)
the omission or alleged omission to state in any Preliminary Prospectus, the Registration
Statement, the Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement
thereto or in any Non-Prospectus Road Show, any 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, but in each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and in conformity with
written information concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion therein,
-22-
which information consists solely of the information specified in Section 8(e). The foregoing
indemnity agreement is in addition to any liability that any Underwriter may otherwise have to the
Company or any such director, officer, employee or controlling person
of the Company.
(c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim
or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such failure and, provided,
further, that the failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8. If any such claim
or action shall be brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that the indemnified party
shall have the right to employ counsel to represent jointly the indemnified party and those other
indemnified parties and their respective directors, officers, employees and controlling persons who
may be subject to liability arising out of any claim in respect of which indemnity may be sought
under this Section 8 if (i) the indemnified party and the indemnifying party shall have so mutually
agreed; (ii) the indemnifying party has failed within a reasonable time to retain counsel
reasonably satisfactory to the indemnified party; (iii) the indemnified party and its directors,
officers, employees and controlling persons shall have reasonably concluded that there may be legal
defenses available to them that are different from or in addition to those available to the
indemnifying party; or (iv) the named parties in any such proceeding (including any impleaded
parties) include both the indemnified parties or their respective directors, officers, employees or
controlling persons, on the one hand, and the indemnifying party, on the other hand, and
representation of both sets of parties by the same counsel would be inappropriate due to actual or
potential differing interests between them, and in any such event the fees and expenses of such
separate counsel shall be paid by the indemnifying party as incurred. No indemnifying party shall
(i) without the prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding and does not include any findings of fact or admissions of fault or
culpability as to the indemnified party, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably withheld), but if
settled with the consent of the indemnifying party or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such settlement or judgment.
-23-
(d) If the indemnification provided for in this Section 8 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under Section 8(a), or 8(b) in
respect of any loss, claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result of such 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 the Company, as set forth in the table
on the cover page of the Prospectus, on the one hand, and the total underwriting discounts and
commissions received by the Underwriters with respect to the principal amount of Securities
purchased under this Agreement, as set forth in the table on the cover page of the Prospectus, on
the other hand. The relative fault, of the Company, on the one hand, and the Underwriters, on the
other, shall be determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) 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 as a result of the loss, claim, damage or liability, or action in
respect thereof, referred to above in this Section 8(d) shall be deemed to include, for purposes of
this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the net proceeds from the sale of the Securities underwritten by it
exceeds the amount of any damages that such Underwriter has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm, and the Company acknowledges and agrees, that the
statements set forth in the concession figure appearing in the fifth paragraph under the caption
“Underwriting”, the third sentence in the first paragraph under the caption “Underwriting — New
Issue of Notes”, the first paragraph under the caption “Underwriting — ShortPositions”, the paragraph
under the caption “Underwriting — Conflict of Interest” and the
paragraph under the caption “Underwriting — Other Relationships” in the Preliminary Prospectus
-24-
and the Prospectus, are correct and constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion
in any Preliminary Prospectus, the Registration Statement, the Prospectus, the Pricing Disclosure
Package, any Issuer Free Writing Prospectus or any amendment or supplement thereto or in any
Non-Prospectus Road Show.
9. Termination. The obligations of the Underwriters hereunder may be terminated by the
Representatives 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 7(j), 7(k) and
7(l) shall have occurred, or if the Underwriters shall decline to purchase the Securities for any
reason permitted under this Agreement.
10. Default of One or More of the Several Underwriters. If, on the Closing Date any one or
more of the several Underwriters shall fail or refuse to purchase Securities that it or they have
agreed to purchase hereunder on such date, and the aggregate principal amount which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate principal amount of the Securities to be purchased on such date, the other Underwriters
shall be obligated, severally, in the proportions that the principal amount of Securities set forth
opposite their respective names on Schedule 1 bears to the aggregate principal amount of Securities
set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions
as may be specified by the Representatives with the consent of the non-defaulting Underwriters, to
purchase the Securities which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date. If, on the Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase Securities and the aggregate principal amount of Securities with
respect to which such default occurs exceeds 10% of the aggregate principal amount of Securities to
be purchased on such date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Securities are not made within 48 hours after such default, this Agreement
shall terminate without liability of any party to any other party except that the provisions of
Section 6, Section 8, and Section 11 shall at all times be effective and shall survive such
termination. In any such case either the Representatives or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days in order that the required
changes, if any, to the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
As used in this Agreement, the term “Underwriter” shall be deemed to include any person
substituted for a defaulting Underwriter under this Section 10. Any action taken under this
Section 10 shall not relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
11. Reimbursement of Underwriters’ Expenses. If (a) the Company shall fail to tender the
Securities for delivery to the Underwriters by reason of any failure, refusal or inability on the
part of the Company to perform any agreement to be performed on its part hereunder, or because any
other condition of the obligations hereunder required to be fulfilled by the Company is not
fulfilled for any reason, or (b) the Underwriters shall decline to purchase the Securities for any
reason permitted under this Agreement, the Company will reimburse the Underwriters for all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of one counsel) incurred by the Underwriters in connection with this Agreement and
the
-25-
proposed purchase of the Securities, and upon demand the Company shall pay the full amount
thereof to the Representatives.
