Exhibit 1.1
KINGSWAY FINANCIAL CAPITAL TRUST I
KINGSWAY AMERICA INC.
KINGSWAY U.S. FUNDING INC.
KINGSWAY FINANCIAL SERVICES INC.
____% Preferred Securities
(Liquidation Amount $25 per Preferred Security)
UNDERWRITING AGREEMENT
__, 2003
ADVEST, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, INCORPORATED
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
SANDLER ▇'▇▇▇▇▇ & PARTNERS, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇ NBF SECURITIES INC.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
As Representatives of the Several
Underwriters Named in Schedule I Hereto
c/o Advest, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Kingsway Financial Capital Trust I (the "Trust"), a statutory trust
organized under the Delaware Statutory Trust Act (the "Delaware Act") of the
State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
Section 3801 et seq.), Kingsway U.S. Funding Inc., a Delaware corporation (the
"Company"), as depositor of the Trust, Kingsway Financial Services Inc., an
Ontario corporation (the "Guarantor"), as guarantor of (x) the Preferred
Securities (as defined below) to the extent set forth in the Preferred
Securities Guarantee Agreement to be dated as of ________, 2003 (the "Preferred
Securities Guarantee Agreement"), between the Guarantor and BNY Midwest Trust
Company ("Trust Company"), an Illinois trust company, as Trustee (the "Guarantee
Trustee"), and (y) the Junior Subordinated Debentures (as defined below) to the
extent set forth in the Indenture (as defined below), and Kingsway America Inc.
("Kingsway America"), a Delaware corporation and wholly owned subsidiary of the
Guarantor, hereby confirm their agreement with you and the several underwriters,
on whose behalf you have been duly authorized to act as their representatives
(the "Representatives"), as follows:
1. Introduction. Upon the terms and conditions set forth in this
Underwriting Agreement (this "Agreement"), the Trust agrees to, and the Company
agrees to cause the Trust to, issue and sell to the several underwriters
identified in Schedule I annexed hereto (the "Underwriters"), who are acting
severally and not jointly, an aggregate liquidation amount of $ (the "Firm
Securities") of the Trust's ______% preferred securities, representing undivided
beneficial interests in the assets of the Trust (the "Preferred Securities").
The Trust also proposes to, and the Company also proposes to cause the Trust to,
issue and sell to the Underwriters, at the Underwriters' option, up to an
additional $ aggregate liquidation amount of Preferred Securities (the
"Option Securities") in proportion to the amounts set forth opposite their
respective names in Schedule I hereto.
The Preferred Securities and the Common Securities (as defined herein) are
to be issued pursuant to the terms of an Amended and Restated Declaration of
Trust to be dated as of _____________, 2003 (the "Trust Agreement"), among the
Company, as depositor, the Trust Company, as property trustee (in such capacity,
"Property Trustee"), The Bank of New York (Delaware) ("Delaware Trust"), a
Delaware banking corporation, as Delaware trustee ("Delaware Trustee"), the
Administrative Trustees named therein, and the holders from time to time of
undivided beneficial interests in the assets of the Trust. The Preferred
Securities will be guaranteed by the Guarantor on a subordinated basis and
subject to certain limitations with respect to distributions and payments upon
liquidation, redemption or otherwise (the "Preferred Securities Guarantee")
pursuant to the Preferred Securities Guarantee Agreement. The assets of the
Trust will consist of __% junior subordinated deferrable interest debentures,
due _____, 2033 (the "Junior Subordinated Debentures") of the Company which will
be issued under a Junior Subordinated Indenture to be dated as of ________, 2003
(the "Indenture"), among the Company, the Guarantor and the Trust Company, as
Trustee (in such capacity, "Indenture Trustee"). The Guarantor will fully and
unconditionally guarantee on a subordinated basis payments in respect of the
Junior Subordinated Debentures (the "Debenture Guarantee," and together with the
Preferred Securities Guarantee, the "Guarantees") pursuant to the Indenture.
Under certain circumstances, the Junior Subordinated Debentures will be
distributable to the holders of undivided beneficial interests in the assets of
the Trust. The entire proceeds from the sale of the Preferred Securities will be
combined with the entire proceeds from the sale by the Trust to the Company of
the Trust's common securities, representing undivided beneficial interests in
the assets of the Trust (the "Common Securities"), and will be used by the Trust
to purchase an equivalent amount of the Junior Subordinated Debentures from the
Company. Kingsway America will issue to the Company subordinated notes with
economic terms substantially similar to the Junior Subordinated Debentures (the
"Subordinated Notes"). The Company will use the entire proceeds from the sale of
the Junior Subordinated Debentures to purchase the Subordinated Notes.
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For purposes of the Underwriting Agreement, the Company, the Guarantor, the
Trust and Kingsway America are sometimes collectively referred to herein as the
"Offerors."
2. Representations and Warranties. Each of the Offerors represents and
warrants to, and agrees with, each of the Underwriters as follows:
(a) The Offerors have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form F-3 (No.
333-100655) and a related preliminary prospectus for the registration
of the Preferred Securities, the Subordinated Notes, the Guarantees
and the Junior Subordinated Debentures under the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
thereunder (the "Securities Act Regulations"). The Guarantor is a
"foreign private issuer" (as defined in Rule 405 of the Securities Act
Regulations). The Offerors meet the requirements for use of Form F-3
under the Securities Act. The Offerors have prepared and filed such
amendments thereto and such amended preliminary prospectuses as may
have been required to the date hereof, and will file such additional
amendments thereto and such amended prospectuses as may hereafter be
required. The registration statement has been declared effective under
the Securities Act by the Commission. The registration statement as
amended at the time it became effective (including the Prospectus (as
defined below) and all documents incorporated or deemed incorporated
by reference therein at the time it became effective pursuant to Rule
430A(b) of the Securities Act Regulations) is hereinafter called the
"Registration Statement," except that, (i) if the Offerors file a
post-effective amendment to such registration statement which becomes
effective prior to the Closing Date (as defined below), "Registration
Statement" shall refer to such registration statement as so amended
and (ii) if the Offerors file an abbreviated registration statement to
register additional Preferred Securities, Subordinated Notes,
Guarantees and Junior Subordinated Debentures pursuant to Rule 462(b)
under the Securities Act (the "Rule 462 Registration Statement"),
"Registration Statement" shall be deemed to include such Rule 462
Registration Statement. Each prospectus included in the registration
statement, or amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by the
Offerors with the consent of the Underwriters pursuant to Rule 424(a)
of the Securities Act Regulations (including the documents
incorporated or deemed incorporated by reference therein) is
hereinafter called the "Preliminary Prospectus." The term "Prospectus"
means the final prospectus (including the documents incorporated by
reference therein), as first filed with the Commission pursuant to
paragraph (1) or (4) of Rule 424(b) of the Securities Act Regulations.
The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus or Prospectus.
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(b) Each of the Company, the Guarantor and Kingsway America and each other
Subsidiary (as defined below) is duly incorporated and validly
existing as a corporation or other legal entity, as the case may be,
in good standing under the laws of the jurisdiction of its
organization with full power and authority (corporate and other) to
own, lease and operate its properties and conduct its business as
described in the Prospectus; the Guarantor has no subsidiaries except
those set forth in Schedule II attached hereto (each a "Subsidiary"
and collectively, the "Subsidiaries"); the Guarantor owns, directly or
indirectly, beneficially and of record all of the outstanding capital
stock or equity interests of each Subsidiary, including, without
limitation, the Company, free and clear of any claim, lien,
encumbrance or security interest, except as described in the
Prospectus. The Guarantor and each Subsidiary is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which any of them own or lease properties, has an
office, or in which the business conducted by any of them make such
qualification necessary, except where the failure to so qualify would
not have a material adverse effect on the condition (financial or
otherwise), business, prospects, assets, properties, results of
operations or net worth of the Guarantor and the Subsidiaries taken as
a whole ("Material Adverse Effect"); and no proceeding has been
instituted in any jurisdiction revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or
qualification.
(c) The Trust has been duly created and is validly existing in good
standing as a statutory trust under the Delaware Act with full trust
power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus and to enter into
and perform its business obligations under the Trust Agreement and
this Agreement and to issue and perform its obligations under the
Preferred Securities and the Common Securities. The Trust has
conducted and will conduct no business, and exists solely to enter
into the transactions contemplated by the Trust Agreement and
described in the Prospectus. The Trust is not a party to or otherwise
bound by any agreement other than this Agreement and those described
in the Prospectus. The Trust is and will be classified for U.S.
federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. The Trust is and will be treated
as a consolidated subsidiary of the Company pursuant to generally
accepted accounting principles as applied in Canada.
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(d) The Preferred Securities have been duly and validly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and,
when executed and authenticated in accordance with the terms of the
Trust Agreement and delivered to the Underwriters against payment of
the consideration set forth herein, will constitute valid and legally
binding obligations of the Trust, enforceable in accordance with their
terms and entitled to the benefits provided by the Trust Agreement
(except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or
affecting creditors' rights generally or general equity principles
(whether considered in a proceeding in equity or at law)) and will
conform in all material respects to the statements relating thereto
contained in the Prospectus. The Trust Agreement has been duly
authorized and, when executed by the proper officers of the Company
and delivered by the Company, will have been duly executed and
delivered by the Company, and assuming due authorization and execution
of the Trust Agreement by each other party thereto, will constitute
the valid and legally binding instrument of the Company, enforceable
in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance
or similar laws relating to or affecting creditors' rights generally
or general equity principles (whether considered in a proceeding in
equity or at law)). The Junior Subordinated Debentures have been duly
and validly authorized for delivery by the Company and, when duly
authenticated in accordance with the terms of the Indenture and
delivered to the Trust against payment of the consideration set forth
therein, will constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Indenture and
enforceable against the Company in accordance with their terms (except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, readjustment of debt,
moratorium, fraudulent conveyance or similar laws relating to or
affecting creditors' rights generally or general equity principles
(whether considered in a proceeding in equity or at law)). The Common
Securities have been duly and validly authorized for issuance and sale
to the Company pursuant to the Trust Agreement and, when issued and
delivered in accordance with the terms of the Trust Agreement and
delivered to the Company against payment, will constitute validly
issued and (subject to the terms of the Trust Agreement) fully paid
and non-assessable undivided beneficial interests in the assets of the
Trust and will conform in all material respects to all statements
relating thereto contained in the Prospectus; and at the Closing Date
all of the issued and outstanding Common Securities of the Trust will
be directly owned by the Company free and clear of any security
interest, pledge, lien encumbrance, claim or equity (subject to the
terms of the Trust Agreement). The Subordinated Notes have been duly
and validly authorized for delivery by
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and, when issued and delivered to the Company against
payment of the consideration set forth therein, will constitute the
valid and legally binding obligations of Kingsway America, enforceable
in accordance with their terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance
or similar laws relating to or affecting creditors' rights generally
or general equity principles (whether considered in a proceeding in
equity or at law)). The Indenture has been duly authorized and, when
executed by the proper officers of the Company and the Guarantor and
delivered by the Company and the Guarantor, will have been duly
executed and delivered by the Company and the Guarantor and, assuming
due authorization and execution of the Indenture by each other party
thereto, will constitute the valid and legally binding instrument of
the Company and the Guarantor, enforceable in accordance with its
terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or
affecting creditors' rights generally or general equity principles
(whether considered in a proceeding in equity or at law)). The
Preferred Securities Guarantee Agreement has been duly authorized and,
when executed by the proper officers of the Guarantor and delivered by
the Guarantor, will have been duly executed and delivered by the
Guarantor and, assuming due authorization and execution of the
Preferred Securities Guarantee Agreement by the Guarantee Trustee,
will constitute the valid and legally binding instrument of the
Guarantor, enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, readjustment of debt, moratorium,
fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether
considered in a proceeding in equity or at law)). The Trust Agreement,
the Preferred Securities Guarantee Agreement and the Indenture have
been duly qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). The Preferred Securities, the Common
Securities, the Trust Agreement, the Preferred Securities Guarantee
Agreement, the Junior Subordinated Debentures, the Debenture
Guarantee, the Indenture and the Subordinated Notes conform in all
material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(e) Neither any Offeror nor any Subsidiary, is, or with the giving of
notice or lapse of time or both will be, in violation or breach of, or
in default under, nor will the execution or delivery of, or the
performance and consummation of the transactions contemplated by this
Agreement (including, but not limited to, the offer, sale or delivery
of the Preferred Securities), conflict with, or result in a violation
or breach of, or constitute a default under, any provision of the
organization documents of the Trust or the Articles of Incorporation
(as amended or restated to date) or Bylaws
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(as amended or restated to date) of the Offerors, or other governing
or organizational documents of any Subsidiary, or of any provision of
any agreement, contract, mortgage, deed of trust, lease, loan
agreement, indenture, note, bond, or other evidence of indebtedness,
or other material agreement or instrument to which any Offeror or any
Subsidiary is a party or by which any of them is bound or to which any
of their properties is subject, nor will the performance by any
Offeror of its obligations hereunder violate any rule, regulation,
order, or decree, applicable to any Offeror or any Subsidiary of any
court or any regulatory body, administrative agency or other
governmental body having jurisdiction over any Offeror or any
Subsidiary or any of its respective properties, or any order of any
court or governmental agency or authority entered in any proceeding to
which any Offeror or any Subsidiary was or is now a party or by which
it is bound, except those, if any, described in the Prospectus or
which are not material to any Offeror.
(f) No consent, approval, filing, authorization, registration,
qualification, or order, including with or by any insurance or
reinsurance regulatory agency, is required for the execution, delivery
and performance of this Agreement or the consummation of the
transactions contemplated by this Agreement, other than such that have
been obtained or made, except for compliance with the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the Blue Sky Laws applicable to the public offering of the
Preferred Securities by the Underwriters, the clearance of such
offering and the underwriting arrangements evidenced hereby with the
National Association of Securities Dealers, Inc. ("NASD"), and the
listing of the Preferred Securities on the New York Stock Exchange
(the "NYSE").
(g) This Agreement has been duly authorized, executed and delivered by the
Offerors and constitutes a valid and binding obligation of the
Offerors, and assuming due authorization and execution of this
Agreement by the Representatives is enforceable against the Offerors
in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance
or similar laws relating to or affecting creditors' rights generally
or general equity principles (whether considered in a proceeding in
equity or at law)).
(h) Each Preliminary Prospectus complies in all material respects with the
requirements of the Securities Act and the Securities Act Regulations.
