CGS&H DRAFT
11/17/95
U S WEST, INC.
4,900,000 DECS(SM) (Debt Exchangeable for Common Stock(SM)*
% Exchangeable Notes Due _____________, 1998
(Subject to Exchange into Shares of Common Stock,
par value $.10 per share, of Enhance Financial Services Group Inc.)
Underwriting Agreement
New York, New York
_______________ , 1995
Salomon Brothers Inc
As Representative of the several Underwriters,
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
U S WEST, Inc., a Delaware corporation ("U S WEST"), proposes to sell
to the underwriters named in Schedule I hereto (the "Underwriters"), for whom
you (the "Representative") are acting as representative, an aggregate of
4,900,000 DECS (Debt Exchangeable for Common Stock) consisting of its ____%
Exchangeable Notes Due ____, 1998 (the "Underwritten DECS"), to be issued under
an indenture (the "Indenture") dated as of ________ between U S WEST and The
First National Bank of Chicago, as trustee (the "Trustee"), as amended to the
date hereof by the First Supplemental Indenture thereto dated as of _______. In
addition, the Underwriters will have an option to purchase up to 530,800 DECS
(the "Option DECS" and, together with the Underwritten DECS, the "DECS"). At
maturity (including as a result of acceleration or otherwise), the DECS will be
mandatorily
-----------------------
* Plus an option to purchase from US West, Inc., up to 530,800 additional
DECS to cover over-allotments.
exchanged by U S WEST into shares of Common Stock, par value $.10 per share (the
"Enhance Common Stock"), of Enhance Financial Services Group Inc., a New York
corporation ("Enhance") (or, at U S WEST's option under the circumstances
described in the Final USW Prospectus, cash with an equal value) at the rate
specified in the USW Prospectus (as defined below).
In connection with the foregoing and pursuant to the Subscribers'
Registration Rights Agreement dated October 31, 1986, as amended, between
Enhance and the Subscribers named therein ( the "Registration Rights
Agreements"), Enhance has filed with the Commission a registration statement
with respect to 4,900,000 shares (the "Underwritten Shares") of Enhance Common
Stock, in respect of the Underwritten DECS plus an additional 530,800 shares
(the "Option Shares" and, together with the Underwritten Shares, the "Shares")
of Enhance Common Stock in respect of the Option DECS, for sale by U S WEST as a
selling stockholder (to the extent U S WEST shall so elect to deliver Enhance
Common Stock to holders of the DECS at maturity thereof pursuant to the terms of
the DECS), which registration statement is referred to in Section 2 of this
Agreement.
Certain terms used in this Agreement are defined in paragraph (a)(vi)
of Section 1 and paragraph (c) of Section 2.
1. REPRESENTATIONS AND WARRANTIES OF U S WEST. (a) U S WEST
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 1.
(i) U S WEST has filed with the Commission a registration statement
(file number 33-62451) on such Form, including a basic prospectus, for the
registration under the Securities Act of 1933, as amended (the "Act"), of
the offering and sale of the DECS. U S WEST may have filed one or more
amendments thereto, and may have used a Preliminary Final USW Prospectus,
each of which has previously been furnished to you. Such registration
statement, as so amended, has become effective. U S WEST will next file
with the Commission pursuant to Rules 415 and 424(b)(2) or (5) a final
supplement to the form of prospectus included in such registration
statement relating to the DECS and the offering thereof. As filed, such
final prospectus supplement, except to the extent the Representative shall
agree in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
Basic USW Prospectus and any Preliminary Final USW Prospectus) as U S WEST
has advised you, prior to the Execution Time, will be included or made
therein.
(ii) On the USW Effective Date, the USW Registration Statement did or
will, and when the Final USW Prospectus is first filed in accordance with
Rule 424(b) and on the Closing Date, the Final USW Prospectus (and any
supplement thereto) will, conform in all material respects with the
applicable requirements of the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Trust
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Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
respective rules thereunder; on the USW Effective Date, the USW
Registration Statement did not or will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; on the USW Effective Date and on the Closing Date the Indenture
did or will comply in all material respects with the applicable
requirements of the Trust Indenture Act and the rules thereunder; and, on
the date of any filing pursuant to Rule 424(b) and on the Closing Date, the
Final USW Prospectus (together with any supplement thereto) will not
include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that U S WEST makes no representations or warranties as to (A)
that part of the USW Registration Statement which shall constitute the
Statement of Eligibility and Qualification (Form T-1) under the Trust
Indenture Act of the Trustee or (B) the information contained in or omitted
from the USW Registration Statement or the Final USW Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to U S WEST by or on behalf of any Underwriter through
the Representative specifically for inclusion in the USW Registration
Statement or the Final USW Prospectus (or any supplement thereto) or (C)
the information contained in or omitted from the Enhance Prospectus
(attached as Appendix A to the Final USW Prospectus), other than
information contained in or omitted from the Enhance Prospectus in reliance
upon and in conformity with information furnished in writing to Enhance by
U S WEST specifically for inclusion in the Enhance Prospectus.
(iii) Subsequent to the respective dates as of which information
is presented in the USW Registration Statement and the Final USW
Prospectus, except as otherwise stated therein, there has been no material
adverse change or any development involving a prospective material adverse
change in the financial condition or results of operations of U S WEST and
its subsidiaries taken as a whole.
(iv) To the knowledge of U S WEST, the representations and warranties
of Enhance contained in Section 2 of this Agreement are (i) in cases where
such representations and warranties are qualified as to materiality, true
and correct and (ii) in all other cases, true and correct in all material
respects.
(v) U S WEST has not taken and will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of Enhance to
facilitate the sale or resale of the DECS or the Shares and has not
effected any sales of Enhance Common Stock which, if effected by the
issuer, would be required to be disclosed in response to Item 701 of
Regulation S-K.
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(vi) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "Commission" shall mean the Securities
and Exchange Commission. "USW Effective Date" shall mean each date that
the USW Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean
the date and time that this Agreement is executed and delivered by the
parties hereto. "Basic USW Prospectus" shall mean the prospectus referred
to in paragraph (a) (i) of this Section 1 contained in the USW Registration
Statement at the USW Effective Date. "Preliminary Final USW Prospectus"
shall mean any preliminary prospectus supplement to the Basic USW
Prospectus which describes the DECS and the offering thereof, is used prior
to filing the Final USW Prospectus and is filed, together with the Basic
USW Prospectus, pursuant to Rule 424(b). "Final USW Prospectus" shall mean
the prospectus supplement relating to the DECS that is first filed pursuant
to Rule 424(b) after the Execution Time together with the Basic USW
Prospectus. "USW Registration Statement" shall mean the registration
statement referred to in paragraph (a) (i) of this Section 1, including
incorporated documents, exhibits and financial statements, as amended at
the Execution Time and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as hereinafter defined), shall
also mean such registration statement as so amended. Such term shall
include any Rule 430A Information deemed to be included therein at the USW
Effective Date as provided by Rule 430A. "Rule 415," "Rule 424," "Rule
430A" and "Regulation S-K" refer to such rules or regulation under the Act.
"Rule 430A Information" means information with respect to the DECS (or the
Shares) and the offering thereof permitted to be omitted from the USW
Registration Statement (or the Enhance Registration Statement) when it
becomes effective pursuant to Rule 430A. Any reference herein to the USW
Registration Statement, the Basic USW Prospectus, any Preliminary Final USW
Prospectus or the Final USW Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 which were filed under the Exchange Act on or before the USW
Effective Date or the issue date of the Basic USW Prospectus, any
Preliminary Final USW Prospectus or the Final USW Prospectus, as the case
may be; and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the USW Registration Statement, the Basic USW
Prospectus, any Preliminary Final USW Prospectus or the Final USW
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the USW Effective Date, or the issue
date of any Preliminary Final USW Prospectus or the Final USW Prospectus,
as the case may be, deemed to be incorporated therein by reference.
(b) In respect of any statements in or omissions from the Enhance
Registration Statement or the Enhance Prospectus or any supplements thereto made
in reliance upon and in conformity with information furnished in writing to
Enhance by U S WEST specifically for inclusion therein, U S WEST makes the same
representations and warranties to Enhance as U S WEST makes to each Underwriter
under paragraph (a)(ii) of this Section 1.