12. Research Analyst Independence. The Company acknowledges that the Underwriters’ research
analysts and research departments are required to be independent from their respective investment
banking divisions and are subject to certain regulations and internal policies, and that such
Underwriters’ research analysts may hold views and make statements or investment recommendations
and/or publish research reports with respect to the Company and/or the offering that differ from
the views of their respective investment banking divisions. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company may have against the
Underwriters with respect to any conflict of interest that may arise from the fact that the views
expressed by their independent research analysts and research departments may be different from or
inconsistent with the views or advice communicated to the Company by such Underwriters’ investment
banking divisions. The Company acknowledges that each of the Underwriters is a full service
securities firm and as such from time to time, subject to applicable securities laws, may effect
transactions for its own account or the account of its customers and hold long or short positions
in debt or equity securities of the Company.
13. No Fiduciary Duty. The Company acknowledges and agrees that in connection with this
offering, sale of the Securities or any other services the Underwriters may be deemed to be
providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between
the parties or any oral representations or assurances previously or subsequently made by the
Underwriters: (i) no fiduciary or agency relationship between the Company and any other person, on
the one hand, and the Underwriters, on the other, exists; (ii) the Underwriters are not acting as
advisors, expert or otherwise, to the Company, including, without limitation, with respect to the
determination of the public offering price of the Securities, and such relationship between the
Company, on the one hand, and the Underwriters, on the other, is entirely and solely commercial,
based on arms-length negotiations; (iii) any duties and obligations that the Underwriters may have
to the Company shall be limited to those duties and obligations specifically stated herein; and
(iv) the Underwriters and their respective affiliates may have interests that differ from those of
the Company. The Company hereby waives any claims that the Company may have against the
Underwriters with respect to any breach of fiduciary duty in connection with this offering.
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 to Banc of America
Securities LLC Xxx Xxxxxx Xxxx, XX0-000-00-00, Xxx Xxxx, XX 00000, Facsimile: (000)
000-0000, Attention: High Grade Transaction Management, and Xxxxx Fargo Securities, LLC, 000
X. Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, Facsimile (000) 000-0000, Attention: Transaction
Management Department; and
(b) if to the Company, shall be delivered or sent by mail or facsimile transmission to
the address of the Company c/o Reliance Standard Life Insurance Company,
0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, Attention: Xxxx
X. Xxxxxxx (Fax: (000) 000-0000).
-26-
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. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company, and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the directors, officers
and employees of the Underwriters and each person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriters contained in Section 8(b) of this Agreement shall be deemed to be for the benefit of
the directors of the Company, the officers of the Company who have signed the Registration
Statement and any person controlling the Company within the meaning of Section 15 of the Securities
Act. Nothing in this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 15, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision contained herein.
16. Survival. The respective indemnities, representations, warranties and agreements of the
Company and the Underwriters contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
17. Definition of the Terms “Business Day” and “Subsidiary”. For purposes of this Agreement,
(a) “business day” means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on
which banking institutions in New York are generally authorized or obligated by law or executive
order to close and (b) “subsidiary” has the meaning set forth in Rule 405.
18. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
19. Waiver of Jury Trial. The Company and the Underwriters hereby waive all right to trial by
jury in any proceeding (whether based upon contract, tort or otherwise) in any way arising out of
or relating to this Agreement. The Company and the Underwriters agree that a final judgment in any
such proceeding brought in any such court shall be conclusive and binding upon the Company and the
Underwriters, as applicable, and may be enforced in any other courts in the jurisdiction of which
the Company or the Underwriters are or may be subject, by suit upon such judgment.
20. Counterparts. This Agreement may be executed in one or more counterparts and, if executed
in more than one counterpart, the executed counterparts shall each be
deemed to be an original but all such counterparts shall together constitute one and the same
instrument.
-27-
21. 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.