Each document, if any, filed or to be filed pursuant to the Exchange
Act, and incorporated by reference in the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder.
As of the effective date of the Registration Statement, and at all
times subsequent thereto up to and including the Closing Date or any
Option Closing Date
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(as defined below), the Registration Statement and the Prospectus, and
any amendments or supplements thereto, contained or will contain all
material statements that are required to be stated therein in
accordance with the Securities Act and the Securities Act Regulations
and conformed or will conform in all material respects to the
requirements of the Securities Act and the Securities Act Regulations,
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto included or will include any untrue
statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that no
representation or warranty is made as to information contained in or
omitted from the Registration Statement, the Prospectus or any
amendment or supplement in reliance upon and in conformity with
written information furnished to the Offerors by or on behalf of the
Underwriters specifically for inclusion therein. The Offerors
acknowledge that the only information relating to the Underwriters
furnished in writing to the Offerors by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement
and Prospectus is the following information: (i) the names of the
Underwriters set forth on the front and back covers of the Prospectus;
(ii) the aggregate liquidation amount of Preferred Securities to be
purchased by each Underwriter set forth under the "Underwriting"
section; (iii) the amounts of the selling concession and reallowance
set forth in the "Underwriting" section and (iv) the statements set
forth in the third and sixth paragraphs under the section
"Underwriting."
(i) There are no persons with registration or other similar rights to have
any equity or debt securities registered for sale under the
Registration Statement or included in the offering contemplated by
this Agreement or otherwise registered by the Guarantor or any
Subsidiary under the Securities Act.
(j) KPMG LLP, who has audited, reviewed and expressed their opinion with
respect to the financial statements and schedules filed with the
Commission as a part of the Registration Statement and included or to
be included, as the case may be, in the Prospectus and in the
Registration Statement, and whose report is included in the Prospectus
and the Registration Statement and in the Guarantor's Form 6-K
incorporated by reference into the Registration Statement, are
independent accountants as required by the Securities Act and the
Securities Act Regulations.
(k) The financial statements and schedules and the related notes thereto
included or to be included, as the case may be, in the Registration
Statement, the Preliminary Prospectus and the Prospectus present
fairly the financial position of the entities purported to be shown
thereby as of the respective dates of such financial statements and
schedules and the results of operations and changes in equity and in
cash flows of the entities purported to be shown thereby for the
respective periods covered thereby,
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all in conformity with generally accepted accounting principles as
applied in Canada consistently applied throughout the periods
involved, except as may be expressly stated in the related notes
thereto. The reconciliation of such financial statements to U.S.
generally accepted accounting principles, as set forth in the related
notes thereto, conforms to the requirements of subsection (c) of Item
17 of Form 20-F under the Exchange Act and fairly presents all
adjustments necessary for a fair presentation of the results of such
periods. The Guarantor has the outstanding capitalization as set forth
under the heading "Capitalization" in the Prospectus as of the date
indicated therein and there has been no material change therein since
such date. The financial, operating and statistical information set
forth in the Prospectus under the headings "Prospectus Summary," "Use
of Proceeds," "Capitalization," "Ratio of Earnings to Fixed Charges,"
"Selected Consolidated Financial Information," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and "The Company" are fairly presented and prepared on a
basis consistent with the audited financial statements of the
Guarantor.
(l) To the extent that the descriptions in the sections of the Prospectus
entitled "Risk Factors," "The Company," "Description of the Trust
Preferred Securities," "Description of the Debentures and the
Debenture Guarantee," "Description of the Preferred Securities
Guarantee," "Relationship Among the Trust Preferred Securities, the
Debentures and the Guarantee," "Material U.S. Federal Income Tax
Consequences," "Enforcement of Civil Liabilities," "Underwriting" and
"Part II - Information Not Required in Prospectus--Item 8.
Indemnification of Officers and Directors," constitute matters of law,
summaries of legal matters, legal proceedings, legal conclusions,
summaries of organizational documents or bylaws, or the documents
referred to therein, such descriptions are complete and correct and
accurately and fairly present the information required to be shown in
all material respects.
(m) There is no litigation or governmental proceeding, action, or
investigation pending or, to the knowledge of any Offeror, threatened,
to which any Offeror or any Subsidiary is or may be a party or to
which property owned or leased by the Guarantor or any Subsidiary is
or may be subject, or related to environmental or discrimination
matters, which is required to be disclosed in the Registration
Statement or the Prospectus by the Securities Act or the Securities
Act Regulations and is not so disclosed, or which questions the
validity of this Agreement or any action taken or to be taken pursuant
hereto.
(n) Either the Guarantor or a Subsidiary, as the case may be, has good and
marketable title in fee simple to all items of real property and good
and marketable title to all the personal properties and assets
reflected as owned by the Guarantor or a Subsidiary in the Prospectus
(or elsewhere in the Registration Statement), in each case clear of
all liens, mortgages, pledges,
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charges or encumbrances of any kind or nature except those, if any,
reflected in the financial statements described above (or elsewhere in
the Registration Statement) or which are not material to the Guarantor
and the Subsidiaries taken as a whole; all properties held or used by
the Guarantor or a Subsidiary under leases, licenses, franchises or
other agreements are held by them under valid, existing, binding and
enforceable leases, franchises, licenses or other agreements with
respect to which it is not in default.
(o) Neither any Offeror nor any Subsidiary has taken or will take,
directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to
constitute, stabilization or manipulation, under the Exchange Act or
otherwise, of the price of the Preferred Securities.
(p) Except as reflected in or contemplated by the Registration Statement,
since the respective dates as of which information is given in the
Registration Statement and prior to the Closing Date and Option
Closing Date:
(i) neither the Guarantor nor any Subsidiary has or will have
incurred, without the prior written consent of the
Representatives, which consent shall not be unreasonably
withheld, any liabilities or obligations, direct or contingent,
or entered into any transaction, in either case, that are
material to the Guarantor and the Subsidiaries taken as a whole;
(ii) the Guarantor has not paid or declared, and will not pay or
declare, any dividend or other distribution with respect to its
capital stock and the Guarantor has not been, and will not be,
delinquent in the payment of principal or interest on any
outstanding debt obligations;
(iii) No Subsidiary has or will have paid or declared any dividend or
other distribution with respect to its capital stock, other than
to a wholly owned Subsidiary of the Guarantor, in the ordinary
course of business and consistent with past practices, and no
Subsidiary has or will be delinquent in the payment of principal
or interest on any outstanding debt obligations; and
(iv) there has not been and will not be any change in the capital
stock or any material change in the indebtedness of the
Guarantor or any Subsidiary (except as may result from the
closing of the transactions contemplated by this Agreement), or
any adverse change in the condition (financial or otherwise), or
any development involving a prospective adverse change in their
respective businesses (resulting from litigation or otherwise),
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prospects, properties, condition (financial or otherwise), net
worth or results of operations which is material to the
Guarantor and the Subsidiaries taken as a whole.
(q) There is no contract or other document, transaction or relationship
required to be described in the Registration Statement, or to be filed
as an exhibit to the Registration Statement, by the Securities Act or
by the Securities Act Regulations that has not been described or filed
as required.
(r) Except as disclosed in the Prospectus, there are no outstanding (i)
securities or obligations of the Guarantor or any Subsidiary
convertible into or exchangeable for any capital stock of the
Guarantor or any Subsidiary, (ii) warrants, rights or options to
subscribe for or purchase from the Guarantor or any Subsidiary any
such capital stock or any such convertible or exchangeable securities
or obligations or (iii) obligations of the Guarantor or any Subsidiary
to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights
or options.
(s) All documents delivered or to be delivered by the Offerors or any of
their representatives in connection with the issuance and sale of the
Preferred Securities were on the dates on which they were delivered,
or will be on the dates on which they are to be delivered, true,
complete and correct in all material respects.
(t) The Guarantor and each Subsidiary have timely filed all necessary U.S.
and Canadian federal and all state, provincial, local and foreign
income, payroll, franchise, use and other tax returns and timely paid
all taxes required to be paid by any of them and, if due and payable,
any related or similar assessment, fine or penalty levied against any
of them (including interest, if applicable), except those amounts that
are being contested in good faith and by appropriate proceedings and
as to which adequate reserves have been provided, other than those
amounts relating to taxes (other than income taxes) the failure of
which to timely pay and provide adequate reserves would not,
individually or in the aggregate, have a Material Adverse Effect; and
no tax deficiency has been asserted or to the knowledge of the
Guarantor or any Subsidiary, threatened against the Guarantor or any
Subsidiary that would have a Material Adverse Effect, except as
described in the Prospectus. The Guarantor has made adequate charges,
accruals and reserves in the applicable financial statements referred
to in Section 2(k) above in respect of all U.S. and Canadian federal,
state, provincial, local and foreign income, payroll, franchise, use
and other taxes for all periods as to which the tax liability of the
Guarantor or any of the Subsidiaries has not been finally determined.
(u) The Offerors have not distributed and will not distribute any
prospectus or other offering material (including, without limitation,
content on the
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Guarantor's website that may be deemed to be a prospectus or other
offering material) in connection with the offering and sale of the
Preferred Securities other than any Preliminary Prospectus or the
Prospectus or other materials permitted by the Securities Act to be
distributed by the Offerors.
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(v) The Guarantor and each Subsidiary has filed, or has had filed on its
behalf, on a timely basis, all materials, reports, documents and
information, including, but not limited to, annual reports and reports
of examination with each applicable insurance or reinsurance
regulatory authority, board or agency, which are required to be filed
by it, except where the failure to so file would not, individually or
in the aggregate, have a Material Adverse Effect.
(w) Each of the Guarantor and each Subsidiary makes and keeps accurate
books and records reflecting its assets and liabilities and maintains
proper and adequate internal accounting controls that provide
reasonable assurance that (i) transactions are executed in accordance
with management's authorization, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles as applied in Canada and
to maintain accountability for the assets of the Guarantor and each
Subsidiary, (iii) access to assets is permitted only in accordance
with management's authorization and (iv) the recorded accountability
for assets of the Guarantor and each Subsidiary is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Guarantor and each
Subsidiary maintains disclosure controls and procedures required by
Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to ensure that all material information
concerning the Guarantor and the Subsidiaries is made known on a
timely basis to the individuals responsible for the preparation of the
Guarantor's filings with the Commission and other public disclosure
documents.
(x) The Guarantor has no off-balance sheet interests or investments other
than those in which it holds less than a 5% interest.
(y) To the knowledge of the Offerors, neither any Offeror nor any
Subsidiary has, directly or indirectly, at any time:
(i) made any unlawful contribution to any candidate for political
office, or failed to disclose any contribution in violation of
law; or
(ii) made any payment to any federal, state, local, or foreign
government officer or official, or other person charged with
similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States, Canada,
Bermuda, Barbados or any jurisdiction thereof or other
applicable foreign jurisdictions.
(z) The Guarantor or a Subsidiary owns or possesses adequate rights to use
all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, servicemark registrations, copyrights
and licenses
13
necessary for the conduct of the business of the Guarantor and the
Subsidiaries or ownership of their respective properties, and neither
the Guarantor nor any Subsidiary has received notice of conflict with
the asserted rights of others in respect thereof which has not been
resolved.
(aa) The Guarantor and each Subsidiary have in place and effective such
policies of insurance, with limits of liability in such amounts, as
are reasonably adequate for the conduct of their respective businesses
and the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries from
insurers of recognized financial responsibility. The Guarantor has no
reason to believe that it or any Subsidiary will not be able (i) to
renew its existing insurance coverage as and when such policies expire
or (ii) to obtain comparable coverage from similar institutions as may
be necessary or appropriate to conduct its business as now conducted
and at a cost that would not have a Material Adverse Effect. Neither
the Guarantor nor any of the Subsidiaries has been denied any
insurance coverage which it has sought or for that it has applied.
(bb) The Guarantor and each Subsidiary have and hold, and at the Closing
Date or Option Closing Date will have and hold, and are operating in
compliance with, and have fulfilled and performed all of their
obligations with respect to, all permits, certificates, franchises,
grants, easements, consents, licenses, approvals, charters,
registrations, authorizations and orders (collectively, "Permits")
required under all laws, rules and regulations (including, without
limitation, laws, rules and regulations applicable to insurance or
reinsurance companies and insurance holding companies) in connection
with their respective businesses, except where the failure to so
comply or to so possess any such Permits would not, individually or in
the aggregate, have a Material Adverse Effect, and all of such Permits
are in full force and effect, except where the failure to be in full
force and effect would not, individually or in the aggregate, have a
Material Adverse Effect; and there is no pending proceeding, and
neither the Guarantor nor any Subsidiary has received notice of any
threatened proceeding, relating to the revocation or modification of
any such Permits or that any additional Permit is required. None of
the Permits contain any restrictions that are materially burdensome to
the Guarantor or any of the Subsidiaries. No insurance or reinsurance
regulatory agency or body has issued any order or decree impairing,
restricting or prohibiting the payment of dividends by any Subsidiary
to the Guarantor or by any of the other Subsidiaries to any other
Subsidiary of the Guarantor. None of the Offerors or any Subsidiary is
(by virtue of any action, omission to act, contract to which it is a
party or by which it is bound, or any occurrence or state of facts
whatsoever) in violation of any applicable U.S., Canadian, Bermuda or
Barbados federal, state, municipal or local statutes, laws,
ordinances, rules, regulations and/or orders issued pursuant to U.S.,
Canada, Bermuda or Barbados, foreign, federal, state, municipal or
local
14
statutes,laws, ordinances, rules or regulations (including, without
limitation, those relating to any aspect of environmental protection,
occupational safety and health and equal employment practices and
laws, rules and regulations applicable to insurance or reinsurance
companies and insurance holding companies) heretofore or currently in
effect, except such violation that has been fully cured or satisfied
without recourse or that would not have a Material Adverse Effect.
(cc) Except as set forth in the Prospectus, no loss experience has occurred
that would require or make it necessary or appropriate for the
Guarantor or any Subsidiary to change, alter, modify or amend the
Guarantor's or any Subsidiary's methodology or assumption relating to
losses.
(dd) All reinsurance treaties, contracts, agreements and arrangements to
which any Subsidiary engaged in the business of insurance or
reinsurance is a party are in full force and effect, and no Subsidiary
is in violation of, or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition
contained therein, except where such violation or default would not,
individually or in the aggregate, have a Material Adverse Effect.