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2. REPRESENTATIONS AND WARRANTIES OF ENHANCE. Enhance represents and
warrants to, and agrees with, each Underwriter and U S WEST as set forth below
in this Section 2.
(a) Enhance meets the requirements for use of Form S-3 under the Act
and has filed with the Commission a registration statement (file number 33-
97824) on such Form, including a related preliminary prospectus, for the
registration under the Act of the offering and sale of the Shares. Enhance
may have filed one or more amendments thereto, including the related
preliminary prospectus, each of which has previously been furnished to you.
Enhance will next file with the Commission one of the following: (i) prior
to effectiveness of such registration statement, a further amendment to
such registration statement, including the form of final prospectus or (ii)
a final prospectus in accordance with Rules 430A and 424(b)(1) or (4). In
the case of clause (ii), Enhance has included in such registration
statement, as amended at the Enhance Effective Date, all information (other
than Rule 430A Information) required by the Act and the rules thereunder to
be included in the Enhance Prospectus with respect to the Shares and the
offering thereof. As filed, such amendment and form of final prospectus,
or such final prospectus, shall contain al Rule 430A Information, together
with all other such required information, with respect to the Shares and
the offering thereof and, except to the extent the Representative shall
agree in writing to a modification, shall be in all substantative respects
in the form furnished to you prior to the Execution Time, shall contain
only such specific additional information and other changes (beyond that
contained in the latest Preliminary Enhance Prospectus) as Enhance has
advised you, prior to the Execution Time, will be included or made therein.
(b) On the Enhance Effective Date, the Enhance Registration Statement
did or will, and when the Enhance Prospectus is first filed (if required)
in accordance with Rule 424(b) and on the Closing Date, the Enhance
Prospectus (and any supplement thereto) will, comply in all material
respects with the applicable requirements of the Act, the Exchange Act
and the respective rules thereunder; on the Enhance Effective Date, the
Enhance Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein
not misleading; and, on the Enhance Effective Date the Enhance Prospectus,
if not filed pursuant to Rule 424(b), did not or will not, and on date of
any filing pursuant to Rule 424(b) and on the Closing Date, the Enhance
Prospectus (together with any supplement thereto) will not, include any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that Enhance makes no representations or warranties as to the
information contained in or omitted from the Enhance Registration
Statement or the Enhance Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to
Enhance (i)
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by or on behalf of any Underwriter through the Representative or (ii)
by U S WEST, in either case, specifically for inclusion in the Enhance
Registration Statement or the Enhance Prospectus (or any supplement
thereto).
(c) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "Enhance Effective Date" shall mean each
date that the Enhance Registration Statement and any post-effective
amendment or amendments thereto became or become effective. "Preliminary
Enhance Prospectus" shall mean any preliminary prospectus referred to in
paragraph (a) of this Section 2 and any preliminary prospectus included in
the Enhance Registration Statement at the Enhance Effective Date that omits
Rule 430A Information. "Enhance Prospectus" shall mean the prospectus
relating to the Shares that is first filed pursuant to Rule 424(b) after
the Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Shares included in
the Enhance Registration Statement at the Enhance Effective Date. "Enhance
Registration Statement" shall mean the registration statement referred to
in paragraph (a) of this Section 2 including incorporated documents,
exhibits and financial statements, as amended at the Execution Time and, in
the event any post-effective amendment thereto becomes effective prior to
the Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended. Such term shall include any Rule
430A Information deemed to be included therein at the Enhance Effective
Date as provided by Rule 430A. Any reference herein to the Enhance
Registration Statement, Preliminary Enhance Prospectus or the Enhance
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Exchange Act on or before the Enhance Effective Date
or the issue date of Preliminary Enhance Prospectus or the Enhance
Prospectus, as the case may be; and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Enhance
Registration Statement, any Preliminary Enhance Prospectus or the Enhance
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Enhance Effective Date, or the
issue date of any Preliminary Enhance Prospectus or the Enhance Prospectus,
as the case may be, deemed to be incorporated therein by reference. The
term "Material Adverse Effect" shall mean any material adverse effect on
the condition (financial or otherwise), earnings, business, properties,
results of operations or business prospects of Enhance and its consolidated
subsidiaries, taken as a whole.
(d) Each of Enhance, Enhance Reinsurance Company, a New York
corporation ("ERC"), and Asset Guaranty Insurance Company, a New York
corporation ("AGC") (ERC and AGC being hereinafter referred to as the
"Subsidiaries") is validly existing as a corporation in good standing under
the laws of the jurisdiction in which it is chartered or organized. Each
of Enhance and the Subsidiaries has been duly incorporated and has full
corporate power and authority to own its properties and conduct its
business as described in the Enhance Prospectus. Each of Enhance and the
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Subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction in which the
ownership or leasing of its properties or the conduct of its business
legally require such qualification, except where the failure so to qualify
or be in good standing would not have a Material Adverse Effect.
(e) To the best knowledge of Enhance, the accountants who certified
the financial statements and supporting schedules included in the Enhance
Registration Statement and the Enhance Prospectus are independent public
accountants as required by the Act and the regulations promulgated under
the Act.
(f) All of the outstanding shares of capital stock of the
Subsidiaries have been duly and validly authorized and issued, are fully
paid and nonassessable and are owned by Enhance directly or indirectly, in
each case, except as described in the Enhance Prospectus (including the
footnotes to the consolidated financial statements for Enhance and its
subsidiaries included in the Enhance Prospectus), free and clear of any
security interests, claims, liens, encumbrances, preemptive rights or other
restrictions.
(g) The historical consolidated financial statements (including the
related notes) included in the Enhance Registration Statement and the
Enhance Prospectus present fairly the consolidated financial position of
Enhance as of the dates indicated and the results of operations of Enhance
and its consolidated subsidiaries for the periods specified; except as
otherwise stated in the Enhance Registration Statement, such financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis; and the
selected historical consolidated financial information included in the
Enhance Prospectus presents fairly the information shown therein and has
been compiled on a basis consistent with that of the related historical
consolidated financial statements included in the Enhance Registration
Statement.
The statutory financial statements of Enhance and each of the
Subsidiaries have been prepared in accordance with the New York Insurance
Law and the rules and regulations of the New York Insurance Department (the
"Insurance Law"), and the selected statutory financial data included in the
Enhance Prospectus fairly presents the information shown therein.
(h) Enhance's issued and authorized capitalization as of September
30, 1995 was as set forth in the Enhance Prospectus under "Capitalization"
and there has been no material change thereto subsequent to such date.
(i) There is no pending or, to the knowledge of Enhance, threatened
action, suit, proceeding or investigation before any court, governmental
agency or body (including, without limitation, any insurance regulatory
agency or body) or arbitrator having jurisdiction over Enhance or the
Subsidiaries involving Enhance or any of the
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Subsidiaries that (a) would be reasonably likely to affect the execution by
Enhance of this Agreement or the performance by Enhance of its obligations
hereunder or the consummation by Enhance of any of the transactions
contemplated herein or (b) would have, or would be reasonably likely to
have, singularly or in the aggregate with all such actions, suits or
proceedings, a Material Adverse Effect or (c) is of a character required to
be disclosed in the Enhance Registration Statement or the Enhance
Prospectus which is not disclosed in the Enhance Registration Statement or
the Enhance Prospectus as required; there are no contracts or other
documents of a character required to be described in the Enhance
Registration Statement or the Enhance Prospectus, or to be filed as an
exhibit, which are not described or filed as required, and all such
contracts are in full force and effect; and the statements in the Enhance
Prospectus under the headings "Certain Relationships and Related
Transactions" and "Legal Matters" and in Item 11 of Enhance's Annual Report
on Form 10-K for 1994 fairly summarize in all material respects the matters
therein described.
(j) Each of Enhance and the Subsidiaries has good, valid and
marketable title to all properties and assets described in the Enhance
Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except as (A) are described in the Enhance
Prospectus or (B) are neither material in amount nor materially significant
in relation to the business of Enhance and the Subsidiaries, considered as
one enterprise. All of the leases and subleases material to the business
of Enhance and the Subsidiaries, considered as one enterprise, and under
which Enhance or any Subsidiary holds properties described in the Enhance
Prospectus, are in full force and effect, and none of Enhance nor any
Subsidiary has any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of Enhance or any Subsidiary under
any of the leases or subleases mentioned above, or affecting or questioning
the rights of such entity to the continued possession of the leased or
subleased properties under any such lease or sublease.