[Signature pages follow]
-28-
If the foregoing correctly sets forth the agreement between the Company and the Underwriters,
please indicate your acceptance in the space provided for that purpose below.
please indicate your acceptance in the space provided for that purpose below.
| Very truly yours, DELPHI FINANCIAL GROUP, INC. |
||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Senior VP | |||
| Accepted: BANC OF AMERICA SECURITIES LLC |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxx X. Xxxxxxx | |||
| Title: | Vice President | |||
| XXXXX FARGO SECURITIES, LLC |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice President | |||
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SCHEDULE 1
| Aggregate Principal | ||||
| Amount of Securities | ||||
| Underwriters | to be Purchased | |||
Banc of America Securities LLC |
$ | 87,500,000 | ||
Xxxxx Fargo Securities, LLC |
$ | 87,500,000 | ||
X.X. Xxxxxx Securities Inc. |
$ | 22,500,000 | ||
U.S. Bancorp Investments, Inc. |
$ | 22,500,000 | ||
KeyBanc Capital Markets Inc. |
$ | 17,500,000 | ||
SG Americas Securities, LLC |
$ | 6,250,000 | ||
The Xxxxxxxx Capital Group, L.P. |
$ | 6,250,000 | ||
Total |
$ | 250,000,000 | ||
SCHEDULE 2
ISSUER FREE
WRITING PROSPECTUS
(RELATING TO PRELIMINARY PROSPECTUS
SUPPLEMENT DATED JANUARY 13, 2010 AND
PROSPECTUS DATED DECEMBER 18, 2008)
FILED PURSUANT TO RULE 433
REGISTRATION NUMBER
333-156284
DELPHI
FINANCIAL GROUP, INC.
$250,000,000 7.875% Senior Notes due 2020
$250,000,000 7.875% Senior Notes due 2020
Final
Term Sheet
Dated
January 14, 2010
| Issuer: | Delphi Financial Group, Inc. | |
| Security Type: | Senior Unsecured Fixed Rate Notes | |
| Principal Amount: | $250,000,000 | |
| Maturity Date: | January 31, 2020 | |
| Ratings (Xxxxx’x/ S&P/ Fitch)*: | Baa3/ BBB /BBB- | |
| Pricing Date: | January 14, 2010 | |
| Settlement Date: | January 20, 2010 (T+3) | |
| Coupon: | 7.875% | |
| Benchmark Treasury: | 3.375% due November 15, 2019 | |
| Benchmark Treasury Yield: | 3.734% | |
| Benchmark Treasury Price: | 97-2 | |
| Spread to Benchmark Treasury: | + 414.1 basis points | |
| Re-Offer Yield: | 7.875% | |
| Price to Public: | 99.995% of principal amount | |
| Interest Payment Dates: | Semi-annually on January 31 and July 31, commencing July 31, 2010 | |
| Redemption Provisions: | ||
| Make-whole call | At any time at a discount rate of Treasury plus 50 basis points | |
| Interest Rate Adjustment: | If the rating on the notes from Xxxxx’x Investors Service, Inc., which we refer to as Moody’s, Standard & Poor’s Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc., which we refer to as S&P, or Fitch Ratings, which we refer to as Fitch, is a rating set forth in the immediately following table, the per annum interest rate on the notes will increase from that set forth herein by the percentage set forth opposite that rating; |
| however, for this purpose, only the two lowest of the rating levels of Xxxxx’x, S&P and Fitch shall be taken into account: |
|
Rating |
Rating Agency | |||||||||||
|
Levels
|
Xxxxx’x | S&P | Fitch | Percentage | ||||||||
| 1 | Ba1 | BB+ | BB+ | 0.25 | % | |||||||
| 2 | Ba2 | BB | BB | 0.50 | % | |||||||
| 3 | Ba3 | BB- | BB- | 0.75 | % | |||||||
| 4 | B1 or below | B+ or below | B+ or below | 1.00 | % | |||||||
| If any of Moody’s, S&P or Fitch subsequently increases its rating with respect to the notes to or above any of the threshold ratings set forth above, the per annum interest rate on such notes will be decreased such that the per annum interest rate equals the interest rate set forth herein plus the percentages (if any) applicable to the lowest two ratings levels of Xxxxx’x, S&P and Fitch in effect immediately following the increase. | ||
| Each adjustment required by any decrease or increase in a rating set forth above, whether occasioned by the action of Moody’s, S&P or Fitch, shall be made independent of any and all other adjustments. In no event shall (1) the per annum interest rate on the notes be reduced below the interest rate set forth herein, and (2) the total increase in the per annum interest rate on the notes exceed 2.00% above the interest rate set forth herein. | ||
| If any two of Moody’s, S&P or Fitch ceases to provide a rating of the notes, any subsequent increase or decrease in the interest rate of the notes necessitated by a reduction or increase in the rating by the agency continuing to provide the rating shall be twice the percentage set forth in the applicable table above. | ||
| No adjustments in the interest rate of the notes shall be made solely as a result of Moody’s, S&P or Fitch ceasing to provide a rating. If all of Xxxxx’x, S&P and Fitch cease to provide a rating of the notes, the interest rate on the notes will increase to, or remain at, as the case may be, 2.00% above the interest rate payable on the notes on the date of their issuance. | ||
| Any interest rate increase or decrease described above will take effect from the first business day of the interest period during which a rating change requires an adjustment in the interest rate. If any of Moody’s, S&P or Fitch changes its rating of the notes more than once during any particular interest period, the last such change to occur will control in the event of a conflict. | ||
| The interest rate on the notes will permanently cease to be subject to any adjustment described above (notwithstanding any subsequent decrease in the ratings by either or both rating agencies) if the notes become rated A3, A- or A- or higher by any two of Xxxxx’x, S&P and Fitch, respectively (or one of these ratings if only rated by one rating agency), with a stable or positive outlook by both such rating agencies. | ||
| Effect of Interest Rate Contingency: | In certain circumstances, if the rating on the notes changes, we may be obligated to pay additional interest on the notes. Our obligation to pay such additional interest may implicate the provisions of the Treasury regulations relating to “contingent payment debt instruments.” Under these regulations, however, a contingency should not cause a debt |