Neither the Guarantor nor any Subsidiary has received any notice from
any of the other parties to such treaties, contracts, agreements or
arrangements that the other party intends not to perform such treaty,
contract, agreement or arrangement and, to the best knowledge of the
Guarantor and the Subsidiaries, the Guarantor and the Subsidiaries
have no reason to believe that any such other party will not or cannot
perform in any respect its duties or obligations under any such
treaty, contract, agreement or arrangement, except to the extent
adequately and properly reserved for in the consolidated financial
statements of the Guarantor included in the Prospectus and, except
where any such non-performance would not, individually or in the
aggregate, have a Material Adverse Effect. The Guarantor has no reason
to believe that its or each of the Subsidiaries' provisions for unpaid
claims are inadequate.
(ee) The statutory financial statements of each of the Subsidiaries from
which certain ratios and other statistical data filed as part of the
Registration Statement or included or incorporated in the Prospectus
have been derived and for each relevant period have been prepared in
conformity with statutory accounting principles or practices required
or permitted by the National Association of Insurance Commissioners
and/or by the appropriate insurance department of the jurisdiction of
domicile of each of such Subsidiaries, and such statutory accounting
practices have been applied on a consistent basis throughout the
periods involved, except as may otherwise be indicated therein or in
the notes thereto, and present fairly the statutory financial position
of such Subsidiaries as of the dates thereof, and the statutory basis
results of operations of such Subsidiaries for the periods covered
thereby.
15
(ff) Each of the Guarantor and the Subsidiaries is duly registered,
licensed or admitted as an insurer, reinsurer or an insurance holding
company (as applicable) in each jurisdiction where it is required to
be so registered, licensed or admitted to conduct its business as
presently conducted and as described in the Prospectus. Each of the
Guarantor and the Subsidiaries is in compliance with all applicable
insurance or reinsurance statutes and regulations and has filed all
reports, documents or other information required to be filed under
such statutes and regulations, and has duly paid all taxes (including
franchise and similar fees) it is required to have paid under such
statutes and regulations, except where such noncompliance or failure
to file would not, individually or in the aggregate, have a Material
Adverse Effect; and none of the Guarantor or any Subsidiary has
received any notification from any insurance or reinsurance regulatory
authority to the effect that any additional authorization, approval,
order, consent, license, certificate, permit, registration or
qualification from any insurance or reinsurance regulatory authority
is needed to be obtained other than as described in the Prospectus or
as would not, individually or in the aggregate, have a Material
Adverse Effect. Each of the Guarantor and the Subsidiaries maintains
its books and records in accordance with applicable insurance or
reinsurance statutes and regulations in all material respects.
(gg) To the knowledge of the Offerors, no change in any insurance or
reinsurance laws or regulations is pending that could reasonably be
expected to be adopted and if adopted, would have, individually or in
the aggregate with all such changes, a Material Adverse Effect.
(hh) The provisions of any employee pension benefit plan ("Pension Plan")
as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), in which the Guarantor or any
Subsidiary is a participating employer are in substantial compliance
with ERISA, and neither the Guarantor nor any Subsidiary is in
material violation of ERISA. The Guarantor, each Subsidiary, or the
plan sponsor thereof, as the case may be, has duly and timely filed
the reports required to be filed by ERISA in connection with the
maintenance of any Pension Plan in which the Guarantor or any
Subsidiary is a participating employer, and to the knowledge of the
Guarantor or any Subsidiary, no facts, including any "reportable
event" as defined by ERISA and the regulations thereunder, exist in
connection with any Pension Plan in which the Guarantor or any
Subsidiary is a participating employer which might constitute grounds
for the termination of such plan by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate U.S. District
Court of a trustee to administer any such plan. The provisions of any
employee benefit welfare plan, as defined in Section 3(1) of ERISA, in
which the Guarantor or any Subsidiary is a participating employer, are
in substantial compliance with ERISA, and the Guarantor, any
Subsidiary, or the plan sponsor thereof, as the case may be, has duly
and timely filed
16
the reports required to be filed by ERISA in connection with the
maintenance of any such plans.
(ii) No Offeror is an open-end investment company, unit investment trust or
face-amount certificate company that is, or is required to be, or,
immediately after giving effect to the offering and sale of the
Preferred Securities and the application of the proceeds thereof as
described in the Prospectus will be, or will be required to be,
registered under Section 8 of the Investment Company Act of 1940, as
amended, or subject to regulation under such Act.
(jj) To the knowledge of the Offerors, there are no affiliations or
associations between any member of the NASD and any of the Offerors'
trustees, officers, directors or 5% or greater security holders,
except as set forth in the Prospectus.
(kk) Except as described in the Prospectus, no Offeror is aware of any
threatened or pending downgrading in the rating of the Guarantor or
any Subsidiary by A.M. Best Company, Inc.
(ll) No material labor dispute exists with the Guarantor's or any
Subsidiary's employees, and to the knowledge of the Guarantor or any
Subsidiary, no such labor dispute is threatened. Neither the Company
nor the Guarantor has knowledge of any existing or threatened labor
disturbance by the employees of any of its principal agents,
suppliers, contractors or customers that would have a Material Adverse
Effect.
(mm) Except as disclosed in writing to the Underwriters, to the knowledge
of the Guarantor, after due inquiry, none of the directors or
executive officers of the Offerors has: (i) ever been convicted of an
indictable offense, (ii) ever been convicted of an offense relating to
financial or securities-related matters (such as embezzlement, fraud,
theft, illegal securities trading or securities fraud), (iii) ever
been declared bankrupt or made a voluntary assignment in bankruptcy,
or (iv) in the last five years, been subject to any criminal
proceedings (other than minor traffic offenses) in the United States,
Canada or elsewhere.
(nn) Neither this Agreement nor any certificate, statement or other
document delivered or to be delivered by the Offerors or any
Subsidiary contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(oo) None of the Underwriters or any subsequent purchasers of the Preferred
Securities is subject to any stamp duty, excise or similar tax imposed
in connection with the offering, sale or purchase of the Preferred
Securities (except for those paid, or that will be paid by the
Company).
17
(pp) All offers and sales of securities of direct or indirect financing
subsidiaries of the Guarantor described in the Prospectus were made
outside the United States to certain persons in offshore transactions
in compliance on Regulation S under the Act and were exempt from the
registration requirements of the Securities Act and such offers and
sales are not required to be integrated with the offer and sale of the
Preferred Securities pursuant to the Registration Statement.
3. Purchase Sale and Delivery to Underwriters; Closing. On the basis of
the representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Trust, the Guarantor and the Company agree that
the Trust will issue and sell to the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Trust, the number of
Firm Securities set forth opposite the name of such Underwriter in Schedule I at
a purchase price of $25 per Firm Security. The Guarantor hereby guarantees the
timely performance by the Trust, the Company and Kingsway America of their
obligations under this Agreement.
Payment of the purchase price for, and delivery of, the Firm Securities
shall be made at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois),
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as shall
be agreed upon by the Representatives, the Trust, the Guarantor and the Company,
at 9:00 A.M. Central Standard Time, on the fourth business day (unless postponed
in accordance with the provisions of Section 12) following the date of this
Agreement, or such other time not later than ten (10) business days after such
date as shall be agreed upon by the Representatives, the Trust, the Guarantor
and the Company (such time and date of payment and delivery being herein called
the "Closing Date").
As compensation (the "Underwriting Commission") for the commitments of the
Underwriters contained in this Section 3, the Company hereby agrees to pay to
the Underwriters an amount equal to __% of the public offering price of the
Preferred Securities. Such payment will be made on the Closing Date with respect
to the Firm Securities and on the Option Closing Date with respect to the Option
Securities.
Payment for the Firm Securities shall be made to the Trust by wire transfer
of immediately available funds, against delivery to the Underwriters of the Firm
Securities to be purchased by them. The Firm Securities shall be issued in the
form of one or more fully registered global securities (the "Global Securities")
in book-entry form in such denominations and registered in the name of the
nominee of The Depository Trust Company (the "DTC") or in such names as the
Representatives may request in writing at least two business days before the
Closing Date. The Global Securities representing the Firm Securities shall be
made available for examination by the Representatives and counsel to the
Underwriters not later than 10:30 A.M. Eastern Standard Time on the last
business day prior to the Closing Date.
In addition, on the basis of the representations, warranties and agreements
contained herein, but subject to the terms and conditions set forth herein, the
Trust hereby grants to the Underwriters an option to purchase, severally and not
jointly, from the Trust
18
the Option Securities in the same proportion as the number of Firm Securities
set forth opposite their names on Schedule I bears to the total number of Firm
Securities, at the same purchase price per Preferred Security to be paid for the
Firm Securities, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Securities. The option
granted hereunder may be exercised at any time (but not more than once) within
thirty (30) days after the date of this Agreement, upon notice by the
Representatives to the Trust which sets forth the aggregate liquidation amount
of Option Securities as to which the Underwriters are exercising the option, and
the time and place at which the certificate representing the Option Securities
will be delivered. Such time of delivery may not be earlier than the Closing
Date and herein is called the "Option Closing Date." The Option Closing Date
shall be determined by the Representatives, but if at any time other than the
Closing Date, shall not be earlier than three nor later than five full business
days after delivery of such notice to exercise. Certificates for the Option
Securities will be made available for inspection at least 24 hours prior to the
Option Closing Date at the offices of DTC, or its designated custodian, or at
such other location as specified by the Representatives. The manner of payment
for delivery of the Option Securities shall be the same as for the Firm
Securities as specified in this Section 3.
4. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the Underwriters, represent and warrant to the
Company, Kingsway America and the Guarantor that (i) the names of the
Underwriters set forth on the front and back covers of the Prospectus, (ii) the
aggregate liquidation amount of Preferred Securities to be purchased by each
Underwriter set forth in the "Underwriting" section, (iii) the amounts of the
selling concession and reallowance set forth in the "Underwriting" section and
(iv) the statements set forth in the third and sixth paragraphs under the
section "Underwriting," constitute the only written information furnished to the
Offerors by and on behalf of any Underwriter expressly for use in connection
with the preparation of the Registration Statement, and such information is
correct and complete in all material respects and does not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
5. Offering by the Underwriters. The Offerors are advised by the
Representatives that the Underwriters propose to make a public offering of the
Preferred Securities, on the terms and conditions set forth in the Registration
Statement from time to time as and when the Underwriters deem advisable after
the Registration Statement becomes effective. Because the NASD is expected to
view the Preferred Securities as interests in a direct participation program,
the offering of the Preferred Securities is being made in compliance with the
applicable provisions of Rule 2810 of the NASD's Conduct Rules.
6. Agreements of the Offerors. Each of the Offerors covenants and agrees
with each of the Underwriters that:
(a) If any information shall have been omitted from the Registration
Statement in reliance upon Rule 430A, the Company and/or the
Guarantor,
19
at the earliest possible time, will furnish the Representatives with
copies of the Prospectus to be filed by the Offerors with the
Commission to comply with Rule 424(b) and Rule 430A under the
Securities Act, and will file such Prospectus with the Commission in
compliance with such rules. Upon compliance with such rules, the
Company and/or the Guarantor will so advise the Representatives
promptly. The Company and/or the Guarantor will advise the
Representatives and counsel to the Underwriters promptly of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the institution of
any proceedings for that purpose, or of any notification received by
the Company or the Guarantor of the suspension of qualification of the
Preferred Securities for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose, or of any
notification received by the Company or the Guarantor of the
suspension of qualification of the Preferred Securities for sale in
any jurisdiction or the initiation or threatening of any proceedings
for that purpose. The Company and/or the Guarantor also will advise
the Representatives and counsel to the Underwriters promptly of any
request of the Commission for amendment or supplement of the
Registration Statement, of any Preliminary Prospectus, or of the
Prospectus, or for additional information, and the Offerors will not
file any amendment or supplement to the Registration Statement (either
before or after it becomes effective), to any Preliminary Prospectus,
or to the Prospectus (including a prospectus filed pursuant to Rule
424(b)) if the Representatives have not been furnished with copies
prior to such filing or if the Representatives reasonably object to
such filing.
(b) For the period during which a Prospectus relating to the Preferred
Securities is required to be delivered under the Securities Act, the
Offerors shall comply with all requirements imposed on them by the
Securities Act, as now and hereafter amended, and by the Securities
Act Regulations, as from time to time in force, so far as is necessary
to permit the continuance of sales or dealings in the Preferred
Securities as contemplated by the provisions hereof and the
Prospectus. If any event occurs as a result of which the Prospectus,
including any subsequent amendment or supplement, would include an
untrue statement of a material fact, or would omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it becomes necessary at any time to
amend the Prospectus, including any amendment or supplement thereto,
to comply with the Securities Act, the Company and/or the Guarantor
promptly will advise the Representatives and counsel to the
Underwriters thereof and the Offerors will promptly prepare and file
with the Commission an amendment or supplement that will correct such
statement or omission or an amendment that will effect such
compliance; and, if any Underwriter is required to deliver a
prospectus nine (9) months or more after the effective date of the
Registration Statement, the
20
Company and/or the Guarantor, upon request of the Representatives but
at the expense of such Underwriter, will prepare promptly such
prospectus or prospectuses as may be necessary to permit compliance
with the requirements of Section 10(a)(3) of the Securities Act.
(c) The Offerors will not, prior to the Option Closing Date or thirty (30)
days after the date of this Agreement, whichever occurs first, without
the prior consent of the Representatives, incur any material liability
or obligation, direct or contingent, or enter into any material
transaction, other than in the ordinary course of business, or any
transaction with a related party which is required to be disclosed in
the Prospectus pursuant to Item 404 of Regulation S-K under the
Securities Act, except as contemplated by the Prospectus.
(d) The Guarantor will timely file such reports pursuant to the Exchange
Act as are necessary in order to make generally available to its
security holders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder.
(e) During such period as a prospectus is required by law to be delivered
in connection with sales by an underwriter or dealer, the Company
and/or Guarantor will furnish to the Representatives, at the expense
of the Company or Guarantor, copies of the Registration Statement, the
Prospectus, any Preliminary Prospectus, and all amendments and
supplements to any such documents, in each case as soon as available
and in such quantities as the Representatives may reasonably request,
for the purposes contemplated by the Securities Act.