(k) Enhance has not taken and will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of Enhance to
facilitate the sale or resale of the DECS or the Shares.
(l) No consent, approval, authorization or order of any court,
governmental agency or body (including, without limitation, the New York
Insurance Department or any other insurance regulatory agency or body) or
arbitrator having jurisdiction over Enhance or any of the Subsidiaries is
required for the performance by Enhance of its obligations hereunder or the
consummation by Enhance of any of the transactions contemplated herein
except such as have been obtained under the Act and the insurance laws and
regulations of New York and such as may be required under the blue sky laws
of any jurisdiction and the securities laws of any jurisdiction outside the
United States
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in connection with the purchase and distribution of the Shares by the
Underwriters in the manner contemplated in the Final USW Prospectus.
(m) Neither the consummation by Enhance of any of the transactions
contemplated herein nor the fulfillment of the terms hereof will violate,
conflict with, result in a breach of, or constitute a default (or an event
which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (a) any order, law,
treaty, rule, regulation or determination of any court, governmental agency
or body (including, without limitation, any insurance regulatory agency or
body), or arbitrator having jurisdiction over Enhance or any of the
Subsidiaries (other than any violation of or conflict with any such order,
law, treaty, rule, regulation or determination that would not in any manner
adversely affect the sale of the Shares in the manner contemplated in the
Final USW Prospectus or the execution and delivery of, and the performance
by Enhance of its obligations under, this Agreement and would not have,
singularly or in the aggregate with all such other violations or conflicts,
a Material Adverse Effect), (b) the charter or by-laws of Enhance or any of
the Subsidiaries or (c) the terms of any bond, debenture, note or any other
evidence of indebtedness or any agreement, indenture, lease or other
instrument to which Enhance or any Subsidiary is a party or by which any of
them is bound or any of their respective properties is subject or which
would result in the creation or imposition of any lien, charge or
encumbrance upon any of their assets (other than any breach of or default
under the terms of any such bond, debenture, note or other evidence of
indebtedness or agreement, indenture, lease or other instrument that would
not in any manner adversely affect the sale of the Shares in the manner
contemplated in the Final USW Prospectus or the execution and delivery of,
and the performance by Enhance of their obligations under, this Agreement
and would not have, singularly or in the aggregate with all such other
breaches or defaults, a Material Adverse Effect).
(n) None of Enhance or any of the Subsidiaries is in violation of, in
conflict with, in breach of or in default (or knows of an event which with
the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (a) any order, law, treaty, rule,
regulation or determination of any court, governmental agency or body
(including, without limitation, any insurance regulatory agency or body),
or arbitrator having jurisdiction over Enhance or any of the Subsidiaries
(other than any violation of or conflict with any such order, law, treaty,
rule, regulation or determination that would not adversely affect the sale
of the Enhance Common Stock or the execution and delivery of, and the
performance by Enhance of its obligations under, this Agreement and would
not have, singularly or in the aggregate with all such other violations or
conflicts, a Material Adverse Effect), (b) its charter or by-laws or (c)
the terms of any bond, debenture, note or any other evidence of
indebtedness or any agreement, indenture, lease or other instrument to
which any of them is a party or by which any of them is bound or any of
their respective properties is subject (other than any breach of or default
under the terms of any such bond, debenture, note or other
9
evidence of indebtedness or agreement, indenture, lease or other instrument
that would not in any manner adversely affect the sale of the Shares or the
execution and delivery of, and the performance by Enhance of its
obligations under this Agreement and would not have, singularly or in the
aggregate with all such other breaches or defaults, a Material Adverse
Effect).
(o) Enhance and each of the Subsidiaries has such permits, licenses,
certificates and authorizations of governmental agencies or bodies
(including, without limitation, any insurance regulatory agencies or
bodies) as are necessary to own its properties and to conduct its business
as described in the Enhance Registration Statement (except where the
failure to have obtained such permits, licenses, certificates, and
authorizations, singularly or in the aggregate, would not have a Material
Adverse Effect) and there is no pending or, to the knowledge of Enhance,
threatened, action, suit, proceeding or investigation that may lead to the
revocation, termination or suspension of any such permit, license,
certificate, or authorization (including, without limitation, any permit,
license, certificate, or authorization from any insurance regulatory agency
or body), the revocation, termination or suspension of which would have,
singularly or in the aggregate with all other such revocations,
terminations or suspensions, a Material Adverse Effect.
(p) No relationship, direct or indirect, exists between or among any
of Enhance or any affiliate of Enhance, on the one hand, and any director,
officer, stockholder, customer or supplier of any of them, on the other
hand, which is required by the Act or by the rules and regulations
promulgated under the Act to be described in the Enhance Registration
Statement or the Enhance Prospectus which is not so described or is not
described as required.
(q) Other than as described in the Enhance Prospectus or as would not
have a Material Adverse Effect, all treaties and other arrangements to
participate as a reinsurer of the types of risks described in the Enhance
Prospectus to which Enhance or any of the Subsidiaries is a party are in
full force and effect, and neither Enhance nor any of the Subsidiaries is
in violation of, or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition contained
therein; none of Enhance or any of the Subsidiaries has received any notice
from any of the other parties to such treaties, contracts or agreements
that such other party intends not to perform such treaty, contract or
agreement, and Enhance has no knowledge that any of the other parties to
such treaties or arrangements will be unable to perform such treaty or
arrangement; and, to the knowledge of Enhance, no change in any insurance
laws or regulations is pending which, if made effective, would have, or
would be reasonably likely to have, singularly or in the aggregate with all
such changes, a Material Adverse Effect.
(r) Other than as described in the Enhance Prospectus, there are no
outstanding warrants, options or other agreements that constitute the right
to receive or purchase
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any shares of capital stock of Enhance or any of the Subsidiaries and there
are no restrictions upon the voting or transfer of, or the declaration or
payment of any dividend or distribution on, any shares of capital stock of
Enhance or any of the Subsidiaries.
(s) Subsequent to the Enhance Effective Date, (A) there has been no
change and there has arisen no condition that would, or would be reasonably
likely to, singularly or in the aggregate with all such changes or
conditions, have a Material Adverse Effect, (B) there have been no
transactions entered into and no transactions are contemplated by Enhance
or any of the Subsidiaries which are material, individually or in the
aggregate with all such transactions, with respect to any of them and of a
character required to be disclosed in the Enhance Registration Statement
and (C) there has been no dividend or distribution of any kind declared,
paid or made by Enhance on any class of its capital stock, other than
___________ [if quarterly dividend is declared or payable between Enhance
Effective Date and Closing, specify].
(t) None of Enhance or the Subsidiaries is an "investment company" or
under the "control" of an "investment company," as such terms are defined
under the Investment Company Act of 1940, as amended.
(u) None of the employee benefit plans maintained at any time by
Enhance or the trusts created thereunder has engaged in a "prohibited
transaction" which could subject any such employee benefit plan or trust to
a tax or penalty, the effect of which would likely result in a Material
Adverse Effect; nor has any employee benefit plan maintained by Enhance or
any Subsidiary nor has Enhance or any Subsidiary (A) incurred liability to
the Pension Benefit Guaranty Corporation, other than for required insurance
premiums which have been paid when due, or (B) incurred any accumulated
funding deficiency, whether or not waived, except for any such liabilities
or deficiencies which, individually or in the aggregate, would not result
in a Material Adverse Effect.
(v) The Enhance Common Stock is duly listed and admitted for trading
on the New York Stock Exchange (the "NYSE").
3. PURCHASE AND SALE. (a) Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, U S WEST
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from U S WEST, the number of DECS set forth opposite
that Underwriter's name on Schedule I hereto, at a price of $[ ] per DECS.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, U S WEST hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
530,800 of the Option DECS at the same purchase
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price as the Underwriters shall pay for the Underwritten DECS. Said option may
be exercised only to cover over-allotments in the sale of the Underwritten DECS
by the Underwriters. Said option may be exercised in whole or in part at any
time (but not more than once) on or before the 30th day after the date of the
Final USW Prospectus upon written or telegraphic notice by the Representative to
U S WEST setting forth the number of the Option DECS as to which the several
Underwriters are exercising the option and the settlement date. Delivery of
certificates for the Option DECS, and payment therefor, shall be made as
provided in Section 4 hereof. The number of the Option DECS to be purchased by
each Underwriter shall be the same percentage of the total number of the Option
DECS to be purchased by the several Underwriters as such Underwriter is
purchasing of the Underwritten DECS, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional Option DECS.