2
| instrument to be treated as a contingent payment debt instrument if, as of the issue date, such contingency is “remote,” “incidental,” or, in certain circumstances, significantly more likely than not to occur. We intend to take the position that the foregoing contingency should not cause the notes to be contingent payment debt instruments. Our position is binding on a holder, unless the holder discloses in the proper manner to the IRS that it is taking a different position. However, this determination is inherently factual and we can give you no assurance that our position would be sustained if challenged by the IRS. A successful challenge of this position by the IRS would require a holder to accrue interest income at a rate higher than the stated interest rate on the notes, and would cause any gain from the sale or other disposition of a note to be treated as ordinary income, rather than capital gain. The discussion of certain U.S. federal income tax considerations assumes that the notes will not be considered contingent payment debt instruments. Holders are urged to consult their own tax advisors regarding the potential application of the contingent payment debt regulations to the notes and the consequences thereof. | ||
| Payment of Additional Amounts by a Foreign Successor Issuer: | A Foreign Successor Issuer is any entity that is organized in Bermuda, Canada, a European Union Member State or Switzerland and becomes a successor of Delphi as a result of a merger of Delphi with and into such entity after the date hereof in accordance with the provisions set forth in the Preliminary Prospectus Supplement “— Consolidation, Merger and Sale of Assets.” | |
| All payments made under or with respect to the notes by any Foreign Successor Issuer will be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge (including related penalties and interest) of whatever nature (collectively, “Taxes”) imposed or levied by or on behalf of any jurisdiction in which such Foreign Successor Issuer is organized or resident for tax purposes or from or through which such Foreign Successor Issuer makes any payment on the notes or any department or political subdivision thereof (each, a “Relevant Taxing Jurisdiction”), unless such Foreign Successor Issuer is required by law to withhold or deduct Taxes. If a Foreign Successor Issuer is required by law to withhold or deduct any amount for or on account of Taxes of a Relevant Taxing Jurisdiction from any payment made under or with respect to the notes, the Foreign Successor Issuer, subject to the exceptions listed below, will pay additional amounts (“Additional Amounts”) as may be necessary to ensure that the net amount received by each holder of the notes after such withholding or deduction (including withholding or deduction attributable to Additional Amounts payable hereunder) will not be less than the amount the holder would have received if such Taxes had not been withheld or deducted. | ||
| A Foreign Successor Issuer will not, however, pay Additional Amounts to a holder or beneficial owner of notes: | ||
|
(a) to the extent the Taxes giving rise to such Additional
Amounts would not have been imposed but for any present or
former connection of the holder or beneficial owner with the
Relevant Taxing Jurisdiction (other than a connection resulting
solely from the ownership of notes);
|
3
|
(b) to the extent the Taxes giving rise to such Additional
Amounts would not have been imposed but for the failure of the
holder or beneficial owner of notes, following the Foreign
Successor Issuer’s written request (or other applicable
withholding agent’s request) addressed to the holder, to
the extent such holder or beneficial owner is legally eligible
to do so, to comply with any certification, identification,
information or other reporting requirements, whether required by
statute, treaty, regulation or administrative practice of a
Relevant Taxing Jurisdiction, as a precondition to exemption
from, or reduction in the rate of deduction or withholding of,
Taxes imposed by the Relevant Taxing Jurisdiction (including,
without limitation, a certification that the holder or
beneficial owner is not resident in the Relevant Taxing
Jurisdiction);
|
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|
(c) with respect to any estate, inheritance, gift, sales,
use, transfer, value added, personal property, excise or any
similar Taxes;
|
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|
(d) if such holder of notes is a fiduciary or partnership
or person other than the sole beneficial owner of such payment,
to the extent the Taxes giving rise to such Additional Amounts
would not have been imposed on such payment had the holder been
the beneficiary, partner or sole beneficial owner, as the case
may be, of such note;
|
||
|
(e) to the extent the Taxes giving rise to such Additional
Amounts would not have been imposed but for the presentation by
the holder of any note, where presentation is required, for
payment on a date more than 30 days after the date on which
payment became due and payable or the date on which payment
thereof is duly provided for, whichever occurs later;
|
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(f) with respect to any withholding or deduction that is
imposed on a payment to an individual and that is required to be
made pursuant to the European Council Directive on the taxation
of savings income that was adopted by the ECOFIN Council on
June 3, 2003 or any law implementing or complying with, or
introduced in order to conform to, such directive (the “EU
Savings Tax Directive”) or is required to be made pursuant
to the Agreement between the European Community and the Swiss
Confederation dated October 26, 2004 providing for measures
equivalent to those laid down in the EU Savings Tax Directive
(the “EU-Swiss Savings Tax Agreement”) or any law or