(f) The Offerors will use their best efforts to take or cause to be taken
in cooperation with the Representatives and counsel to the
Underwriters all actions required in qualifying or registering the
Preferred Securities for sale under the Blue Sky Laws of such
jurisdictions as the Representatives may reasonably designate,
provided the Offerors shall not be required to qualify generally as
foreign corporations or as a dealer in securities or to consent
generally to the service of process under the law of any such state
(except with respect to the offering and sale of the Preferred
Securities), and will continue such qualifications or registrations in
effect so long as reasonably requested by the Representatives to
effect the distribution of the Preferred Securities (including,
without limitation, compliance with all undertakings given pursuant to
such qualifications or registrations). In each jurisdiction where any
of the Preferred Securities shall have been qualified as provided
above, the Offerors will file such reports and statements as may be
required to continue such qualification for a period of not less than
one (1) year from the date of this Agreement.
21
(g) The Guarantor will furnish to its security holders annual reports
containing financial statements audited by independent chartered
accountants. During the period ending three (3) years after the date
of this Agreement, (i) as soon as practicable after the end of the
fiscal year, the Guarantor will furnish to each of the Representatives
two copies of the annual report of the Guarantor containing the
audited consolidated balance sheet of the Guarantor as of the close of
such fiscal year and corresponding audited consolidated statements of
operations, retained earnings and cash flows for the year then ended
and (ii) the Guarantor will file promptly and will make available to
each of the Representatives as promptly as practicable after the
filing thereof, to the extent not otherwise available on the
Commission's ▇▇▇▇▇ system or another similar document retrieval system
of the Commission or on the Guarantor's website, copies of all reports
and any definitive proxy or information statements required to be
filed by the Guarantor with the Commission pursuant to Section 13, 14,
or 15 of the Exchange Act. During such three-year period, the
Guarantor or the Company also will make available or furnish, as
applicable, to the Representatives one copy of the following, to the
extent not otherwise available on the Commission's ▇▇▇▇▇ system or
another similar document retrieval system of the Commission or on the
Guarantor's website:
(i) as soon as practicable after the filing thereof, each other
report, statement, or other document filed by the Guarantor or
Company with the Commission;
(ii) as soon as practicable after the filing thereof, all reports,
statements, other documents and financial statements furnished
by the Guarantor or the Company to the NYSE pursuant to
requirements of or agreements with the NYSE; and
(iii) as soon as available, each report, statement, or other document
of the Guarantor mailed to its stockholders.
(h) The Offerors will use their best efforts to satisfy or cause to be
satisfied the conditions to the obligations of the Underwriters in
Section 8 hereof.
(i) The Offerors shall deliver the requisite notice of issuance to the
NYSE and shall take all necessary or appropriate action within their
power to maintain the authorization for trading of the Preferred
Securities on the NYSE for a period of at least thirty-six (36) months
after the date of this Agreement.
(j) The Trust shall comply in all respects with the undertakings given by
the Trust in connection with the qualification or registration of the
Preferred Securities for offering and sale under the Blue Sky Laws.
22
(k) The Trust shall apply the proceeds from its sale of the Preferred
Securities, combined with the entire proceeds from the sale by the
Trust to the Company of the Trust's Common Securities, to purchase an
equivalent amount of Junior Subordinated Debentures. All the proceeds
to be received by the Company from the sale of the Junior Subordinated
Debentures will be used to purchase an equivalent amount of
Subordinated Notes to be issued by Kingsway America in the manner and
for the purposes specified under the heading "Use of Proceeds" in the
Prospectus. The Offerors shall file, and make available or furnish, as
appropriate, to the Underwriters and counsel to the Underwriters
copies of all reports as may be required in accordance with Rule 463
under the Securities Act.
(l) Except for the sale of Preferred Securities pursuant to this Agreement
and sales of securities of direct or indirect financing subsidiaries
of the Guarantor up to $80 million as previously approved by the
Guarantor's board of directors, neither the Guarantor nor any
Subsidiary shall, directly or indirectly, offer, sell, contract to
sell, issue, distribute, grant any option, right, or warrant to
purchase or otherwise dispose of any shares of the Preferred
Securities or substantially similar securities, in the open market or
otherwise, for a period of one hundred eighty (180) days after the
later of the effective date of the Registration Statement or the date
of this Agreement, without the express prior written consent of the
Representatives.
(k) Within the 180 day period from the date hereof, all offers and sales
of direct and indirect financing subsidiaries of the Guarantor shall
be duly registered or exempt from the registration requirements of the
Securities Act and, to the extent made within the United States, shall
be duly registered or subject to an available exemption from the
registration requirements of the applicable state securities or Blue
Sky laws, and such offers and sales shall not be required to be
integrated with the offer and sale of the Preferred Securities
pursuant to the Registration Statement.
7. Payment of Expenses and Fees.
(a) Whether or not the transactions contemplated hereunder are
consummated, or if this Agreement is terminated for any reason, the
Company will pay or cause to be paid or the Guarantor shall cause the
Company to pay, the costs, fees and expenses incurred in connection
with the offering of the Preferred Securities as follows:
(i) All costs, fees and expenses incurred in connection with the
performance of the obligations of the Offerors hereunder,
including all fees and expenses of the Offerors' accountants and
counsel, all costs and expenses incurred in connection with the
preparation, printing, filing and distribution (including
delivery and shipping costs) of the Registration Statement, each
Preliminary
23
Prospectus and the Prospectus (including all amendments and
exhibits thereto and the financial statements therein), and
agreements and supplements provided for herein, this Agreement
and other underwriting documents, including various
Underwriters' letters and the Preliminary and Supplemental Blue
Sky Memoranda;
(ii) All filing and registration fees and expenses, including the
legal fees and disbursements of counsel, incurred in connection
with qualifying or registering all or any part of the Preferred
Securities, the Guarantees and the Junior Subordinated
Debentures for offer and sale under the Blue Sky Laws;
(iii) All fees and expenses of the Offerors' registrar and transfer
agent; all transfer taxes, if any, and all other fees and
expenses incurred in connection with the sale and delivery of
the Preferred Securities to the Underwriters;
(iv) The filing fees of the NASD and applicable fees charged by the
NYSE for inclusion of the Preferred Securities for listing on
the NYSE;
(v) All other costs and expenses incident to the performance of the
Offerors' obligations hereunder which are not otherwise provided
for in this Section 7(a); and
(b) Upon consummation of the transactions contemplated hereunder, the
Company will pay or cause to be paid or the Guarantor shall cause the
Company to pay, the costs, fees and expenses incurred in connection
with the offering of the Preferred Securities by the Underwrites in an
amount up to $325,000.
8. Conditions to the Obligations of the Underwriters. The obligations of
the Underwriters under this Agreement shall be subject to the accuracy of the
representations and warranties on the part of the Offerors set forth herein as
of the Closing Date, and if applicable, as of the Option Closing Date, as the
case may be, to the accuracy of the statements of the Offerors' directors and
officers, to the performance by the Offerors of their obligations hereunder, and
to the following additional conditions, except to the extent expressly waived in
writing by the Representatives:
(a) The Registration Statement and all post-effective amendments thereto
shall have been declared effective by the Commission no later than 5:30 p.m.
Eastern Time, on the date of this Agreement, or such later time as shall have
been consented to by the Representatives in writing, but in any event not later
than 5:30 p.m. Eastern Time on the third full business day following the date
hereof; if the Offerors omitted information
24
from the Registration Statement at the time it became effective in reliance on
Rule 430A under the Securities Act, the Prospectus shall have been filed with
the Commission in compliance with Rule 424(b) and Rule 430A under the Securities
Act; no stop order suspending the effectiveness of the Registration Statement or
any amendment or supplement thereto shall have been issued; no proceeding for
the issuance of such an order shall have been initiated or shall be pending or,
to the knowledge of the Offerors or the Representatives, threatened or
contemplated by the Commission; and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been disclosed to the Representatives and complied with to
the Representatives' satisfaction.
(b) The Preferred Securities, the Guarantees and the Junior Subordinated
Debentures shall have been qualified or registered for sale, or subject to an
available exemption from such qualification or registration, under the Blue Sky
Laws of such jurisdictions as shall have been reasonably specified by the
Representatives and the offering contemplated by this Agreement shall have been
cleared by the NASD.
(c) Since the dates as of which information is given in the Registration
Statement:
(i) There shall not have been any material adverse change, or any
development involving a prospective material adverse change, in
the ability of the Guarantor or any Subsidiary, to conduct their
respective businesses (whether by reason of any court,
legislative, other governmental action, order, decree, or
otherwise), or in the general affairs, condition (financial and
otherwise), business, prospects, properties, management,
financial position or earnings, results of operations, or net
worth of the Guarantor or any Subsidiary, whether or not arising
from transactions in the ordinary course of business;
(ii) Neither the Guarantor nor any Subsidiary shall have sustained
any loss or interference from any labor dispute, strike, fire,
flood, windstorm, accident, or other calamity (whether or not
insured) or from any court or governmental action, order, or
decree; and
(iii) In any such case described in clause (c)(i) or (ii) above, the
effect of which on the Guarantor or any Subsidiary is in the
opinion of the Representatives so material and adverse as to
make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Preferred Securities on the
terms and in the manner contemplated in the Registration
Statement and the Prospectus.
(d) There shall have been furnished to the Representatives on the Closing
Date and the Option Closing Date, except as otherwise expressly provided below:
25
(i) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of Lord, Bissell & Brook, special U.S.
counsel to the Company, the Guarantor and Kingsway America,
substantially in the form attached hereto as Exhibit A and
otherwise in form and substance satisfactory to you;
(ii) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of Fogler, ▇▇▇▇▇▇▇▇ LLP, special Canadian
counsel to the Guarantor, substantially in the form attached
hereto as Exhibit B and otherwise in form and substance
satisfactory to you;
(iii) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, special
Bermuda counsel to the Guarantor, substantially in the form
attached hereto as Exhibit C and otherwise in form and
substance satisfactory to you;
(iv) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of ▇▇▇▇▇ ▇▇▇▇ & Co., special Barbados
counsel to the Guarantor, substantially in the form attached
hereto as Exhibit D and otherwise in form and substance
satisfactory to you;
(v) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel
to the Trust Company, substantially in the form attached hereto
as Exhibit E and otherwise in form and substance satisfactory
to you;
(vi) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A.,
special Delaware counsel to the Company and the Trust,
substantially in the form attached hereto as Exhibit F and
otherwise in form and substance satisfactory to you;
(vii) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A.,
special counsel to the Company and the Trust, substantially in
the form attached hereto as Exhibit G and otherwise in form and
substance satisfactory to you;
(viii) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of Lord, Bissell & Brook, special tax
counsel for the Offerors, substantially in form attached hereto
as Exhibit H and otherwise in form and substance satisfactory
to you; and
(ix) The favorable opinion, dated the Closing Date and the Option
Closing Date, if any, of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
26
(Illinois), counsel to the Underwriters, as to such matters as
the Representatives shall reasonably request.
In rendering such opinions specified in clause (d)(i), (ii), (iii), (iv),
(v), (vi), (vii) and (ix) above, counsel may rely upon an opinion or opinions,
each dated the Closing Date or the Option Closing Date, as the case may be, of
other counsel retained by them or the Company and/or the Guarantor as to laws of
any jurisdiction other than the United States, the State of Delaware, the State
of Illinois or the State of New York, as the case may be, provided that (A) such
reliance is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to the Representatives and (B) counsel shall
state in their opinion that they believe that they and the Underwriters are
justified in relying thereon. Insofar as such opinions involve factual matters,
such counsel may rely, to the extent such counsel deems proper, upon
certificates of officers of the Guarantor, the Subsidiaries and the Trust and
certificates of public officials.
(e) At the time this Agreement is executed and also on the Closing Date
and the Option Closing Date, as the case may be, there shall be delivered to the
Representatives a letter from KPMG LLP, the Guarantor's independent accountants,
the first letter to be dated the date of this Agreement, the second letter to be
dated the Closing Date and the third letter to be dated the Option Closing Date,
if any, which shall be in form and substance reasonably satisfactory to the
Representatives to the effect set forth in Exhibit I and shall contain
information as of a date within five days of the date of each such letter. There
shall not have been any change set forth in any letter referred to in this
subsection (e) and/or set forth in Exhibit I that makes it impracticable or
inadvisable in the judgment of the Representatives to proceed with the public
offering or purchase of the Preferred Securities as contemplated hereby.
(f) At the time this Agreement is executed and also on the Closing Date
and the Option Closing Date, as the case may be, there shall be delivered to the
Representatives a letter from KPMG LLP, American Country Holdings Inc.'s
independent accountants, the first letter to be dated the date of this
Agreement, the second letter to be dated the Closing Date and the third letter
to be dated the Option Closing Date, if any, which shall be in form and
substance reasonably satisfactory to the Representatives to the effect set forth
in Exhibit J and shall contain information as of a date within five days of the
date of each such letter. There shall not have been any change set forth in any
letter referred to in this subsection (f) and/or set forth in Exhibit J that
makes it impracticable or inadvisable in the judgment of the Representatives to
proceed with the public offering or purchase of the Preferred Securities as
contemplated hereby.
(g) On the Closing Date and on the Option Closing Date, if any, a
certificate signed by the Chairman of the Board, the President, a Vice Chairman
of the Board or any Executive or Senior Vice President and the principal
financial or accounting officer of each of the Company, the Guarantor and
Kingsway America dated the Closing Date or the Option Closing Date, as the case
may be, to the effect that the signers of such certificate have carefully
examined the Registration Statement and this Agreement and that:
27
(i) The representations and warranties of the Offerors in this
Agreement are true and correct in all material respects on and
as of the Closing Date or the Option Closing Date, as the case
may be, with the same effect as if made on the Closing Date or
the Option Closing Date, as the case may be, and the Offerors
have complied in all material respects with all the agreements
and satisfied in all material respects all the conditions on
their part to be performed or satisfied at or prior to the
Closing Date or the Option Closing Date, as the case may be;
(ii) The Commission has not issued an order preventing or suspending
the use of the Prospectus or any Preliminary Prospectus or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and, to the
knowledge of the respective signatories, no proceeding for that
purpose has been instituted or is pending or contemplated under
the Securities Act;
(iii) Each of the respective signatories of the certificate has
carefully examined the Registration Statement, the Prospectus,
and any amendments or supplements thereto, and such documents
contain all material statements and information required to be
made therein, and neither the Registration Statement nor any
amendment or supplement thereto includes any untrue statement of
a material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading and, since the date on which the Registration
Statement was initially filed, no event has occurred that was
required to be set forth in an amended or supplemented
prospectus or in an amendment to the Registration Statement that
has not been so set forth; provided, however, that no
representation need be made as to information contained in or
omitted from the Registration Statement or any amendment or
supplement in reliance upon and in conformity with written
information furnished to the Offerors by or on behalf of any
Underwriter through the Representatives; and
(iv) Since the date on which the Registration Statement was initially
filed with the Commission, there has not been any material
adverse change or a development involving a prospective material
adverse change in the business, properties, financial condition,
prospects, or earnings of the Guarantor and the Subsidiaries
taken as a whole, whether or not arising from transactions in
the ordinary course of business, except as disclosed in the
Registration Statement as heretofore amended or (but only if the
Representatives expressly consent thereto in writing) as
disclosed in an amendment or supplement thereto filed with the
Commission and delivered to the Representatives after the
execution of this Agreement; since such
28
date and except as so disclosed or in the ordinary course of
business, neither the Guarantor nor any Subsidiary has incurred
any liability or obligation, direct or indirect, or entered into
any transaction that is material to the Guarantor or such
Subsidiary, as the case may be, not contemplated in the
Prospectus; since such date and except as so disclosed there has
not been any change in the outstanding capital stock of the
Guarantor, the Company and/or Kingsway America, or any change
that is material to the Guarantor and the Subsidiaries taken as
a whole in the short-term debt or long-term debt of the
Guarantor or any Subsidiary; since such date and except as so
disclosed, neither the Guarantor nor any of the Subsidiaries
have incurred any material contingent obligations, and no
material litigation is pending or, to their knowledge,
threatened against the Guarantor or any Subsidiary; and, since
such date and except as so disclosed, neither the Guarantor nor
any of the Subsidiaries have sustained any material loss or
interference from any strike, fire, flood, windstorm, accident
or other calamity (whether or not insured) or from any court or
governmental action, order or decree.