4. DELIVERY AND PAYMENT. Delivery of and payment for the
Underwritten DECS and the Option DECS (if the option provided for in Section
3(b) hereof shall have been exercised on or before the first business day prior
to the Closing Date) shall be made at 10:00 AM, New York City time, on ________,
1995, (or such later date not later than five business days after such specified
date as the Representative shall designate) which date and time may be postponed
by agreement between the Representative and U S WEST or as provided in Section
11 hereof (such date and time of delivery and payment for the DECS being herein
called the "Closing Date"). Delivery of the DECS shall be made to the
Representative for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representative of the purchase
price thereof to or upon the order of U S WEST by certified or official bank
check or checks drawn on or by a New York Clearing House bank and payable in
next day funds. Delivery of the DECS shall be made at such location as the
Representative shall reasonably designate at least one business day in advance
of the Closing Date and payment for such DECS shall be made at the office of
Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx.
Certificates for the DECS shall be registered in such names and in such
denominations as the Representative may request not less than three full
business days in advance of the Closing Date.
U S WEST agrees to have the DECS available for inspection, checking
and packaging by the Representative in New York, New York, not later than 1:00
PM on the business day prior to the Closing Date.
If the option provided for in Section 3(b) hereof is exercised after
the first business day prior to the Closing Date, U S WEST will deliver (at the
expense of U S WEST) to the Representative at One New York Plaza, New York, New
York, on the date specified by the Representative (which shall be within three
business days after exercise of said option), certificates for the Option DECS
in such names and denominations as the Representative shall have requested
against payment of the purchase price thereof to or upon the order of U S WEST
by certified or official bank check or checks drawn on or by a New York Clearing
House bank and payable in next day funds. If settlement for the Option DECS
occurs after the
12
Closing Date, U S WEST and Enhance will deliver to the Representative on the
settlement date for the Option DECS, and the obligation of the Underwriters
to purchase the Option DECS shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date
the opinions, certificates and letters delivered on the Closing Date pursuant
to Section 7 hereof.
5. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the DECS for sale to the public as set forth in
the Final USW Prospectus.
6. AGREEMENTS OF U S WEST. U S WEST agrees with the several
Underwriters that:
(a) U S WEST will use its best efforts to cause the USW Registration
Statement, if not effective at the Execution Time, and any amendment
thereof to become effective. Prior to the termination of the offering of
the DECS, U S WEST will not file any amendment of the USW Registration
Statement or supplement (including the Final USW Prospectus or any
Preliminary Final USW Prospectus) to the Basic USW Prospectus unless U S
WEST has furnished you a copy for your review prior to filing and will not
file any such proposed amendment or supplement to which you reasonably
object unless U S WEST shall conclude in good faith that such filing is
required by applicable law. Subject to the foregoing sentence, U S WEST
will cause the Final USW Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable
paragraph of Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to the Representative of such timely filing. U S
WEST will promptly advise the Representative (i) when the USW Registration
Statement, if not effective at the Execution Time, and any amendment
thereto, shall have become effective, (ii) when the Final USW Prospectus,
and any supplement thereto, shall have been filed with the Commission
pursuant to Rule 424(b), (iii) when, prior to termination of the offering
of the DECS, any amendment to the USW Registration Statement shall have
been filed or become effective, (iv) of any request by the Commission for
any amendment of the USW Registration Statement or supplement to the Final
USW Prospectus or for any additional information, (v) of the issuance by
the Commission of any stop order suspending the effectiveness of the USW
Registration Statement or the institution or threatening of any proceeding
for that purpose and (vi) of the receipt by U S WEST of any notification
with respect to the suspension of the qualification of the DECS for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose. U S WEST will use its best efforts to prevent the issuance
of any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the DECS is
required to be delivered under the Act, any event occurs as a result of
which the Final USW Prospectus as then supplemented would include any
untrue statement of a material fact
13
or omit to state any material fact necessary to make the statements therein
in the light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend the USW Registration
Statement or supplement the Final USW Prospectus to comply with the Act or
the Exchange Act or the respective rules thereunder, U S WEST promptly will
prepare and file with the Commission, subject to the second sentence of
paragraph (a) of this Section 6, an amendment or supplement which will
correct such statement or omission or effect such compliance.
(c) As soon as practicable, U S WEST will make generally available to
its security holders an earnings statement or statements of U S WEST and
its subsidiaries which will satisfy the provisions of Section 11(a) of the
Act and Rule 158 under the Act.
(d) U S WEST will furnish to the Representative and counsel for the
Underwriters, without charge, copies of the USW Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of the
USW Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by the
Act, as many copies of each Preliminary Final USW Prospectus and the Final
USW Prospectus and any supplement thereto as the Representative may
reasonably request. U S WEST will pay the expenses of printing or other
production of the USW Registration Statement, each Preliminary Final USW
Prospectus and the Final USW Prospectus.
(e) U S WEST will arrange for the qualification of the DECS and the
Shares for sale under the laws of such jurisdictions as the Representative
may designate and will maintain such qualifications in effect so long as
required for the distribution of the DECS and the Shares; provided,
however, that in connection therewith U S WEST shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction.
(f) U S WEST will not, for a period of 90 days following the
Execution Time, without the prior written consent of the Representative,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of any shares of Enhance Common Stock
or any securities convertible into, or exchangeable for, or warrants to
acquire, shares of Enhance Common Stock (other than the DECS).
(g) U S WEST confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, AN ACT
RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and U S WEST further
agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the USW
Registration Statement becomes or has become effective with the Commission
or with the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported in
14
the Final USW Prospectus, if any, concerning U S WEST's business with Cuba
or with any person or affiliate located in Cuba changes in any material
way, U S WEST will provide the Department notice of such business or
change, as appropriate, in a form acceptable to the Department.
7. AGREEMENTS OF ENHANCE. Enhance agrees with the several
Underwriters that:
(a) Enhance will use its best efforts to cause the Enhance
Registration Statement, if not effective at the Execution Time, and any
amendment thereof to become effective. Prior to the termination of the
offering of the Shares, Enhance will not file any amendment of the Enhance
Registration Statement or supplement to the Enhance Prospectus unless
Enhance has furnished you a copy for your review prior to filing and will
not file any such proposed amendment or supplement to which you reasonably
object unless Enhance shall conclude in good faith that such filing is
required by applicable law. Subject to the foregoing sentence, if the
Enhance Registration Statement has become or becomes effective pursuant to
Rule 430A, or filing of the Enhance Prospectus is otherwise required under
Rule 424(b), Enhance will cause the Enhance Prospectus, properly completed,
and any supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representative of such timely
filing. Enhance will promptly advise the Representative (i) when the
Enhance Registration Statement, if not effective at the Execution Time, and
any amendment thereto, shall have become effective, (ii) when the Enhance
Prospectus, and any supplement thereto, shall have been filed (if required)
with the Commission pursuant to Rule 424(b), (iii) when, prior to
termination of the offering of the Shares, any amendment to the Enhance
Registration Statement shall have been filed or become effective, (iv) if
any request by the Commission for any amendment of the Enhance Registration
Statement or supplement to the Enhance Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Enhance Registration Statement or the
institution or threatening of any proceeding for that purpose and (vi) of
the receipt by Enhance of any notification with respect to the suspension
of the qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. Enhance will
use its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Enhance Common
Stock is required to be delivered under the Act, any event occurs as a
result of which the Enhance Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to
amend the Enhance Registration Statement or supplement the Enhance
Prospectus to comply with the Act or the Exchange Act or the respective
rules
15
thereunder, Enhance promptly will prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 7, an
amendment or supplement which will correct such statement or omission or
effect such compliance.