other governmental regulation implementing or complying with, or
introduced in order to conform to, such agreements;
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(g) to the extent the Taxes giving rise to such Additional
Amounts would not have been imposed if the notes were presented
for payment in another jurisdiction within the European Union;
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(h) with respect to any Tax imposed by the United States,
any state thereof or the District of Columbia;
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(i) with respect to any Tax that is payable other than by
withholding or deduction at source; or
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(j) any combination of items (a), (b), (c), (d), (e), (f),
(g), (h), (i) and (j).
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| A Foreign Successor Issuer will (i) make any such withholding or deduction required by law to be made by such Foreign Successor Issuer and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Foreign Successor Issuer will make reasonable efforts to obtain certified copies of tax receipts evidencing any payment by the Foreign Successor Issuer of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes. The Foreign Successor Issuer will provide to the trustee, within a reasonable time after the date the payment of any Taxes so deducted or withheld is due pursuant to applicable law, either a certified copy of tax receipts evidencing such payment, or, if such tax receipts are not reasonably available to the Foreign Successor Issuer, such other documentation that provides reasonable evidence of such payment by the Foreign Successor Issuer. | ||
| At least 30 calendar days prior to each date on which any payment under or with respect to the notes is due and payable, if the Foreign Successor Issuer will be obligated to pay Additional Amounts with respect to such payment (unless such obligation to pay Additional Amounts arises after the 40th day prior to the date on which payment under or with respect to the notes is due and payable, in which case it will be promptly thereafter), the Foreign Successor Issuer will deliver to the trustee an officers’ certificate stating that such Additional Amounts will be payable and the amounts so payable and will set forth such other information necessary to enable the trustee to pay such Additional Amounts to holders of the notes on the payment date. The Foreign Successor Issuer will promptly publish a notice in accordance with the provisions set forth in the indenture stating that such Additional Amounts will be payable and describing the obligation to pay such amounts. | ||
| The obligations described under this heading will survive any termination, defeasance or discharge of the indenture and will apply mutatis mutandis to any successor to any Foreign Successor Issuer which successor is organized in Bermuda, Canada, a European Union Member State or Switzerland, or to any jurisdiction in which such successor is organized or is resident for tax purposes or any jurisdiction from or through which payment is made by such successor or its respective agents. Whenever the indenture or the Preliminary Prospectus Supplement — “Description of Notes” refers to, in any context, the payment of principal, premium, if any, interest or any other amount payable under or with respect to any note, such reference includes the payment of Additional Amounts as described hereunder, if applicable. | ||
| Tax Redemption: | If, as a result of: | |
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(a) any amendment to, or change in, the laws or treaties
(or regulations or rulings promulgated thereunder) of any
Relevant Taxing Jurisdiction which is announced and becomes
effective after the date on which a Foreign Successor Issuer
becomes a Foreign Successor Issuer (or, where a jurisdiction in
question does not become a Relevant Taxing Jurisdiction until a
later date, such later date); or
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(b) any amendment to, or change in, the official
application or official interpretation of the laws, treaties,
regulations or rulings of any Relevant Taxing Jurisdiction which
is announced and becomes effective after the date on which a
Foreign Successor Issuer becomes a Foreign Successor Issuer (or,
where a jurisdiction in question does not become a Relevant
Taxing Jurisdiction until a later date, such later date),
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| such Foreign Successor Issuer would be obligated to pay, on the next date for any payment and as a result of that amendment or change, Additional Amounts as described above under “— Payment of Additional Amounts by a Foreign Successor Issuer” with respect to the Relevant Taxing Jurisdiction, which such Foreign Successor Issuer reasonably determines it cannot avoid by the use of reasonable measures available to it, then such Foreign Successor Issuer may redeem all, but not less than all, of the notes, at any time thereafter, upon not less than 30 nor more than 60 days’ notice, at a redemption price of 100% of their principal amount, plus accrued and unpaid interest, if any, to the redemption date. Prior to the giving of any notice of redemption described in this paragraph, a Foreign Successor Issuer will deliver to the trustee: | ||
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(a) a certificate signed by an officer of such Foreign
Successor Issuer stating that the obligation to pay the
Additional Amounts cannot be avoided by such Foreign Successor
Issuer’s taking reasonable measures available to it; and
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(b) a written opinion of independent legal counsel to such
Foreign Successor Issuer of recognized standing to the effect
that such Foreign Successor Issuer has or will become obligated
to pay such Additional Amounts as a result of a change,
amendment, official interpretation or application described
above.