(h) Except as disclosed in the Prospectus, no downgrading in the rating
accorded any debt securities of the Guarantor and/or the Company or
the Preferred Securities by any "nationally recognized statistical
rating organization" (as that term is defined by the Commission for
the purposes of Rule 436(g)(2) under the Securities Act) shall have
occurred, or any public announcement that any such organization has
under surveillance or review their ratings of any debt securities of
the Guarantor, the Company and/or Kingsway America (other than an
announcement with positive implications of a possible upgrading, and
no implication of a possible downgrading, of such rating), and if, in
any such case, the effect thereof in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with
the offering of the Preferred Securities.
(i) Prior to the Closing Date and any Option Closing Date, the Company,
the Guarantor and/or Kingsway America shall have furnished to the
Representatives such further information, certificates and documents
as the Representatives may reasonably request in connection with the
offering of the Preferred Securities.
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice from the Representatives to the Guarantor and the Company
at any time without liability on the part of any Underwriter, including the
Representatives, or the Guarantor, the Company and Kingsway America, except for
expenses to be paid by the Company and/or the Guarantor pursuant to Section 7
hereof or reimbursed by the Company and/or the Guarantor pursuant to Section 9
and except to the extent provided in Section 11.
29
9. Reimbursement of Underwriters' Expenses. If the sale of the Preferred
Securities to the Underwriters on the Closing Date is not consummated because
the offering is terminated or indefinitely suspended by the Offerors or by the
Representatives for any reason permitted by this Agreement, other than the
Underwriters' inability to legally act as Underwriter, the Company will
reimburse, or the Guarantor will cause the Company to reimburse, the
Underwriters for the Underwriters' reasonable out-of-pocket expenses, including
fees and disbursements of their counsel, that shall have been incurred by the
Underwriters in connection with the proposed purchase and sale of the Preferred
Securities. Any such termination or suspension shall be without liability of any
party to the other except that the provisions of this Section 9, and Sections 7
and 11 shall remain effective and shall apply.
10. Maintain Effectiveness of Registration Statement. The Representatives
and the Company, Kingsway America and the Guarantor will use their respective
best efforts to prevent the issuance of any stop order or other such order
suspending the effectiveness of the Registration Statement and, if such stop
order is issued, to obtain the lifting thereof as soon as possible.
11. Indemnification and Contribution.
(a) The Company, Kingsway America and the Guarantor agree to indemnify and
hold harmless each Underwriter, each of its directors, officers,
partners and agents, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages, expenses, liabilities, or
actions in respect thereof ("Claims"), joint or several, to which such
Underwriter or each such controlling person may become subject under
the Securities Act, the Exchange Act, the Securities Act Regulations,
Blue Sky Laws or other U.S. and Canadian federal or state statutory
laws or regulations, at common law or otherwise (including payments
made in settlement of any litigation, if such settlement is effected
with the written consent of the Company or Guarantor, which consent
shall not be unreasonably withheld), insofar as such Claims arise out
of or are based upon the inaccuracy or breach of any representation,
warranty, or covenant of the Offerors contained in this Agreement, any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto or arise out of
or are based upon the omission or alleged omission to state in any of
the foregoing a material fact required to be stated therein or
necessary to make the statements therein not misleading. The Company,
Kingsway America and the Guarantor, jointly and severally, agree to
reimburse each Underwriter, each of its directors, officers, partners
and agents, and each such controlling person promptly for any legal
fees or other expenses incurred by such Underwriter or any such
controlling person in connection with investigating or defending any
such Claim or appearing as a third-party witness in connection with
any
30
such Claim; provided, however, that the Company, Kingsway America and
the Guarantor will not be liable in any such case to the extent that:
(i) Any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement
thereto in reliance upon and in conformity with the written
information furnished by or on behalf of the Underwriters to the
Offerors expressly for use therein pursuant to Section 4 of this
Agreement; or
(ii) Such statement or omission was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (1)
any such Claim suffered or incurred by any Underwriter, any of
its directors, officers, partners and agents, (or any person who
controls such Underwriter) resulted from an action, claim, or
suit by any person who purchased Preferred Securities that are
the subject thereof from such Underwriter in the offering of the
Preferred Securities, and (2) such Underwriter failed to deliver
a copy of the Prospectus (as then amended if the Offerors shall
have amended the Prospectus) to such person at or prior to the
confirmation of the sale of such Preferred Securities in any
case where such delivery is required by the Securities Act,
unless such failure was due to failure by the any of the
Offerors to provide copies of the Prospectus (as so amended) to
the Underwriter as required by this Agreement.
(b) Each Underwriter severally, but not jointly, agrees to indemnify and
hold harmless the Offerors, each of their directors, each of their
officers who sign the Registration Statement, and each person who
controls such Offeror within the meaning of the Securities Act,
against any Claim to which the Offerors, or any such director,
officer, or controlling person may become subject under the Securities
Act, the Exchange Act, the Securities Act Regulations, or other U.S.
federal or state statutory laws or regulations, at common law or
otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter
and the Representatives, which consent shall not be unreasonably
withheld), insofar as such Claim arises out of or is based upon any
untrue or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto or arises out of or
is 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, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto in
31
reliance upon and in conformity with the written information furnished
by or on behalf of such Underwriter to the Offerors pursuant to
Section 4 of this Agreement. Each Underwriter will severally reimburse
any legal fees or other expenses reasonably incurred by the Offerors,
or any such director, officer, or controlling person in connection
with investigating or defending any such Claim, and from any and all
Claims resulting from failure of such Underwriter to deliver a copy of
the Prospectus, if the person asserting such Claim purchased Preferred
Securities from such Underwriter and a copy of the Prospectus (as then
amended if the Offerors shall have amended the Prospectus) was not
sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Preferred Securities to such person,
and if the Prospectus (as so amended) would have cured the defect
giving rise to such Claim (unless such failure was due to a failure by
the Offerors to provide sufficient copies of the Prospectuses (as so
amended) to each Underwriter).
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) of this Section 11 of notice of the commencement of any action in
respect of a Claim, such indemnified party will, if a Claim in respect
thereof is to be made against an indemnifying party under such
subsection, notify the indemnifying party in writing of the
commencement thereof. In case any such action is brought against any
indemnified party, and such indemnified party notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate in and, to the extent that it may wish,
jointly with all other indemnifying parties, similarly notified,
assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in 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 the indemnified party and/or
other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties.
(d) Upon receipt of notice from the indemnifying party to such indemnified
party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel
selected by the indemnifying party, which approval will not be
unreasonably withheld, the indemnifying party will not be liable to
such indemnified party under subsection (a) or (b) of this Section 11
for any legal fees or other expenses of counsel subsequently incurred
by such indemnified party in connection with the defense thereof,
unless:
32
(i) the indemnified party shall have employed separate counsel in
connection with the assumption of legal defenses in accordance
with the proviso to the last sentence of subsection (c) of this
Section 11 (it being understood, however, that the indemnifying
party shall not be liable for the legal fees and expenses of
more than one separate counsel (plus local counsel), approved by
the Representatives if one or more of the Underwriters or their
controlling persons are the indemnified parties); or
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after the
indemnified party's notice to the indemnifying party of
commencement of the action;
(e) If the indemnification provided for in this Section 11 is unavailable
to an indemnified party or is insufficient to hold harmless an
indemnified party under subsection (a) or (b) of this Section 11 in
respect of any Claim referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall, subject,
to the limitations hereinafter set forth, contribute to the amount
paid or payable by such indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Offerors on the one hand and the
Underwriters on the other hand from the offering of the
Preferred Securities; or
(ii) if the allocation provided by clause (e)(i) above is not
permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in clause (e)(i) above, but also the relative fault of the
Offerors on the one hand and the Underwriters on the other hand
in connection with the statements or omissions that resulted in
such Claim, as well as any other relevant equitable
considerations.
The respective relative benefits received by the Offerors on the one hand
and the Underwriters on the other hand shall be deemed to be in such proportion
that the Underwriters are responsible for that portion of a Claim represented by
the percentage that the amount of the Underwriting Commission bears to the
public offering price of the Preferred Securities, and the Company, Kingsway
America and/or the Guarantor (including their directors, officers, and
controlling persons) is responsible for the remaining portion of such Claim.
The relative fault of the Offerors on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Offerors on the one hand or the
33
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such untrue
statement or omission. The amount paid or payable by a party as a result of the
Claims referred to above shall be deemed to include, subject to the limitations
set forth in subsections (c) and (d) of this Section 11, any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action or claim.
(f) The Offerors and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined
by pro rata or per capita allocation or by any other method or
allocation that does not take into account the equitable
considerations referred to in subsection (e) of this Section 11.
Notwithstanding the other provisions of this Section 11, no
Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Preferred Securities
underwritten by it and distributed to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligation to contribute pursuant to this Section 11 are
several in proportion to their respective underwriting commitments and
not joint.
(g) The obligations of the Company, Kingsway America and the Guarantor and
the Underwriters under this Section 11 shall be in addition to any
liability that the Company, Kingsway America, the Guarantor or the
Underwriters may otherwise have.
12. Default of Underwriters. It shall be a condition to this Agreement and
to the obligations of the Trust to sell and deliver the Preferred Securities
hereunder, and to the obligations of each Underwriter to purchase the Preferred
Securities in the manner described herein, that, except as hereinafter provided
in this Section 12, each of the Underwriters (except a defaulting Underwriter)
shall purchase and pay for all the Preferred Securities agreed to be purchased
by such Underwriter hereunder upon tender to the Representatives of all such
Preferred Securities in accordance with the terms hereof. If any Underwriter or
Underwriters default in its or their obligations to purchase Preferred
Securities hereunder on either the Closing Date or the Option Closing Date and
the aggregate number of Preferred Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent (10%) of
the liquidation amount of Preferred Securities the Underwriters are obligated to
purchase on such Closing Date, the Representatives may make arrangements for the
purchase of such Preferred Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date or
Option Closing Date the nondefaulting Underwriters shall be obligated severally,
in proportion to their respective commitments hereunder, to purchase the
Preferred Securities such defaulting Underwriters agreed but failed to purchase
on such Closing Date or Option Closing Date. If any Underwriter or
34
Underwriters so default and the liquidation amount of Preferred Securities with
respect to which such default or defaults occur is greater than the above
percentage and arrangements satisfactory to the Representatives for the purchase
of such Preferred Securities by other persons are not made within forty-eight
(48) hours after such default, this Agreement will terminate without liability
on the part of any nondefaulting Underwriter or the Offerors, except to the
extent provided in Section 11.
If Preferred Securities to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the Closing Date
or Option Closing Date, as the case may be, for not more than seven (7) business
days in order that the necessary changes, if any, in the Registration Statement,
Prospectus, and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 12. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
13. Effective Date. This Agreement shall become effective immediately on
the date hereof.
14. Termination. Without limiting the right to terminate this Agreement
pursuant to any other provision hereof, this Agreement may be terminated by the
Representatives prior to the Closing Date and the option from the Company and
the Trust referred to in Section 3, if exercised, may be canceled by the
Representatives at any time prior to the Option Closing Date, if:
(a) The Offerors shall have failed, refused, or been unable, at or prior
to the Closing Date or Option Closing Date, as the case may be, to
perform any agreement in all material respects, on its part to be
performed hereunder;
(b) Any other condition to the obligations of the Underwriters hereunder
is not fulfilled; or
(c) In the Representatives' judgment, payment for and delivery of the
Preferred Securities is rendered impracticable or inadvisable because:
(i) Additional governmental restrictions, not in force and effect on
the date hereof, shall have been imposed upon trading in
securities generally or minimum or maximum prices shall have
been generally established on any national securities exchange
or over-the-counter market, or trading in securities generally
shall have suspended on any national securities exchange or on
The Nasdaq, or a general banking moratorium shall have been
established by U.S. or Canadian federal or state authorities;
(ii) Any event shall have occurred or shall exist that makes untrue
or incorrect in any material respect any statement or
information contained in the Registration Statement or that is
not reflected in the Registration Statement but should be
reflected therein to make
35
the statements or information contained therein not misleading
in any material respect; or
(iii) Any outbreak or escalation of major hostilities or other
national or international calamity or any substantial change in
political, financial or economic conditions shall have occurred
or shall have accelerated to such extent, in the
Representatives' judgment, as to have a material adverse effect
on the general securities market or make it impracticable or
inadvisable to proceed with completion of the sale and payment
for the Preferred Securities as provided in this Agreement.
Any termination pursuant to this Section 14 shall be without liability on
the part of any Underwriter to the Offerors or on the part of the Offerors to
any Underwriter (except for expenses to be paid by the Company and Guarantor
pursuant to Section 7 or reimbursed by the Company and Guarantor pursuant to
Section 9 and except as to indemnification and contribution to the extent
provided in Section 11).