(c) As soon as practicable, Enhance will make generally available to
its security holders and to the Representative an earnings statement or
statements of Enhance and its Subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) Enhance will furnish to the Representative and counsel for the
Underwriters, without charge, signed copies of the Enhance Registration
Statement (including exhibits thereto) and to each other Underwriter a copy
of the Enhance Registration Statement (without exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Act, as many copies of each Preliminary Enhance Prospectus
and the Enhance Prospectus and any supplement thereto as the Representative
may reasonably request. Enhance will pay the expenses of printing or other
production of the Enhance Registration Statement, each Preliminary Enhance
Prospectus and the Enhance Prospectus.
(e) Enhance will cooperate with U S WEST for purposes of the
qualification of the DECS and the Shares for sale under the laws of such
jurisdictions as the Representative may designate and will maintain such
qualifications in effect so long as required for the distribution of the
DECS and the Shares.
(f) Enhance will not, for a period of 90 days following the Execution
Time, without the prior written consent of the Representative, offer, sell
or contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, (i) any shares of common stock or any securities
convertible into, or exchangeable for, shares of common stock (other than
the Shares in connection with the offering by U S WEST of the DECS);
PROVIDED, HOWEVER, that Enhance may sell Enhance Common Stock or grant
options to purchase the same, in either case, pursuant to any employee
stock option plan, stock ownership plan or dividend reinvestment plan of
Enhance in effect at the Execution Time and Enhance may issue Enhance
Common Stock issuable upon the conversion of securities or the exercise of
warrants outstanding at the Execution Time.
(g) Enhance confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, AN ACT
RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and Enhance further
agrees that if it commences engaging in business with the government of
Cuba or with any person or affiliate located in Cuba after the date the
Enhance Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in
the Enhance Prospectus, if any, concerning Enhance's business with Cuba or
with
16
any person or affiliate located in Cuba changes in any material way,
Enhance will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(h) Enhance will furnish the Trustee in sufficient quantities for
transmission to holders of the DECS Enhance's annual report to shareholders
and reports on Forms 10-K and 10-Q as soon as practicable after such
reports are required to be filed with the Commission.
(i) Enhance will take such actions as may be reasonably necessary to
comply with the rules and regulations of the NYSE in respect of the
offering of the Shares contemplated hereby.
8. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the DECS shall be subject to the
accuracy of the representations and warranties on the part of U S WEST and
Enhance contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 4 hereof, to the accuracy of the statements
of U S WEST and Enhance made in any certificates pursuant to the provisions
hereof, to the performance by U S WEST and Enhance of their respective
obligations hereunder and to the following additional conditions:
(a) If the USW Registration Statement or the Enhance Registration
Statement has not become effective prior to the Execution Time, unless the
Representative agrees in writing to a later time, such Registration Statement
will become effective not later than (i) 6:00 PM, New York City time, on the
date of determination of the public offering price, if such determination
occurred at or prior to 3:00 PM, New York City time, on such date or (ii) 12:00
Noon, New York City time, on the business day following the day on which the
public offering price was determined, if such determination occurred after 3:00
PM, New York City time, on such date; if filing of the Final USW Prospectus or
the Enhance Prospectus, or any supplements thereto, is required pursuant to Rule
424(b), such Prospectuses, and any such supplements, will be filed in the manner
and within the time period required by Rule 424(b); and no stop order suspending
the effectiveness of the USW Registration Statement or the Enhance Registration
Statements shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(b) U S WEST shall have furnished to the Representative the opinion
of Xxxxxxx X. Xxxxx, Esq., Senior Counsel of U S WEST, dated the Closing Date,
to the effect that:
(i) U S West has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction in which it
is organized, with full corporate power and authority to own its properties
and conduct its business as described in the Final USW Prospectus;
17
(ii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein, except such as have been obtained under
the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the distribution of the DECS and the Shares
by U S WEST and such other approvals (specified in such opinion) as have
been obtained; and
(iii) to the best knowledge of such counsel, U S WEST has good and
marketable title to the Shares and owns such Shares free and clear of all
liens, encumbrances, equities and claims.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of Colorado, the
State of Delaware or the United States, to the extent such counsel deems proper
and specified in such opinion, the State of Delaware, upon the opinion of other
counsel of good standing whom such counsel believes to be reliable and who are
satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
U S WEST and public officials. References to the Final USW Prospectus in this
paragraph (b) include any supplements thereto at the Closing Date.
(c) U S WEST shall have furnished to the Representative the opinion
of Weil, Gotshal & Xxxxxx, counsel for U S WEST, dated as of the Closing Date,
to the effect that:
(i) U S WEST has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
full corporate power and authority to own its properties and conduct its
business as described in the Final USW Prospectus;
(ii) the Indenture has been duly authorized, executed and delivered,
has been duly qualified under the Trust Indenture Act, and (assuming the
due authorization, execution and delivery thereof by the Trustee)
constitutes a legal, valid and binding instrument enforceable against U S
WEST in accordance with its terms (subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in effect);
and the DECS have been duly authorized and, when executed and authenticated
in accordance with the provisions of the Indenture and delivered to and
paid for by the Underwriters pursuant to this Agreement will constitute
legal, valid and binding obligations of U S WEST entitled to the benefits
of the Indenture;
(iii) the USW Registration Statement was declared effective under the
Act; any required filing of the Basic USW Prospectus, any Preliminary Final
USW Prospectus and the Final USW Prospectus, and of any supplements
thereto, pursuant to Rule
18
424(b) has been made in the manner and within the time period required by
Rule 424(b); to the best knowledge of such counsel, no stop order
suspending the effectiveness of the USW Registration Statement has been
issued, no proceedings for that purpose have been instituted or threatened;
(iv) this Agreement has been duly authorized, executed and delivered
by U S WEST; and
(v) The statements in the Basic USW Prospectus under the heading
"Description of Debt Securities" and the statements in the Final USW
Prospectus under the heading "Description of the DECS", insofar as such
statements constitute a summary of certain provisions of the Indenture and
the DECS, are accurate in all material respects.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of U S WEST, representatives
of the independent public accountants for U S WEST and representatives of the
Underwriters and counsel for the Underwriters, at which conferences the contents
of the USW Registration Statement and the Final USW Prospectus and related
matters were discussed; such counsel has not independently verified and is not
passing upon and assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the USW Registration Statement and the
Final USW Prospectus, except for the statements in the Basic USW Prospectus
under the heading "Description of Debt Securities" and the statements in the
Final USW Prospectus under the heading "Description of the DECS"; however, based
upon such counsel's participation in the aforesaid conferences, no facts have
come to its attention which lead it to believe that the USW Registration
Statement, as of the USW Effective Date, and the Final USW Prospectus (other
than the financial statements and other financial, statistical, accounting and
operating (as described below) information contained therein, the Enhance
Prospectus and exhibit 25 to the USW Registration Statement, as to which such
counsel need express no opinion) did not comply as to form in all material
respects with the applicable requirements of the Act, the Exchange Act and the
Trust Indenture Act and the respective rules thereunder; and such counsel has no
reason to believe that at the Effective Date the USW Registration Statement
(other than the financial statements and schedules and other financial,
accounting and operating (as described below) information included therein, the
Enhance Prospectus and exhibit 25 to the USW Registration Statement) contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements included
therein not misleading or that, as of the date thereof or on the Closing Date,
the Final USW Prospectus (other than the financial statements and schedules and
other financial, accounting and operating (as described below) information
included therein, the Enhance Prospectus and exhibit 25 to the USW Registration
Statement) includes or included any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
included therein, in the light of the circumstances under which they were made,
not misleading. For purposes of this paragraph, the phrase "operating
information" means
19
information of the type included in the Final USW Prospectus in the second
through fifth line items under the caption "Summary Financial Data - Operating
Data."