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| A Foreign Successor Issuer will publish a notice of any optional redemption of the notes described above in accordance with the provisions of the indenture described in the Preliminary Prospectus Supplement under “Description of Notes — Redemption of Notes at Our Option.” No such notice of redemption may be given more than 60 days before the Foreign Successor Issuer first becomes liable to pay any Additional Amounts. | ||
| Risk Factor: | Downgrades or other changes in our credit ratings could affect our financial results and reduce the market value of the notes. | |
| The interest rate payable on the notes will be subject to adjustment from time to time if any rating agency, downgrades the credit rating assigned to the notes as described above. We can give no assurance, however, that such adjustment will fully compensate you for any loss in value of the notes as a result of any ratings downgrade. | ||
| CUSIP / ISIN: | 247131 AF2 / US247131AF28 | |
| Denominations: | $2,000 and integral multiples of $1,000 in excess thereof | |
| Joint Book-Running Managers: | Banc of America Securities LLC | |
| Xxxxx Fargo Securities, LLC |
6
| Joint Lead Managers: | X.X. Xxxxxx Securities Inc. | |
| U.S. Bancorp Investments, Inc. | ||
| Senior Co-Manager: | KeyBanc Capital Markets Inc. | |
| Co-Managers: | SG Americas Securities, LLC | |
| The Xxxxxxxx Capital Group, L.P. |
| * | A credit rating is not a recommendation to buy, sell or hold the securities and may be subject to revision or withdrawn at any time by the assigning rating agency. Each credit rating should be evaluated independently of any other credit rating. Any rating assigned to the notes does not enhance, affect or address the likely performance of the notes other than the ability of the Issuer to meet its obligations. |
The issuer has filed a registration statement (including a
prospectus) with the SEC for the offering to which this
communication relates. Before you invest, you should read the
prospectus in that registration statement and other documents
the issuer has filed with the SEC for more complete information
about the issuer and this offering. You may get these documents
for free by visiting XXXXX on the SEC Web site at xxx.xxx.xxx.
Alternatively, you may obtain a copy of the prospectus by
calling toll-free
1-800-294-1322
at Banc of America Securities LLC or
0-000-000-0000
at Xxxxx Fargo Securities, LLC.
7
EXHIBIT A-1
FORM OF OPINION OF ISSUER’S COUNSEL
(i) The Securities have been duly authorized, executed and issued by the Company and, when
authenticated in accordance with the provisions of the Base Indenture and the Supplemental
Indenture and when delivered to and paid for by you in accordance with the terms of the
Underwriting Agreement, will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to the Enforceability
Exceptions, and will be entitled to the benefits of the Indenture.
(ii) Each of the Base Indenture and the Supplemental Indenture has been duly authorized by the
Company and will have been duly qualified under the Trust Indenture Act and, when duly executed by
the Trustee and delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to the Enforceability Exceptions.
(iii) Except for the registration of the Securities under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state or foreign securities laws in connection with the purchase and
sale of the Securities by the Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or assets is required for the issue
and sale of the Securities, the execution, delivery and performance of the Transaction Documents by
the Company and the consummation of the transactions contemplated thereby.