15. Representations and Indemnities to Survive Delivery. The respective
indemnity and contribution agreements of the Company, Kingsway America, the
Guarantor and the Underwriters, and the representations, warranties, covenants,
other statements of the Offerors and of their directors and officers 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, the
Offerors or any of its or their partners, officers, directors, or any
controlling person, as the case may be, and will survive delivery of and payment
for the Preferred Securities sold hereunder. The respective indemnity and
contribution agreements of the Company, Kingsway America, the Guarantor and the
Underwriters, the provisions of Section 7(a) and Section 9 of this Agreement,
and the representations and warranties of the Offerors will survive the
termination or cancellation of this Agreement.
16. Notices. All communications hereunder shall be in writing and, if sent
to the Representatives, will be mailed, delivered, or telecopied (with receipt
confirmed) to The Representatives, c/o Advest, Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing
Director (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇) with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇); and if sent to the Offerors,
will be mailed, delivered, or telecopied (with receipt confirmed) to Kingsway
Financial Services Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇, Attention: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇) with a copy to
▇▇▇▇▇ ▇. Love, Lord, Bissell & Brook, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇).
17. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors or assigns, and to the
benefit of the directors, officers and partners (and their personal
representatives) and controlling persons referred to in Section 11, and no other
person shall acquire or have any right or
36
obligation hereunder. The terms "successors or assigns," as used in this
Agreement, shall not include any purchaser of the Preferred Securities from any
Underwriter merely by reason of such purchase.
18. Partial Unenforceability. If any section, subsection, clause, or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, subsection, clause, or provision hereof.
19. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
20. Judicial Proceedings.
(a) The Guarantor, the Company and Kingsway America expressly accept and
irrevocably submit to the non-exclusive jurisdiction of the United
States Federal or New York State court sitting in the Borough of
Manhattan, The City of New York, New York, over any suit, action or
proceeding arising out of or relating to this Agreement, the Indenture
or the Guarantee Agreements. To the fullest extent it may effectively
do so under applicable law, the Guarantor, the Company and Kingsway
America irrevocably waive and agree not to assert, by way of motion,
as a defense or otherwise, any claim that it is not subject to the
jurisdiction of any such court, any objection that each of them may
now or hereafter have to the laying of the venue of any such suit,
action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
(b) The Guarantor, the Company and Kingsway America agree, to the fullest
extent that it may effectively do so under applicable law, that a
judgment in any suit, action or proceeding of the nature referred to
in Section 20(a) brought in any such court shall be conclusive and
binding upon the Guarantor, the Company and Kingsway America, subject
to rights of appeal and may be enforced in the courts of the United
States of America or the State of New York (or any other court the
jurisdiction to which the Guarantor, the Company or Kingsway America
is or may be subject) by a suit upon such judgment.
(c) The Guarantor, the Company and Kingsway America irrevocably designate
and appoint Lord, Bissell & Brook, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
as their authorized agent, upon whom process may be served in any
suit, action or proceeding of the nature referred to in Section 20(a)
by mailing a copy thereof by registered or certified mail, postage
prepaid, return receipt requested, to such agent at such address and
to the Offerors as specified in Section 16. The Guarantor, the Company
and Kingsway America agree that such service (i) shall be deemed in
every respect effective service of process upon every suit, action or
proceeding and (ii)
37
shall, to the fullest extent permitted by law, be taken and held to be
valid personal service upon and personal delivery to the Guarantor,
the Company and Kingsway America. Notices hereunder shall be
conclusively presumed received as evidenced by a delivery receipt
furnished by the United States Postal Service or any commercial
delivery service.
(d) Nothing in this Section 20 shall affect the right of any Underwriter
to serve process in any manner permitted by law, or limit any right to
bring proceedings against the Guarantor, the Company or Kingsway
America in the courts of any jurisdiction or to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other
jurisdiction.
21. Entire Agreement. This Agreement embodies the entire agreement among
the parties hereto with respect to the transactions contemplated herein and
there have not been and are no agreements among the parties with respect to such
transactions other than as set forth or provided for herein.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
38
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed counterparts hereof, whereupon it will
become a binding agreement among the Company, the Guarantor, Kingsway America,
the Trust and the Underwriters, including the Representatives, in accordance
with its terms.
Very truly yours,
KINGSWAY FINANCIAL SERVICES INC.,
as Guarantor
____________________________________
By: ▇▇▇▇▇▇▇ ▇. Star
Title: Chairman, President and Chief
Executive Officer
____________________________________
By: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
KINGSWAY FINANCIAL CAPITAL TRUST I,
as Trust
By: Kingsway U.S. Funding Inc., as
Depositor
____________________________________
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
KINGSWAY U.S. FUNDING INC.,
as Depositor
____________________________________
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
KINGSWAY AMERICA INC.
____________________________________
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
____________________________________
By: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President and Secretary
39
Accepted as of the date hereof
ADVEST, INC.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, INCORPORATED
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
SANDLER ▇'▇▇▇▇▇ & PARTNERS, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇ NBF SECURITIES INC.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
As Representatives of the Several
Underwriters Named in Schedule I Hereto
By: ADVEST, INC.
____________________________________
By:_________________________________
Title:______________________________
40
SCHEDULE I
Liquidation Amount of
Firm Securities to be
Name of Underwriter Purchased
------------------- ---------------------
Advest, Inc ....................................................... $________
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ................................................ $________
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc ...................................... $________
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc ................................... $________
Sandler ▇'▇▇▇▇▇ & Partners, L.P ................................... $________
▇▇▇▇▇▇ ▇▇▇▇▇▇ NBF Securities Inc .................................. $________
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc ............................................. $________
Total .................................................... $
========
41
SCHEDULE II
LIST OF SUBSIDIARIES
--------------------------------------------------------------------------------
NAME JURISDICTION OF
INCORPORATION
--------------------------------------------------------------------------------
American Service Investment Corporation Illinois
American Service Insurance Company, Inc. Illinois
--------------------------------------------------------------------------------
Avalon Risk Management, Inc. Illinois
--------------------------------------------------------------------------------
AOA Payment Plan, Inc. Illinois
Appco Finance Corporation Florida
Auto Body Tech, Inc. Florida
Corporate Claim Services, Inc. Florida
▇▇▇▇▇▇▇▇ Risk Management Company Florida
Insurance Management Services Inc. Florida
Yorktowne Premium Finance Company Pennsylvania
U.S. Security Insurance Company Florida
--------------------------------------------------------------------------------
Jevco Insurance Company Canada
--------------------------------------------------------------------------------
Kingsway America Inc. Delaware
--------------------------------------------------------------------------------
Kingsway Finance Nova Scotia, ULC Nova Scotia
--------------------------------------------------------------------------------
Kingsway General Insurance Company Ontario
--------------------------------------------------------------------------------
Kingsway Reinsurance (Bermuda) Ltd. Bermuda
--------------------------------------------------------------------------------
Kingsway Reinsurance Corporation Barbados
--------------------------------------------------------------------------------
Kingsway U.S. Finance Partnership Delaware
--------------------------------------------------------------------------------
Kingsway U.S. Tier II Finance Partnership Delaware
--------------------------------------------------------------------------------
Kingsway U.S. Funding Inc. Delaware
--------------------------------------------------------------------------------
Kingsway Financial Capital Trust I Delaware
--------------------------------------------------------------------------------
Kingsway Connecticut Statutory Trust I Connecticut
--------------------------------------------------------------------------------
Kingsway Connecticut Statutory Trust II Connecticut
--------------------------------------------------------------------------------
Kingsway Delaware Statutory Trust III Delaware
--------------------------------------------------------------------------------
Metro Claim Services Inc. Ontario
--------------------------------------------------------------------------------
Southern United Holding, Inc. Alabama
Consolidated Insurance Management Corp. Alabama
Funding Plus of America, Inc. Alabama
Southern United Fire Insurance Company Alabama
Southern United General Agency of Texas, Inc. Texas
--------------------------------------------------------------------------------
ARK Insurance Agency, Inc. Illinois
UCC Corporation Nevada
Universal Casualty Company Illinois
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Assurance Company Pennsylvania
Lincoln General Insurance Company Pennsylvania
--------------------------------------------------------------------------------
York Fire & Casualty Insurance Company Ontario
--------------------------------------------------------------------------------
American Country Insurance Company Illinois
American Country Holdings Inc. Delaware
American Country Professional Services Corporation Delaware
American Country Underwriting Agency Inc. Illinois
American Country Financial Services Corp. Illinois
--------------------------------------------------------------------------------
EXHIBIT A
The opinion of Lord, Bissell & Brook, special U.S. counsel to the
Company, Kingsway America and the Guarantor, to be delivered pursuant to Section
8(d)(i) of the Underwriting Agreement shall be substantially to the effect that:
1. Each of the Company and Kingsway America have been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of organization, with full corporate power and authority to
own, lease, and operate its properties and conduct its business as described
in the Registration Statement and is qualified to do business as a foreign
corporation under the corporation laws of each jurisdiction in which it owns
or leases properties, has an office or in which business is conducted and
such qualification is required, except where the failure to so qualify would
not have a Material Adverse Effect.
2. Each U.S. significant Subsidiary, other than the Company and Kingsway
America, is validly existing as a corporation in good standing under the
laws of its jurisdiction of organization, with full corporate power and
authority to own, lease and operate its properties and conduct its business
as described in the Registration Statement and is qualified to do business
as a foreign corporation under the corporation laws of each jurisdiction in
which such U.S. Subsidiary owns or leases properties, has an office, or in
which business is conducted and such qualification is required, except where
the failure to so qualify would not have a Material Adverse Effect.
3. The Company and Kingsway America have the requisite corporate power and
authority to execute, deliver, and perform the Underwriting Agreement; the
Underwriting Agreement has been duly authorized, executed and delivered by
the Company and Kingsway America, and constitutes a legal, valid, and
binding obligation of the Company and Kingsway America and, assuming that it
has been duly authorized, executed and delivered by the Guarantor, is
enforceable against each of the Guarantor, the Company and Kingsway America
in accordance with its terms (except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, receivership,
readjustment of debt, moratorium, fraudulent conveyance or similar laws
relating to or affecting creditors' rights generally or general equity
principles (whether considered in a proceeding in equity or at law)) or
public policy.
4. The Trust Agreement has been duly authorized, executed and delivered by the
Company.
5. The Preferred Securities Guarantee Agreement, assuming that it has been duly
authorized, executed and delivered by the Guarantor, is enforceable against
the Guarantor in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance or
similar laws relating to or affecting creditors' rights generally or general
equity principles (whether considered in a proceeding in equity or at law)).
6. The Indenture has been duly authorized, executed and delivered by the
Company, has been duly qualified under the Trust Indenture Act, and is a
valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms (except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, receivership,
readjustment of debt, moratorium, fraudulent conveyance or similar laws
relating to or affecting creditors' rights generally or general equity
principles (whether considered in a proceeding in equity or in law)).
7. The Indenture, assuming that it has been duly authorized, executed and
delivered by the Guarantor, is enforceable against the Guarantor in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
readjustment of debt, moratorium, fraudulent conveyance or similar laws
relating to or affecting creditors' rights generally or general equity
principles (whether considered in a proceeding in equity or in law)).
8. The Junior Subordinated Debentures have been duly authorized, executed and
delivered by the Company and when duly authenticated in accordance with the
Indenture and delivered and paid for in accordance with the Trust Agreement,
will be valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance or
similar laws relating to or affecting creditors' rights generally or general
equity principles (whether considered in a proceeding in equity or at law)).
9. The Subordinated Notes have been duly authorized, executed and delivered by
Kingsway America and when paid for in accordance with their terms, will be
valid and binding obligations of Kingsway America, enforceable against
Kingsway America in accordance with their terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, readjustment of debt, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights
generally or general equity principles (whether considered in a proceeding
in equity or at law)).
10. The Trust is not an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the Investment Company
Act of 1940, as amended and, immediately after giving effect to the offering
and sale of the Preferred Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment company"
or an entity "controlled by an "investment company."
11. The Preferred Securities, the Common Securities, the Trust Agreement, the
Debenture Guarantee, the Preferred Securities Guarantee Agreement, the
Junior Subordinated Debentures, the Indenture and the Subordinated Notes
conform in all material respects to the descriptions thereof contained in
the Registration Statement and the Prospectus.
2
12. To the extent that the descriptions in the sections of the Prospectus
entitled "Risk Factors," "The Company," "Description of the Trust Preferred
Securities," "Description of the Debentures and the Debenture Guarantee,"
"Description of the Preferred Securities Guarantee," "Relationship Among the
Trust Preferred Securities, the Debentures and the Guarantees," "Material
U.S. Federal Income Tax Consequences," "Underwriting," "Enforcement of Civil
Liabilities" and "Part II - Information Not Required in Prospectus - Item 8.
Indemnification of Directors and Officers" constitute matters of U.S. law,
summaries of U.S. legal matters, U.S. legal proceedings, U.S. legal
conclusions, summaries of the organizational documents or bylaws of the
Company and the Trust, or the documents referred to therein, such
descriptions have been reviewed by us and are complete and correct and
accurately present the information called for with respect to such
information in all material respects.
13. The Registration Statement was declared effective under the Securities Act
as of the date and time specified in such opinion and, to such counsel's
knowledge and information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings therefor have been initiated or threatened by the Commission.
14. The Registration Statement and the Prospectus and any amendment or
supplement thereto made by the Guarantor or the Company prior to the Closing
Date or any Option Closing Date (except for the financial statements and
schedules and other financial and statistical data included or incorporated
by reference therein, as to which such counsel need not express an opinion),
when it or they became effective or were filed with the Commission, as the
case may be, and in each case at the Closing Date or any Option Closing
Date, complied as to form in all material respects with the requirements of
the Securities Act, the Trust Indenture Act and the applicable rules and
regulations under said Acts.
15. Each document filed pursuant to the Exchange Act and incorporated or deemed
incorporated by reference in the Registration Statement and the Prospectus
(except for the financial statements and schedules and other financial
included or incorporated by reference therein, as to which such counsel need
not express an opinion) complied when so filed as to form in all material
respects with the requirements of the Exchange Act and the applicable rules
and regulations of the Commission thereunder; provided, however, no opinion
need be given with respect to the laws of Canada or any province, territory
or political subdivision thereof.