(d) The Representative shall have received from Cleary, Gottlieb,
Xxxxx & Xxxxxxxx, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the DECS, the
Indenture, the USW Registration Statement, the Final USW Prospectus (together
with any supplement thereto), the Enhance Common Stock, the Enhance Registration
Statement, the Enhance Prospectus (together with any supplement thereto) and
other related matters as the Representative may reasonably require, and U S WEST
and Enhance shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(e) Enhance shall have furnished to the Representative the opinion of
Xxxxxx Xxxxxxx, Esq., corporate counsel for Enhance, dated as of the Closing
Date, to the effect that:
(i) each of Enhance and the Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with full corporate
power and authority to own its properties and conduct its business as
described in the Enhance Prospectus, and is duly qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or leases
material properties or conducts material business, except where the failure
to qualify would not have a material adverse effect on Enhance and the
Subsidiaries, taken as a whole;
(ii) all the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Enhance
Prospectus, all outstanding shares of capital stock of the Subsidiaries are
owned by Enhance either directly or through wholly owned subsidiaries free
and clear of any perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interests, claims, liens or
encumbrances;
(iii) Enhance's authorized equity capitalization is as set forth in
the Enhance Prospectus; the Shares are duly listed and admitted for trading
on the NYSE; the Enhance Common Stock conforms in all material respects to
the description thereof contained in the Enhance Prospectus; the
outstanding shares of Enhance Common Stock (including the Shares) have been
duly and validly authorized and issued and are fully paid and non-
assessable; the certificates for the Shares are in valid and sufficient
form;
(iv) to the best knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving Enhance or any of its
subsidiaries of a character required to
20
be disclosed in the Enhance Registration Statement which is not adequately
disclosed in the Enhance Prospectus, and there is no franchise, contract or
other document of a character required to be described in the Enhance
Registration Statement or Enhance Prospectus, or to be filed as an exhibit,
which is not described or filed as required; and the statements in the
Enhance Prospectus under the headings "Certain Relationships and Related
Transactions" and "Legal Matters" and in Item 11 of Enhance's Annual Report
on Form 10-K for 1994 fairly summarize the matters therein described;
(v) the Enhance Registration Statement has become effective under the
Act; any required filing of the Enhance Prospectus, and of any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b); to the best knowledge of such counsel,
no stop order suspending the effectiveness of the Enhance Registration
Statement has been issued, no proceedings for that purpose have been
instituted or threatened and the Enhance Registration Statement and the
Enhance Prospectus (other than the financial statements and other financial
information contained therein as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act, the Exchange Act and the Trust Indenture Act and
the respective rules thereunder; and such counsel has no reason to believe
that at the Effective Date the Enhance Registration Statement (other than
the financial statements and other financial information included therein
as to which such counsel need express no opinion) contained any untrue
statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading or that the Enhance Prospectus (other than the financial
statements and other financial information included therein as to which
such counsel need express no opinion) includes any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(vi) this Agreement has been duly authorized, executed and delivered
by Enhance;
(vii) no consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by Enhance of
the transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution of the DECS
by the Underwriters and the distribution of the Shares pursuant to the
terms of the DECS and such other approvals (specified in such opinion) as
have been obtained;
(viii) neither the sale of the Enhance Common Stock, nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation of, or constitute a default under any
21
law or the charter or by-laws of Enhance or the terms of any indenture or
other agreement or instrument known to such counsel and to which Enhance or
any of its subsidiaries is a party or bound or any judgment, order or
decree known to such counsel to be applicable to Enhance or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over Enhance or any of
its subsidiaries; and
(ix) No holders of securities of Enhance, other than U S WEST and
holders that have previously waived their rights, have rights to the
registration of Enhance Common Stock under the Enhance Registration
Statement.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New York or the
United States, to the extent he deems proper and specified in such opinion, upon
the opinion of other counsel of good standing whom such counsel believes to be
reliable and who are satisfactory to counsel for the Underwriters and (B) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of Enhance and public officials. References to the Enhance
Prospectus in this paragraph (e) include any supplements thereto at the Closing
Date.
(f) U S WEST shall have furnished to the Representative a certificate
of U S WEST, signed by the acting Executive Vice President and Chief Financial
Officer of U S WEST, dated the Closing Date, to the effect that the signer of
such certificate has carefully examined the USW Registration Statement, the
Final USW Prospectus, any supplements to the Final USW Prospectus and this
Agreement and that to the best of his knowledge after reasonable investigation:
(i) the representations and warranties of U S WEST in this Agreement
are true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date and U S WEST has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the USW
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to U S WEST's knowledge, threatened; and
(iii) since the date of the most recent financial statements included
in the Final USW Prospectus (exclusive of any supplement thereto), there
has been no material adverse change in the financial position or results of
operations of U S WEST and its subsidiaries taken as a whole, whether or
not arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Final USW Prospectus (exclusive of any
supplement thereto).
22
(g) Enhance shall have furnished to the Representative a certificate
of Enhance, signed by the Chairman of the Board, the President or an Executive
Vice President and the principal financial or accounting officer of Enhance,
dated the Closing Date, to the effect that the signers of such certificate have
carefully examined the Enhance Registration Statement, the Enhance Prospectus,
any supplements to the Enhance Prospectus and this Agreement and that:
(i) the representations and warranties of Enhance in this Agreement
are true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date and Enhance has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Enhance
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to Enhance's knowledge, threatened; and
(iii) since the date of the most recent financial statements included
in the Enhance Prospectus (exclusive of any supplement thereto), there has
been no material adverse change in the condition (financial or other),
earnings, business or properties of Enhance and its subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Enhance Prospectus
(exclusive of any supplement thereto).
(h) At the Execution Time and at the Closing Date, Coopers & Xxxxxxx
L.L.P., accountants for U S WEST, shall have furnished to the Representative a
letter or letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Representative,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements and financial
statement schedules included or incorporated in the USW Registration
Statement and the Final USW Prospectus and reported on by them comply in
form in all material respects with the applicable accounting requirements
of the Act and the Exchange Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the USW and its subsidiaries; carrying out
certain specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the shareholders,
directors and executive, finance, audit committees of U S WEST and its
subsidiaries; and inquiries of certain officials of U S WEST who have
responsibility for
23
financial and accounting matters of U S WEST and its subsidiaries as to
transactions and events subsequent to December 31, 1994, nothing came to
their attention which caused them to believe that:
(1) any unaudited financial statements included or incorporated
in the USW Registration Statement and the Final USW Prospectus do not
comply in form in all material respects with applicable accounting
requirements and with the published rules and regulations of the
Commission with respect to financial statements included or
incorporated in quarterly reports on Form 10-Q under the Exchange Act;
or said unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included or incorporated in the USW Registration Statement and the
Final USW Prospectus; or
(2) with respect to the period subsequent to June 30, 1995,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, in the capital stock of
U S WEST, or any increase in the consolidated long-term debt of U S
WEST and its subsidiaries, or decreases in consolidated net current
assets or net assets as compared with the amounts shown on the June
30, 1995 consolidated balance sheet included or incorporated in the
USW Registration Statement and the Final USW Prospectus, or for the
period from July 1, 1995 to such specified date there were any
decreases, as compared with the corresponding period in the preceding
year in consolidated revenues, net income or net income per share of U
S WEST and its subsidiaries, except in all instances for changes or
decreases set forth in such letter, in which case the letter shall be
accompanied by an explanation by U S WEST as to the significance
thereof unless said explanation is not deemed necessary by the
Representative;
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial or
statistical information derived from the general accounting records of U S WEST
and its subsidiaries) set forth or incorporated in the USW Registration
Statement and the Final USW Prospectus and in Exhibit 12 to the USW Registration
Statement, agrees with the accounting records of U S WEST and its subsidiaries,
excluding any questions of legal interpretation.
References to the Final USW Prospectus in this paragraph (h) include any
supplement thereto at the date of the letter.
(i) At the Execution Time and at the Closing Date, Deloitte & Touche,
accountants for Enhance, shall have furnished to the Representative a letter or
letters, dated respectively as of the Execution Time and as of the Closing Date,
in form and substance
25
satisfactory to the Representative, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and the
respective applicable published rules and regulations thereunder and stating in
effect that:
(i) in their opinion the audited financial statements and financial
statement schedules included or incorporated in the Enhance Registration
Statement and the Enhance Prospectus and reported on by them comply in form
in all material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by Enhance and its subsidiaries; carrying out
certain specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the stockholders,
directors and committees of Enhance and its subsidiaries; and inquiries of
certain officials of Enhance who have responsibility for financial and
accounting matters of Enhance and its subsidiaries as to transactions and
events subsequent to December 31, 1994, nothing came to their attention
which caused them to believe that:
(1) any unaudited financial statements included or incorporated
in the Enhance Registration Statement and the Enhance Prospectus do
not comply in form in all material respects with applicable accounting
requirements and with the published rules and regulations of the
Commission with respect to financial statements included or
incorporated in quarterly reports on Form 10-Q under the Exchange Act;
or said unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements
included or incorporated in the Enhance Registration Statement and the
Enhance Prospectus; or
(2) with respect to the period subsequent to June 30, 1995,
there were any changes, at a specified date not more than five
business days prior to the date of the letter, in the capital stock of
Enhance and its consolidated subsidiaries, or any decreases in
consolidated total assets, stockholders' equity, investments,
increases in long-term debt or liability for losses or loss adjustment
expenses of Enhance as compared with the amounts shown on the June 30,
1995 consolidated balance sheet included or incorporated in the
Enhance Registration Statement and the Enhance Prospectus, or for the
period from July 1, 1995 to such specified date there were any
decreases, as compared with the corresponding period in the preceding
year in consolidated total revenues, pretax operating income, net
income or in the total or per-share amounts of net income, gross
premiums written, net premiums written, net investment income, or
increases in losses and loss adjustment expenses, except in all
instances for
25
changes or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by Enhance as to the
significance thereof unless said explanation is not deemed necessary
by the Representative.