(iv) The statements made in each of the Preliminary Prospectus and the Prospectus under the
captions “Description of Debt Securities” and “Certain United States Federal Income Tax
Considerations for Non-United States Holders,” in each case insofar as such statements purport to
constitute summaries of the Company’s Securities, the terms of agreements or other documents
referred to therein, matters of U.S. federal income tax law or legal conclusions with respect
thereto, or other legal matters, constitute accurate summaries of such matters in all material
respects.
In rendering such opinion, such counsel may state that its opinion is limited to matters
governed by the federal laws of the United States of America and the laws of the States of New York
and Delaware. Such counsel may also state that they have relied, as to factual matters, to the
extent they deem such reliance proper, upon certificates of officers of the Company and its
subsidiaries and other documents.
EXHIBIT A-2
Such counsel has participated in conferences with officers and other representatives of the
Company, representatives of the independent registered public accounting firm for the Company,
representatives of counsel for the Underwriters and representatives of the Underwriters at which
the contents of the Registration Statement, the most recent Preliminary Prospectus and the
Prospectus (in each case, including the documents incorporated by reference therein) and the Issuer
Free Writing Prospectuses, if any, specified on a schedule to such letter (which schedule shall be
reasonably acceptable to the Representatives), and related matters were discussed. Although such
counsel has made certain inquiries and investigations in connection with the preparation of the
Registration Statement, the most recent Preliminary Prospectus, the Prospectus and each Issuer Free
Writing Prospectus, if any, specified on such schedule, the limitations inherent in the role of
outside counsel are such that such counsel cannot and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in such documents except as provided
in paragraph (iv) of such counsel’s opinion to the Underwriters of even date therewith. Subject to
the foregoing, such counsel advises the Underwriters that (a) the Registration Statement, as of the
date it first became effective and as of the date hereof, and the Prospectus, when filed with the
Commission pursuant to Rule 424(b) under the Securities Act and as of the date hereof (other than
the Trustee’s Statement of Eligibility on Form T-1) appeared and appear to comply as to form in all
material respects with the requirements of the Securities Act and the applicable rules and
regulations thereunder and (b) that no facts have come to their attention that lead them to believe
that (i) the Registration Statement (including the documents filed under the Exchange Act
incorporated by reference therein) as of its most recent effective date (which for purposes of this
letter shall be deemed to be the date upon which the Applicable Time occurred), 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, (ii) the Prospectus, as of the date of the
Prospectus Supplement and as of the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading or
(iii) the most recent Preliminary Prospectus together with the information included on Schedule 2
to the Agreement and the Issuer Free Writing Prospectus, if any, set forth on such schedule, taken
together, as of the Applicable Time, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood that such counsel
expresses no comment in clauses (a) or (b) with respect to the financial statements or other
financial and statistical data that is included in, incorporated by reference or omitted from the
Registration Statement, the most recent Preliminary Prospectus, the Prospectus and any Issuer Free
Writing Prospectus specified on such schedule or to any trustee’s statement of eligibility on Form
T-1).
Such letter shall expressly state that, as used therein, all references to the Registration
Statement, the most recent Preliminary Prospectus and the Prospectus shall include the documents
incorporated and deemed to be incorporated by reference therein.
EXHIBIT A-3
FORM OF OPINION OF COMPANY’S IN-HOUSE COUNSEL
(i) The Company and the Significant Subsidiaries have been duly incorporated and are validly
existing as corporations under the laws of their respective jurisdictions of incorporation and are
in good standing under such laws, with full corporate power and authority to own, lease and operate
their respective properties and conduct their respective businesses as described in the most recent
Preliminary Prospectus and the Prospectus.
(ii) The Company has all requisite corporate power and authority to issue, sell and deliver
the Securities in accordance with and upon the terms and conditions set forth in the Agreement, the
Registration Statement, the most recent Preliminary Prospectus and the Prospectus.
(iii) Neither the issue or sale of the Securities, the execution, delivery or performance of
the Transaction Documents nor consummation of the transactions contemplated thereby will result in
a breach or violation of, or constitute a default under, the certificate of incorporation or
by-laws of the Company.
(iv) The Company has all necessary corporate power and authority to execute and deliver the
Transaction Documents and to perform its obligations thereunder. The Transaction Documents have
been duly authorized, executed and delivered by the Company.
(v) To such counsel’s knowledge, except as disclosed in the Preliminary Prospectus and the
Prospectus, all of the outstanding shares of capital stock or other ownership interests of
RSLIC-Texas, RSLIC, SNCC and SIG Holdings, Inc. are owned directly or indirectly by the Company,
free and clear of any perfected interest.