16. To such counsel's knowledge, other than as set forth in the Prospectus,
there are no pending or threatened legal or governmental proceedings to
which the Guarantor or any Subsidiary is a party or any property of the
Guarantor or any Subsidiary is the subject that, if determined adversely to
the Guarantor or any of its Subsidiaries, would individually or in the
aggregate have a Material Adverse Effect, or would adversely affect the
consummation of the transactions contemplated in the Underwriting Agreement,
the Indenture, the Trust Agreement or the Preferred Securities Guarantee
Agreement or the issuance of the Subordinated Notes.
3
17. To such counsel's knowledge there are no contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required to be described
in the Registration Statement or to be filed as exhibits thereto other than
those described therein or filed or incorporated by reference as exhibits
thereto, and the descriptions thereof or references thereto are accurate and
complete in all material respects.
18. To such counsel's knowledge, there are no persons with contractual
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the
offering contemplated by this Agreement or otherwise registered by the
Guarantor or any Subsidiary under the Securities Act.
19. Based on such counsel's review of the relevant U.S. federal laws which in
such counsel's experience are normally applicable to transactions of the
type contemplated by the Underwriting Agreement, no approval, authorization,
consent, registration, qualification or other order of any U.S. public board
or body is required in connection with the execution and delivery of the
Underwriting Agreement, the Trust Agreement, the Preferred Securities
Guarantee Agreement and the Indenture or the issuance and sale of the
Preferred Securities, the Junior Subordinated Debentures or the Subordinated
Notes or the consummation by the Guarantor, the Company and Kingsway America
of the other transactions contemplated by the Underwriting Agreement, the
Trust Agreement, the Preferred Securities Guarantee Agreement, or the
Indenture, except such as have been obtained under the Securities Act, the
Exchange Act and the Trust Indenture Act or such as may be required under
the blue sky or securities laws of various states in connection with the
offering and sale of the Preferred Securities (as to which such counsel need
express no opinion).
20. The execution and delivery of the Underwriting Agreement, the Trust
Agreement, the Preferred Securities Guarantee Agreement, and the Indenture,
the issue and sale of the Preferred Securities, the Common Securities, the
Junior Subordinated Debentures and the Subordinated Notes, the compliance by
the Guarantor, the Company and Kingsway America with the applicable
provisions of the Preferred Securities, the Common Securities, the Junior
Subordinated Debentures, the Subordinated Notes, the Indenture and the
Underwriting Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or constitute a breach of, or
default under, the articles of incorporation or bylaws of the Company or
Kingsway America or, to such counsel's knowledge, a breach or default under
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument known to such counsel to which any U.S. Subsidiary is a party or
by which any of their properties may be bound except for such breaches as
would not have a Material Adverse Effect, nor will such action result in a
violation on the part of any Subsidiary of any U.S. applicable law or
regulation or of any U.S. administrative, regulatory or court decree known
to such counsel except for such violations as would not have a Material
Adverse Effect.
21. To such counsel's knowledge, neither the Guarantor nor any Subsidiary is (by
virtue of any action, omission to act, contract to which it is a party or by
which it is bound, or any occurrence or state of facts whatsoever) in
violation of any applicable U.S.
4
federal, state, municipal, or local statutes, laws, ordinances, rules,
regulations and/or orders issued pursuant to U.S. federal, state, municipal,
or local statutes, laws, ordinances, rules, or regulations (including those
relating to any aspect of insurance, reinsurance, environmental protection,
occupational safety and health, and equal employment practices) heretofore
or currently in effect, except such violation that has been fully cured or
satisfied without recourse or that would not have a Material Adverse Effect.
22. To such counsel's knowledge, no insurance regulatory agency or body has
issued any order or decree impairing, restricting or prohibiting the payment
of dividends by any Subsidiary to the Guarantor or any of the other
Subsidiaries.
23. All offers and sales of securities of direct or indirect financing
subsidiaries of the Guarantor described in the Prospectus were made outside
the United States to certain persons in offshore transactions in compliance
with Regulation S and were exempt from the registration requirements of the
Securities Act and such offers and sales are not required to be integrated
with the offer and sale of the Preferred Securities pursuant to the
Registration Statement.
Nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement or any amendment thereto,
(except for financial statements and schedules and other financial and
statistical data included or incorporated by reference therein, as to which such
counsel need not express an opinion), at the time such Registration Statement or
any such amendment became effective or at the Closing Date or the Option Closing
Date, contained or contains an untrue statement of material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or that the Prospectus or any amendment or supplement
thereto (except for financial statements and schedules and other financial and
statistical data included or incorporated by reference therein, as to which such
counsel need not express an opinion), at the time the Prospectus was issued, at
the time any such amended or supplemented prospectus was issued or at the
Closing Date or the Option Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5
EXHIBIT B
The opinion of Fogler, ▇▇▇▇▇▇▇▇ LLP, special Canadian counsel to the
Guarantor, to be delivered pursuant to Section 8(d)(ii) of the Underwriting
Agreement shall be substantially to the effect that:
1. The Guarantor is a corporation existing and in good standing under the laws
of the Province of Ontario, with requisite corporate power and authority to
own its properties and conduct its business as described in the Registration
Statement, except for such power and authority the absence of which would
not have a Material Adverse Effect.
2. Each Canadian Subsidiary has been duly incorporated or organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of organization, with full corporate power and authority to
own, lease, and operate its properties and conduct its businesses as
described in the Registration Statement; the Guarantor and each Canadian
Subsidiary is qualified to do business as a foreign corporation under the
corporation laws of each jurisdiction in which the Guarantor or such
Canadian Subsidiary, as the case may be, owns or leases properties, has an
office, or in which business is conducted and such qualification is
required, except where the failure to so qualify would not have a Material
Adverse Effect.
3. The Guarantor has full corporate power and authority to execute, deliver,
and perform the Underwriting Agreement; the Underwriting Agreement has been
duly authorized, executed and delivered by the Guarantor, and constitutes a
legal, valid, and binding obligation of the Guarantor.
4. The Preferred Securities Guarantee Agreement has been duly authorized,
executed and delivered by the Guarantor and is a valid and binding
obligation of the Guarantor.
5. The Indenture has been duly authorized, executed and delivered by the
Guarantor, and is a valid and binding agreement of the Guarantor.
6. To the extent that the descriptions in the sections of the Prospectus
entitled "Risk Factors," "The Company," "Description of Trust Preferred
Securities," "Description of the Debentures and the Debenture Guarantee,"
"Description of the Preferred Securities Guarantee," "Relationship Among the
Trust Preferred Securities, the Debentures and the Guarantees," "Enforcement
of Civil Liabilities" and "Part II - Information Not Required in Prospectus
- Item 8. Indemnification of Directors and Officers" constitute matters of
Canadian law, summaries of Canadian legal matters, Canadian legal
proceedings, Canadian legal conclusions, summaries of the organizational
documents or bylaws of the Guarantor, or the documents referred to therein,
such descriptions have been reviewed by us and are complete and correct and
accurately present the information called for with respect to such
information in all material respects.
7. To such counsel's knowledge there are no material pending or threatened
legal or governmental proceedings to which the Guarantor or any Subsidiary
is a party or of
6
which any property of the Guarantor or any Subsidiary is the subject or
which would adversely affect the consummation of the transactions
contemplated in the Underwriting Agreement, the Indenture, the Trust
Agreement or the Preferred Securities Guarantee Agreement or the issuance of
the Subordinated Notes.
8. Based on such counsel's review of the relevant Canadian laws which in such
counsel's experience are normally applicable to transactions of the type
contemplated by the Underwriting Agreement, no approval, authorization,
consent, registration, qualification or other order of any Canadian public
board or body is required in connection with the execution and delivery of
the Underwriting Agreement, the Trust Agreement, the Preferred Securities
Guarantee Agreement and the Indenture or the issuance and sale of the
Preferred Securities in the United States or the consummation by the
Guarantor and the Company of the other transactions contemplated by the
Underwriting Agreement, the Trust Agreement, the Preferred Securities
Guarantee Agreement, or the Indenture.
9. The execution and delivery of the Underwriting Agreement, the Trust
Agreement, the Preferred Securities Guarantee Agreement, and the Indenture,
the issue and sale of the Preferred Securities, the Common Securities, the
Junior Subordinated Debentures and the Subordinated Notes in the United
States, the compliance by the Guarantor, the Company and Kingsway America
with the provisions of the Preferred Securities, the Common Securities, the
Junior Subordinated Debentures, the Subordinated Notes, the Indenture and
the Underwriting Agreement and the consummation of the transactions herein
and therein contemplated will not conflict with or constitute a breach of,
or default under, the articles of incorporation or bylaws of the Guarantor
or, to such counsel's knowledge, a breach or default under any contract,
indenture, mortgage, loan agreement, note, lease or other instrument known
to such counsel to which either the Guarantor or any Canadian Subsidiary is
a party or by which either of them or any of their respective properties may
be bound except for such breaches as would not have a Material Adverse
Effect, nor will such action result in a violation on the part of the
Guarantor or any Subsidiary of any Canadian applicable law or regulation or
of any Canadian administrative, regulatory or court decree known to such
counsel except for such violations as would not have a Material Adverse
Effect.
10. To such counsel's knowledge, neither the Guarantor nor any Subsidiary is (by
virtue of any action, omission to act, contract to which it is a party or by
which it is bound, or any occurrence or state of facts whatsoever) in
violation of any applicable Canadian laws, ordinances, rules, regulations
and/or orders issued pursuant to Canadian laws, ordinances, rules, or
regulations (including those relating to any aspect of insurance,
reinsurance, environmental protection, occupational safety and health, and
equal employment practices) heretofore or currently in effect, except such
violation that has been fully cured or satisfied without recourse or that
would not have a Material Adverse Effect.
11. To such counsel's knowledge, no Canadian insurance regulatory agency or body
has issued any order or decree impairing, restricting or prohibiting the
payment of dividends by any Subsidiary to the Guarantor or any of the other
Subsidiaries.
7
12. To such counsel's knowledge, except as described in the Prospectus, no
change in any Canadian insurance laws or regulations is pending which could
reasonably be expected to be adopted and if adopted, would have,
individually or in the aggregate with all such changes, a Material Adverse
Effect.
13. The execution and delivery of the Underwriting Agreement, the Trust
Agreement, the Preferred Securities Guarantee Agreement, and the Indenture,
the issue and sale of the Preferred Securities, the Common Securities, the
Junior Subordinated Debentures and the Subordinated Notes in the United
States, the compliance by the Guarantor, the Company and Kingsway America
with the provisions of the Preferred Securities, the Common Securities, the
Junior Subordinated Debentures, the Subordinated Notes, the Indenture and
the Underwriting Agreement and the consummation of the transactions herein
and therein contemplated will not, to such counsel's knowledge, conflict
with or constitute a breach or default under any Applicable Contract/1/
except for such breaches as would not have a Material Adverse Effect.
Nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement or any amendment thereto,
(except for financial statements and schedules and other financial and
statistical data included or incorporated by reference therein, as to which such
counsel need not express an opinion), at the time such Registration Statement or
any such amendment became effective or at the Closing Date or the Option Closing
Date, contained or contains an untrue statement of material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or that the Prospectus or any amendment or supplement
thereto (except for financial statements and schedules and other financial and
statistical data included or incorporated by reference therein, as to which such
counsel need not express an opinion), at the time the Prospectus was issued, at
the time any such amended or supplemented prospectus was issued or at the
Closing Date or the Option Closing Date, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
_______________________
/1/ Applicable Contracts include the material agreements, including reinsurance
agreements of the Bermuda Subsidiary.
8
EXHIBIT C
The opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, special Bermuda counsel to the
Guarantor, to be delivered pursuant to Section 8(d)(iii) of the Underwriting
Agreement shall be substantially to the effect that:
1. The Bermuda Subsidiary is duly incorporated and existing under the laws of
Bermuda in good standing (meaning solely that it has not failed to make any
filing with any Bermuda governmental authority, or to pay any Bermuda
government fee or tax, which would make it liable to be struck off the
Register of Companies and thereby cease to exist under the laws of Bermuda),
with full corporate power and authority to conduct its businesses as
described in the Registration Statement.
2. The Bermuda Subsidiary is in compliance with the Insurance ▇▇▇ ▇▇▇▇.
3. The execution and delivery of the Underwriting Agreement by the Guarantor
and the performance by the Guarantor of its obligations thereunder will not
violate the memorandum of association or by-laws of the Bermuda Subsidiary.
4. To the extent that the descriptions in the sections of the Prospectus
entitled "The Company -- Bermuda" constitute matters of Bermuda law,
summaries of Bermuda legal matters, Bermuda legal proceedings, Bermuda legal
conclusions, such descriptions have been reviewed by us and are complete and
correct and accurately present such information in all material respects.
5. Based solely upon a search of the Cause Book of the Supreme Court of Bermuda
conducted at [ am/pm] on September [__], 2003, (which would not reveal
details of proceedings which have been filed but not actually entered in the
Cause Book at the time of the search), there are no judgments against the
Bermuda Subsidiary, nor any legal or governmental proceedings pending in
Bermuda to which the Bermuda Subsidiary or any of its properties is subject.
6. Based solely on a search of the public records in respect of the Bermuda
Subsidiary maintained at the offices of the Registrar of Companies at [
am/pm] on September __, 2003 (which would not reveal details of matters
which have not been lodged for registration or have been lodged for
registration but not actually registered at the time of our search) and a
search of the Cause Book of the Supreme Court of Bermuda conducted at [
am/pm] on September __, 2003 (which would not reveal details of proceedings
which have been filed but not actually entered in the Cause Book at the time
of our search), no steps have been, or are being, taken in Bermuda for the
appointment of a receiver or liquidator to, or for the winding-up,
dissolution, reconstruction or reorganisation of, the Bermuda Subsidiary,
though it should be noted that the public files maintained by the Registrar
of Companies do not reveal whether a winding-up petition or application to
the Court for the appointment of a receiver has been presented and entries
in the Cause Book may not specify the nature of the relevant proceedings
9
EXHIBIT D
The opinion of ▇▇▇▇▇ ▇▇▇▇ & Co., special Barbados counsel to the
Guarantor, to be delivered pursuant to Section 8(d)(iv) of the Underwriting
Agreement shall be substantially to the effect that:
1. The Barbados Subsidiary has been duly incorporated or organized and is
validly existing as a corporation in good standing under the laws of
Barbados, with full corporate power and authority to own, lease, and operate
its properties and conduct its businesses as described in the Registration
Statement.
2. To the extent that the descriptions in the sections of the Prospectus
entitled "The Company--Barbados" constitute matters of Barbados law,
summaries of Barbados legal matters, Barbados legal proceedings, Barbados
legal conclusions, or documents referred to therein, such descriptions have
been reviewed by us and are complete and correct and accurately present the
information called for with respect to such information in all material
respects.