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
Enhance and its subsidiaries) set forth or incorporated in the Enhance
Registration Statement and the Enhance Prospectus, agrees with the
accounting records of Enhance and its subsidiaries, excluding any questions
of legal interpretation.
References to the Enhance Prospectus in this paragraph (i) include any
supplement thereto at the date of the letter.
(j) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in each of the USW Registration Statement and the
Enhance Registration Statements (exclusive of any amendment thereof) and each of
the Final USW Prospectus and the Enhance Prospectus (exclusive of any supplement
thereto), there shall not have been any change, or any development involving a
prospective change, in or affecting the business or properties of either U S
WEST or Enhance and their respective subsidiaries, taken as a whole, the effect
of which is, in the judgment of the Representative, so material and adverse as
to make it impractical or inadvisable to proceed with the offering or delivery
of the DECS as contemplated by the USW Registration Statement (exclusive of any
amendment thereof) and the Final USW Prospectus (exclusive of any supplement
thereto).
(k) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of U S WEST's or Enhance's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Act) or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such rating that does
not indicate the direction of the possible change; it is understood by the
parties that as of the Execution Time the outlook for the rating of U S WEST
debt securities, according to Standard & Poor's Corporation [and Xxxxx'x
Investors Service, Inc.], is "negative".
(l) Prior to the Closing Date, each of U S WEST and Enhance shall
have furnished to the Representative such further information, certificates and
documents as the Representative may reasonably request.
If any of the conditions specified in this Section 8 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representative and counsel for the
26
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representative. Notice of such cancellation shall be given to U S WEST and
Enhance in writing or by telephone or telegraph confirmed in writing.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the DECS
provided for herein is not consummated because any condition to the obligations
of the Underwriters set forth in Section 8 hereof is not satisfied, because of
any termination pursuant to Section 12 hereof or because of any refusal,
inability or failure on the part of U S WEST or Enhance to perform any agreement
herein or comply with any provision hereof other than by reason of a default by
any of the Underwriters, U S WEST will reimburse the Underwriters severally upon
demand for all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the DEC. The Underwriters agree to pay
such expenses, fees and disbursements in any other event. In no event will U S
WEST be liable to any of the Underwriters for damages on account of loss of
anticipated profits.
10. INDEMNIFICATION AND CONTRIBUTION. (a) U S WEST agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter, and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the USW Registration Statement as originally filed or
in any amendment thereof, or in the Basic USW Prospectus, any Preliminary Final
USW Prospectus or the Final USW Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that U S WEST
will not be liable under the indemnity agreement in this subsection (a) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in the USW Registration Statement as originally filed or
in any amendment thereof, or in the Basic USW Prospectus, any Preliminary Final
USW Prospectus or the Final USW Prospectus, or in any amendment thereof or
supplement thereto in reliance upon and in conformity with written information
furnished to U S WEST or Enhance by or on behalf of any Underwriter through the
Representative specifically for inclusion therein or in reliance and in
conformity with the Statement of Eligibility of the Trustee; PROVIDED, FURTHER,
that U S WEST will not be liable under the indemnity agreement in this
subsection (a) to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged
27
untrue statement or omission or alleged omission made in the USW Registration
Statement as originally filed or in any amendment thereof, or in the Basic USW
Prospectus, any Preliminary Final USW Prospectus or the Final USW Prospectus, or
in any amendment thereof or supplement thereto in reliance upon and in
conformity with written information furnished to U S WEST by Enhance
specifically for inclusion therein (including the information contained in any
Preliminary Enhance Prospectus or Enhance Prospectus included in any such
document (other than information contained in or omitted from any such
Preliminary Enhance Prospectus or Enhance Prospectus in reliance on and
conformity with information furnished to Enhance by U S WEST specifically for
inclusion therein)); and PROVIDED, FURTHER that U S WEST shall not be liable to
any Underwriter under the indemnity agreement in this subsection (a) with
respect to the Preliminary Final USW Prospectus to the extent that any such
loss, claim, damage or liability of such Underwriter results from the fact that
such Underwriter sold DECS to a person as to whom it shall be established that
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Final USW Prospectus (excluding documents incorporated by
reference), as the case may be, or of the Final USW Prospectus as then amended
or supplemented (excluding documents incorporated by reference) in any case
where such delivery is required by the Act and where U S WEST has previously
furnished copies thereof in sufficient quantity to such Underwriter and the
loss, claim, damage or liability of such Underwriter results from an untrue
statement or omission of a material fact contained in the Final Preliminary USW
Prospectus and corrected in the Final USW Prospectus (excluding documents
incorporated by reference) or in the Final USW Prospectus as then amended or
supplemented (excluding documents incorporated by reference). This indemnity
agreement will be in addition to any liability which U S WEST may otherwise
have.
(b) U S WEST agrees to indemnify and hold harmless Enhance, each of
its directors, each of its officers who signs the Enhance Registration
Statement, and each person who controls Enhance within the meaning of either the
Act or the Exchange Act, against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Enhance Registration Statement as originally filed or in any amendment
thereof, or in the Preliminary Enhance Prospectus or the Enhance Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission is made in reliance upon and in
conformity with written information furnished in writing to Enhance by U S WEST
specifically for inclusion therein, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability
28
or action. The indemnity agreement shall be in addition to any liability which
U S WEST may otherwise have.
(c) Enhance agrees to indemnify and hold harmless each Underwriter,
the directors, officers, employees and agents of each Underwriter, and each
person who controls any Underwriter within the meaning of either the Act or the
Exchange Act and Enhance agrees to indemnify and hold harmless U S WEST, the
directors, officers, employees and agents of U S WEST, and each person who
controls U S WEST within the meaning of either the Act or the Exchange Act, in
either case, against any and all losses, claims, damages or liabilities, joint
or several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in (i) the Enhance
Registration Statement as originally filed or in any amendment thereof, or in
any Preliminary Enhance Prospectus or the Enhance Prospectus, or in any
amendment thereof or supplement thereto, or (ii) the USW Registration Statement
as originally filed or in any amendment thereof, or in any Preliminary Final USW
Prospectus or the Final USW Prospectus, or in any amendment thereto or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in the documents referred to in clause (i) or (ii) above a
material fact required to be stated in the documents referred to in clause (i)
or (ii) above or necessary to make the statements therein not misleading, but in
the case of the documents referred to clause (ii) 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 furnished in
writing to U S WEST by Enhance specifically for inclusion therein (including the
information contained in any Preliminary Enhance Prospectus or Enhance
Prospectus included in any such document (other than information contained in or
omitted from any such Preliminary Enhance Prospectus or Enhance Prospectus in
reliance on and conformity with information furnished to Enhance by U S WEST
specifically for inclusion therein)), and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that Enhance will not be
liable under the indemnity agreement in this subsection (c) to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made in the documents referred to in clause (i) above in reliance upon
and in conformity with written information furnished to Enhance by or on behalf
of any Underwriter through the Representative specifically for inclusion
therein; PROVIDED, FURTHER that Enhance shall not be liable under the indemnity
agreement in this subsection (c) to the extent that any such loss, claim, damage
or liability arises out of or is based on any such untrue statement or alleged
untrue statement or omission or alleged omission made in the documents referred
to in clause (i) above in reliance upon and in conformity with written
information furnished to Enhance by U S WEST specifically for inclusion therein;
and PROVIDED, FURTHER Enhance shall not be liable to any Underwriter under the
indemnity agreement in this subsection (c) with respect to the
30
Preliminary Enhance Prospectus to the extent that any such loss, claim, damage
or liability of such Underwriter results from the fact that such Underwriter
sold DECS to a person as to whom it shall be established that there was not sent
or given, at or prior to the written confirmation of such sale, a copy of the
Enhance Prospectus (excluding documents incorporated by reference) or of the
Enhance Prospectus as then amended or supplemented (excluding documents
incorporated by reference), as the case may be, in any case where such delivery
is required by the Act and where Enhance has previously furnished copies thereof
in sufficient quantity to such Underwriter and the loss, claim, damage or
liability of such Underwriter results from an untrue statement or omission of a
material fact contained in the Preliminary Enhance Prospectus and corrected in
the Enhance Prospectus (excluding documents incorporated by reference) or in the
Enhance Prospectus as then amended or supplemented (excluding documents
incorporated by reference). This indemnity agreement will be in addition to any
liability which Enhance may otherwise have.