(vi) The issue and sale of the Securities, the execution, delivery and performance of the
Transaction Documents and the consummation of the transactions therein contemplated will not
conflict with, or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries are subject, except where such conflict,
breach, violation or default would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the financial condition, earnings or business of the Company and
its subsidiaries considered as one enterprise, nor will such actions result in any violation of the
provisions of the certificate of incorporation or bylaws of the Company or any statute, rule or
regulation of the States of New York or Delaware or the United States of America or any
governmental agency or body thereof which, in such counsel’s experience, is ordinarily applicable
to transactions of the type contemplated by the Agreement, or any judgment, order or decree known
to such counsel of any court or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their respective properties.
(vii) To such counsel’s knowledge, 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 Securities Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under the Securities Act.
(viii) The Registration Statement and any post-effective amendments thereto became effective
under the Securities Act as of the respective dates they were filed with the Commission, and the
most recent Preliminary Prospectus and any supplements thereto and the Prospectus and any
supplements thereto were filed with the Commission pursuant to the subparagraph of Rule 424(b)
under the Securities Act specified in such opinion on the respective dates specified therein, and
no stop order suspending the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending before or, to the knowledge of
such counsel, threatened by the Commission. No order of the Commission directed to any document
incorporated by reference in the Registration Statement has been issued, and no challenge by
appropriate proceedings has been made to the accuracy or adequacy of any document incorporated by
reference in the Registration Statement.
(ix) The Company and each Insurance Subsidiary is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not reasonably be expected to have a material adverse
effect on the financial condition, earnings or business of the Company and its subsidiaries
considered as one enterprise.
(x) To such counsel’s knowledge, there are no legal or governmental proceedings pending or
threatened against the Company and any of its subsidiaries which are required to be disclosed in
the Registration Statement, the most recent Preliminary Prospectus or the Prospectus, other than
those disclosed therein; all pending legal or governmental proceedings to which the Company or any
of its subsidiaries are parties or to which any of their property is subject which are not
described in the Registration Statement, the most recent Preliminary Prospectus and the Prospectus,
including ordinary routine litigation incidental to the business, would, considered in the
aggregate, not reasonably be expected to have a material adverse effect on the financial condition,
earnings or business of the Company and its subsidiaries considered as one enterprise.
(xi) To such counsel’s knowledge, each subsidiary of the Company holds such licenses,
certificates, authorizations and permits from governmental authorities (including, without
limitation, Insurance Licenses) which are necessary to the conduct of its insurance business as
presently operated; each subsidiary has fulfilled and performed all obligations necessary to
maintain the Insurance Licenses; there is no pending or, to the best of such counsel’s knowledge,
threatened action, suit, or proceeding that may reasonably be expected to lead to the revocation,
termination or suspension of any such license, certificate, authorization or permit (including,
without limitation, the Insurance Licenses), except for an action, suit or proceeding which would
not have a material adverse effect on the financial condition, earnings or business of the Com-
-2-
pany and its subsidiaries, considered as one enterprise, and except, in each of the foregoing
cases, as to licenses, certificates, authorizations or permits, the failure of which to obtain or
maintain would not have a material adverse effect on the management, financial position,
stockholders’ equity or results of operations, of the Company and its subsidiaries considered as
one enterprise.
(xii) No insurance regulatory agency or body has issued any order or decree that by its terms
is specifically applicable to one or more of the Insurance Subsidiaries, as opposed to insurance
companies generally, restricting or prohibiting the payment of dividends by any of the Insurance
Subsidiaries to their respective parent companies.
(xiii) The descriptions in the Registration Statement, the most recent Preliminary Prospectus
and the Prospectus (including, without limitation, the descriptions in the documents incorporated
by reference therein) of statutes, regulations, and legal or governmental proceedings, to the
extent they constitute matters of law and summaries of legal matters, documents or proceedings,
fairly present the information called for with respect to such legal matters, documents or
proceedings and are accurate in all material respects. To the knowledge of such counsel, there are
no contracts or documents required to be described in the Registration Statement, the most recent
Preliminary Prospectus or the Prospectus or to be filed as exhibits thereto which are not described
or filed as required.
(xiv) The Company is not, and will not upon application of the proceeds from the sale of the
Securities be, an “investment company” as such term is defined in the Investment Company Act of
1940, as amended.
The opinion of such counsel shall be limited to the laws of the United States and the States
of New York and Delaware (except that if a second counsel shall render an opinion relating solely
to Safety National Casualty Corp., a Missouri corporation, and SIG Holdings, Inc., a Delaware
corporation, such second opinion may be limited to the laws of the State of Missouri and the
Delaware General Corporation Law). Such counsel may also state that they have relied, as to
factual matters but not legal conclusions, to the extent such counsel deems such reliance proper,
upon certificates of officers of the Company and its subsidiaries and other documents.
-3-