3. To such counsel's knowledge, there are no pending or threatened material
legal or governmental proceedings to which the Barbados Subsidiary is a
party or of which any property of the Barbados Subsidiary is the subject or
which would adversely affect the consummation of the transactions
contemplated in the Underwriting Agreement, the Indenture, the Trust
Agreement or the Preferred Securities Guarantee Agreement.
4. To such counsel's knowledge, the execution and delivery of the Underwriting
Agreement, the Trust Agreement, the Preferred Securities Guarantee
Agreement, and the Indenture, the issue and sale of the Preferred
Securities, the Common Securities, the Junior Subordinated Debentures and
the Subordinated Notes, the compliance by the Guarantor, the Company and
Kingsway America with the provisions of the Preferred Securities, the Common
Securities, the Junior Subordinated Debentures, the Subordinated Notes, the
Indenture and the Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
constitute a breach or default under any contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such counsel to which
the Barbados Subsidiary is a party or by which its properties may be bound
except for such breaches as would not have a Material Adverse Effect, nor
will such action result in a violation on the part of the Barbados
Subsidiary of any Barbados applicable law or regulation or of any
administrative, regulatory or court decree of Barbados except for such
violations as would not have a Material Adverse Effect.
5. To such counsel's knowledge, the Barbados Subsidiary is not (by virtue of
any action, omission to act, contract to which it is a party or by which it
is bound, or any occurrence or state of facts whatsoever) in violation of
any applicable Barbados laws, ordinances, rules, regulations and/or orders
issued pursuant to Barbados laws, ordinances, rules, or regulations
(including those relating to any aspect of insurance and reinsurance)
heretofore or currently in effect, except such violation that has been
10
fully cured or satisfied without recourse or that would not have a Material
Adverse Effect.
6. To such counsel's knowledge, no Barbados insurance or reinsurance regulatory
agency or body has issued any order or decree impairing, restricting or
prohibiting the payment of dividends by the Barbados Subsidiary to the
Guarantor or any of the other Subsidiaries.
7. To such counsel's knowledge, except as described in the Prospectus, no
change in any Barbados insurance or reinsurance laws or regulations is
pending which could reasonably be expected to be adopted and if adopted,
would have, individually or in the aggregate with all such changes, a
Material Adverse Effect.
11
EXHIBIT E
The opinion of counsel to the Trust Company to be delivered pursuant
to Section 8(d)(v) of the Underwriting Agreement shall be substantially to the
effect that:
1. The Trust Company is a trust company duly incorporated and validly existing
under the laws of the State of Illinois.
2. The Trust Company, as Property Trustee, Guarantee Trustee and Indenture
Trustee, has the requisite power and authority to execute, deliver and
perform its obligations under the Trust Agreement, the Preferred Securities
Guarantee Agreement and the Indenture, respectively.
3. The execution, delivery and performance by the Property Trustee of the Trust
Agreement, the execution, delivery and performance by the Guarantee Trustee
of the Preferred Securities Guarantee Agreement and the execution, delivery
and performance by the Indenture Trustee of the Indenture have been duly
authorized by all necessary corporate action on the part of the Property
Trustee, the Guarantee Trustee and the Indenture Trustee, respectively. The
Trust Agreement, the Preferred Securities Guarantee Agreement and the
Indenture have been duly executed and delivered by the Property Trustee, the
Guarantee Trustee and the Indenture Trustee, respectively, and constitute
the legal, valid and binding obligations of the Property Trustee, the
Guarantee Trustee and the Indenture Trustee, respectively, enforceable
against the Property Trustee, the Guarantee Trustee and the Indenture
Trustee, respectively, in accordance with their terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to the enforcement of creditors' rights
generally, and by principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4. The execution, delivery and performance of the Trust Agreement, the
Preferred Securities Guarantee Agreement and the Indenture by the Property
Trustee, the Guarantee Trustee and the Indenture Trustee, respectively, do
not conflict with or constitute a breach of (i) the Organization Certificate
or By-laws of the Property Trustee, the Guarantee Trustee and the Indenture
Trustee, respectively, (ii) the terms of any indenture or other agreement or
instrument known to such counsel and to which the Property Trustee, the
Guarantee Trustee or the Indenture Trustee, respectively, is a party or is
bound, (iii) any judgment, order or decree known to such counsel to be
applicable to the Property Trustee, the Guarantee Trustee or the Indenture
Trustee, respectively, of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Property
Trustee, the Guarantee Trustee or the Indenture Trustee, respectively or
(iv) any law or administrative regulation of the State of Delaware or the
United States of America governing the trust powers of the Trust Company.
5. No consent, approval or authorization of, or registration with or notice to
any New York or federal banking authority is required for the execution,
delivery or performance by the
12
Property Trustee, the Guarantee Trustee or the Indenture Trustee of the
Trust Agreement, the Preferred Securities Guarantee Agreement and the
Indenture, respectively.
6. The Junior Subordinated Debentures delivered on the date hereof have been
duly authenticated by the Trust Company, as Indenture Trustee, in accordance
with the terms of the Indenture. The Preferred Securities delivered on the
date hereof have been duly authenticated by due execution and delivered by
the Trust Company, as Property Trustee, in accordance with the Trust
Agreement.
13
EXHIBIT F
The opinion of counsel, as special Delaware counsel to the Company and
the Trust to be delivered pursuant to Section 8(d)(vi) of the Underwriting
Agreement shall be substantially to the effect that:
1. The Trust has been duly created and is validly existing in good standing as
a statutory trust under the Delaware Act, and all filings required under the
laws of the State of Delaware with respect to the creation and valid
existence of the Trust as a statutory trust have been made.
2. Under the Delaware Act and the Trust Agreement, the Trust has the trust
power and authority to own its properties and conduct its business, all as
described in the Prospectus.
3. The Trust Agreement constitutes a valid and binding obligation of the
Company and the Property Trustee and the Delaware Trustee, and is
enforceable against the Company and the Property Trustee and the Delaware
Trustee, in accordance with its terms.
4. Under the Delaware Act and the Trust Agreement, the Trust has the trust
power and authority to execute and deliver, and to perform its obligations
under, the Underwriting Agreement, to issue and perform its obligations
under the Preferred Securities and the Common Securities and to purchase and
hold the Junior Subordinated Debentures.
5. Under the Delaware Act and the Trust Agreement, the execution and delivery
by the Trust of the Underwriting Agreement, and the performance by the Trust
of its obligations thereunder, have been duly authorized by all necessary
trust action on the part of the Trust.
6. The Preferred Securities have been duly authorized by the Trust Agreement
and are duly and validly issued and, subject to the qualifications set forth
in this paragraph 6, fully paid and nonassessable undivided beneficial
interests in the assets of the Trust, and are entitled to the benefits of
the Trust Agreement. The holders of the Preferred Securities, as beneficial
owners of the Trust, are entitled to the same limitation of personal
liability extended to stockholders of private corporations organized under
the General Corporation Law of the State of Delaware. Such counsel may note
that the holders of the Preferred Securities may be obligated to make
payments as set forth in the Trust Agreement.
7. Under the Delaware Act and the Trust Agreement, the issuance of the
Preferred Securities and Common Securities is not subject to preemptive
rights.
8. The Common Securities have been duly authorized by the Trust Agreement and
are duly and validly issued undivided beneficial interests in the assets of
the Trust and are entitled to the benefits of the Trust Agreement.
14
9. The issuance and sale by the Trust of the Preferred Securities and Common
Securities, the purchase by the Trust of the Junior Subordinated Debentures,
the execution, delivery and performance by the Trust of the Underwriting
Agreement, the consummation by the Trust of the transactions contemplated by
the Underwriting Agreement and the compliance by the Trust with its
obligations thereunder do not violate (i) any of the provisions of the
Certificate of Trust or the Trust Agreement or (ii) any applicable Delaware
law or administrative regulation.
10. No authorization, approval, consent or order of any Delaware court or
Delaware governmental authority or Delaware agency is required to be
obtained by the Trust solely in connection with the issuance and sale by the
Trust of the Preferred Securities or the Common Securities, the due
authorization, execution and delivery by the Trust of the Underwriting
Agreement or the performance by the Trust of the Underwriting Agreement.
11. The holders of Preferred Securities (other than those holders of Preferred
Securities who reside or are domiciled in the State of Delaware) will have
no liability for income taxes imposed by the State of Delaware solely as a
result of their participation in the Trust, and the Trust will not be liable
for any income tax imposed by the State of Delaware.
12. Each of Kingsway U.S. Finance Partnership and Kingsway U.S. Tier II Finance
Partnership has been duly organized and is validly existing as a partnership
in good standing under the laws of its jurisdiction of organization, with
full power and authority to own, lease, and operate its properties and
conduct its business as described in the Registration Statement.
15
EXHIBIT G
The opinion of counsel, as Special Delaware counsel to the Company and
the Trust to be delivered pursuant to Section 8(d)(vii) of the Underwriting
Agreement shall be substantially to the effect that:
1. Delaware Trust is duly incorporated and validly existing in good standing as
a Delaware banking corporation with trust powers under the laws of the State
of Delaware.
2. Delaware Trust has the corporate power and authority to execute and deliver
the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
16
EXHIBIT H
The opinion of Lord, Bissell & Brook, special U.S. tax counsel
to the Company, Kingsway America and the Guarantor, to be delivered pursuant to
Section 8(d)(viii) of the Underwriting Agreement shall be substantially to the
effect that:
1. The Junior Subordinated Debentures will be treated for United States federal
income tax purposes as indebtedness of the Company.
2. The Trust is and will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a
corporation.
3. The discussion (the "Tax Discussion") set forth under the heading "Material
United States Federal Income Tax Consequences" in the Registration Statement
fairly states the material United States federal income tax consequences
with respect to an investment in the Preferred Securities, subject to the
qualifications, limitations or exclusions set forth in such discussion.
17
EXHIBIT I
The comfort letter of KPMG LLP, as independent accountants to the
Guarantor and its subsidiaries to be delivered pursuant to Section 8(e) of the
Underwriting Agreement shall be substantially to the effect that:
1. They are the independent chartered accountants with respect to the Guarantor
and its subsidiaries within the meaning of the Securities Act and the
applicable published rules and regulations thereunder adopted by the
Commission.
2. In their opinion, the consolidated financial statements and any
supplementary financial information and schedules examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Securities Act or the Exchange Act, as
applicable, and the related published rules and regulations thereunder
adopted by the Commission as indicated in their reports thereon, copies of
which have been furnished to the Representatives.
3. They have made a review in accordance with standards established by the
Canadian Institute of Chartered Accountants of the unaudited consolidated
statements of operations, retained earnings, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus; and on the
basis of specified procedures including inquiries of officials of the
Guarantor who have responsibility for financial and accounting matters
regarding whether the unaudited consolidated financial statements referred
to paragraph 6(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations nothing came to
their attention that caused them to believe that the unaudited consolidated
financial statements do not comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations.
4. The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Guarantor
for the five most recent years included in the Prospectus and included or
incorporated by reference in the Guarantor's Annual Report on Form 40-F for
the most recent fiscal year agrees with the corresponding amounts in the
audited consolidated financial statements for such five fiscal years which
were included or incorporated by reference in the Guarantor's Annual Reports
on Form 40-F for such fiscal years.
5. They have compared the information in the Prospectus under selected
captions, limited to those identified in items 301, 302, 402 and 503(D), of
Regulation S-K and on the basis of limited procedures specified in such
letter nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of Form
40-F and of Regulation S-K.
18
6. On the basis of limited procedures, not constituting an examination in
accordance with general accepted auditing standards, consisting of (i) a
reading of the unaudited financial statements and other information referred
to in Item 3, (ii) a reading of the latest interim consolidated financial
statements of the Guarantor and its subsidiaries, (iii) the inspection of
the minute books of the Guarantor and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference in
the Prospectus, (iv) inquiries of officials of the Guarantor and its
subsidiaries responsible for financial and accounting matters and (v) such
other inquiries and procedures as may be specified in such letter:
A) (i) they did not find any change in the share capital or increase
in consolidated bank indebtedness of the Guarantor or any
decreases in consolidated net assets at July 31, 2003 as
compared with the amounts shown in the June 30, 2003 unaudited
consolidated balance sheet included in the Registration
Statement; and
(ii) for the period from July 1, 2003 to July 31, 2003, they did
not find any decreases, as compared with the corresponding
period in the preceding year, in consolidated net premiums
earned or in the total or per share amounts of earnings before
extraordinary items or of net earnings;
except in all instances for changes or decreases that the
registration statement discloses have occurred or may occur.
B) (i) they were not informed of any change at September X, 2003 in
share capital or increase in consolidated long-term debt of
the Company or any decreases in consolidated net assets as
compared with amounts shown in the June 30, 2003 unaudited
consolidated balance sheet included in the registration
statement; or
(ii) for the period from August 1, 2003 to September X, 2003 they
were not informed of any decreases, as compared with the
corresponding period in the preceding year, in consolidated
net premiums earned, or in the total or per share amounts of
earnings before extraordinary items or of net earnings.
except in all instances for changes or decreases that the
Registration Statement discloses have occurred or may occur.
In addition to the examination referred to in their report included in
the Prospectus and the limited procedures, inspection of minute books, inquiries
and other procedures referred to in paragraphs 3 and 6 they have carried out
certain specified procedures, not constituting an examination in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives, which
are derived from the general accounting records of the Guarantor and its
subsidiaries which appear in the Prospectus, or in Part II of, or in exhibits
and schedules to, the Registration Statement specified by the Representatives,
and have compared certain of such amounts, percentages and financial information
with the accounting records of the Guarantor and its subsidiaries and have found
them to be in agreement.
19
EXHIBIT J
The comfort letter of KPMG LLP, as independent accountants to American
Country Holdings Inc. ("American Country") and its subsidiaries to be delivered
pursuant to Section 8(f) of the Underwriting Agreement shall be substantially to
the effect that:
1. They are the independent certified public accountants with respect to
American Country and its subsidiaries, within the meaning of the Securities
Act and the applicable published rules and regulations thereunder.
2. In their opinion, the financial statements examined by them and incorporated
by reference into the Registration Statement or the Prospectus comply as to
form in all material respects with the applicable accounting requirements of
the Securities Act or the Exchange Act, as applicable, and the related
published rules and regulations thereunder.
20