(d) Each Underwriter severally agrees to indemnify and hold harmless
U S WEST, each of its directors, each of its officers who signs the USW
Registration Statement, and each person who controls U S WEST within the meaning
of either the Act or the Exchange Act, to the same extent as the foregoing
indemnity in subsection (a) from U S WEST to each Underwriter, but only with
reference to written information furnished to U S WEST by or on behalf of such
Underwriter through the Representative specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have. U S
WEST acknowledges that the statements set forth in the last paragraph of the
cover page, in the last paragraph of the inside cover page and under the heading
"Plan of Distribution" in any Preliminary Final USW Prospectus or the Final USW
Prospectus constitute the only information furnished in writing by or on behalf
of the several Underwriters for inclusion in the documents referred to in the
foregoing indemnity, and you, as the Representative, confirm that such
statements are correct.
(e) Each Underwriter severally agrees to indemnify and hold harmless
Enhance and U S WEST, each of their respective directors, each of their
respective officers who signs the Enhance Registration Statement or the USW
Registration Statement, respectively, and each person who controls Enhance or U
S WEST within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity in subsection (c) from Enhance to each
Underwriter and U S WEST, but only with reference to written information
relating to such Underwriter furnished to Enhance or U S WEST by or on behalf of
such Underwriter through the Representative specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have.
Enhance acknowledges that the statements set forth in the first paragraph of the
inside cover page and under the heading "Plan of Distribution" in any
Preliminary Enhance Prospectus or the Enhance Prospectus constitute the only
information furnished in writing by or on behalf of the several Underwriters for
inclusion in the documents
30
referred to in the foregoing indemnity, and you, as the Representative, confirm
that such statements are correct.
(f) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 10, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from any liability under paragraphs (a), (b), (c), (d) or (e) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a), (b), (c), (d) or (e)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to the
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party (except as set
forth below) under this Section 10 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. Notwithstanding the indemnifying
party's election to assume the defense of an action pursuant to the immediately
preceding sentence, the indemnified party shall have the right to employ one
separate counsel (including, to the extent necessary, local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the actual or potential defendants in, or targets of,
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party or
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action (so long as such failure to
employ counsel is not the result of an unreasonable determination by the
indemnified party that counsel selected pursuant to the immediately preceding
sentence is unsatisfactory). The indemnifying party or parties shall not be
liable under this Agreement with respect to any settlement made by any
indemnified party or parties without prior written consent (not to be
unreasonably withheld) by the indemnifying party or parties to such settlement.
(g) In the event that the indemnity provided in paragraphs (a), (b),
(c), (d) or (e) of this Section 10 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, U S WEST, Enhance and the
Underwriters agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which U S WEST,
31
Enhance and one or more of the Underwriters may be subject in such proportion as
is appropriate to reflect the relative benefits received by U S WEST, Enhance
and the Underwriters from the offering of the DECS; PROVIDED, HOWEVER, that in
no case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the DECS) be responsible for any amount
in excess of the product of (i) the total Losses and (ii) the percentage
(expressed as a decimal) that the aggregate underwriting discount applicable to
the DECS purchased by such Underwriter hereunder bears to the aggregate initial
public offering price of such DECS. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, U S WEST, Enhance
and the Underwriters shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of U S WEST,
Enhance and the Underwriters in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. The relative benefits received by U S WEST or Enhance on the
one hand and the Underwriters on the other with respect to such offering shall
be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by U S WEST, and the total underwriting discounts
and commissions, respectively, in each case as set forth on the cover page of
the Final USW Prospectus and, as between Enhance and the Underwriters, Enhance
shall be deemed for this purpose to have received such total net proceeds as
received by U S WEST. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by U S WEST and Enhance on the one hand or the Underwriters on the other. U S
WEST, Enhance and the Underwriters agree that it would not be just and equitable
if contribution were determined by PRO RATA allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (g), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 10, each person
who controls an Underwriter within the meaning of either the Act or the Exchange
Act and each director, officer, employee and agent of an Underwriter shall have
the same rights to contribution as such Underwriter, and each person who
controls U S WEST or Enhance within the meaning of either the Act or the
Exchange Act, each officer of U S WEST or Enhance who shall have signed the
Registration Statement and each director of U S WEST or Enhance shall have the
same rights to contribution as U S WEST or Enhance, subject in each case to the
applicable terms and conditions of this paragraph (g).
11. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters shall
fail to purchase and pay for any of the DECS agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of DECS
set forth opposite their names in Schedule I hereto bears to the aggregate
principal amount of DECS set forth opposite the names of all the remaining
Underwriters) the DECS which the defaulting Underwriter or Underwriters agreed
but failed to purchase;
32
PROVIDED, HOWEVER, that in the event that the aggregate principal amount of DECS
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the aggregate amount of DECS set forth in Schedule I hereto,
the remaining Underwriters shall have the right to purchase all, but shall not
be under any obligation to purchase any, of the DECS, and if such nondefaulting
Underwriters do not purchase all the DECS, this Agreement will terminate without
liability to any nondefaulting Underwriter, U S WEST or Enhance. In the event
of a default by any Underwriter as set forth in this Section 11, the Closing
Date shall be postponed for such period, not exceeding seven days, as the
Representative shall determine in order that the required changes in the USW or
Enhance Registration Statement and the Final USW or Enhance Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
U S WEST, Enhance and any nondefaulting Underwriter for damages occasioned by
its default hereunder.
12. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the Representative, by notice given to U S WEST and
Enhance prior to delivery of and payment for the DECS, if prior to such time (i)
trading in U S WEST's or Enhance's common stock shall have been suspended by the
Commission or trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been declared
by either Federal or New York State authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war or other calamity or crisis, the effect of
which on financial markets of the United States is such as to make it, in the
judgment of the Representative, impracticable or inadvisable to proceed with the
offering or delivery of the DECS as contemplated by the Final USW Prospectus
(exclusive of any supplement thereto).
13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of U S
WEST and Enhance or their respective officers and of the Underwriters set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, U S
WEST or Enhance or any of the officers, directors or controlling persons
referred to in Section 10 hereof, and will survive delivery of and payment for
the DECS. The provisions of Sections 9 and 10 hereof shall survive the
termination or cancellation of this Agreement.
14. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telegraphed and confirmed to it at Seven Xxxxx Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000; if sent to U S XXXX, xxxx be mailed, delivered or
telegraphed and confirmed to it at 0000 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000,
attention of the Legal Department; or if sent to Enhance, will be mailed,
delivered, telegraphed and confirmed to it at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxxx, Esq.
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15. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 10 hereof, and no
other person will have any right or obligation hereunder.
16. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
34
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among U S
WEST, Enhance and the several Underwriters.
Very truly yours,
U S WEST Inc.
By: ____________________________
Name:
Title:
Enhance Financial Services Group Inc.
By:_____________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By:
___________________________
Vice President
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
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SCHEDULE I
Amount of
Underwritten DECS
Underwriter to be Purchased
----------- -----------------------
Salomon Brothers Inc . . . . . . . . 4,900,000
-----------------------
Total. . . . . . . . . . . 4,900,000
-----------------------
-----------------------
