Exhibit 1.3
Travelers Property Casualty Corp.
$850,000,000
% Convertible Junior Subordinated Notes due 2032 a/
Convertible Notes Underwriting Agreement
New York, New York
, 2002
Xxxxxxx Xxxxx Xxxxxx Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx X. Xxxxxxx & Company, Inc.
Xxxxxxxx Capital Partners, L.P.
As Representatives of the several Convertible Notes Underwriters
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Travelers Property Casualty Corp., a corporation organized under the
laws of Connecticut (the "Company"), proposes to sell to the several
underwriters named in Schedule I hereto (the "Convertible Notes Underwriters"),
for whom you (the "Representatives") are acting as representatives, $850,000,000
principal amount of its % Convertible Junior Subordinated Notes due 2032 (the
"Underwritten Securities"). The Company also proposes to grant to the
Convertible Notes Underwriters an option to purchase up to $42,500,000
additional principal amount of such Convertible Junior Subordinated Notes to
cover over-allotments (the "Option Securities"; the Option Securities, together
with the Underwritten Securities, being hereinafter called the "Securities").
The Securities are convertible into shares of Class A Common Stock, par value
$0.01 per share (the "Common Stock"), of the Company at the conversion price set
forth in the Prospectus. The Securities are to be issued under an indenture, to
be dated as of the Closing Date, between the Company and The Bank of New York,
as trustee (the "Trustee"), as supplemented by a First Supplemental Indenture to
be dated as of the Closing Date (the "Indenture"). To the extent there are no
additional Convertible Notes Underwriters listed on Schedule I other than you,
the term Representatives as used herein shall mean you, as Convertible Notes
Underwriters, and the terms Representatives and Convertible Notes Underwriters
shall mean either the singular or plural as the context requires. Certain terms
used herein are defined in Section 17 hereof.
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(a) Plus an option to purchase up to $42,500,000 additional principal
amount from the Company to cover over-allotments.
1. Representations and Warranties. (a) The Company represents
and warrants to, and agrees with, each Convertible Notes Underwriter as set
forth below in this Section 1(a).
(i) The Company has prepared and filed with the Commission a
registration statement (file number 333-82388) on Form S-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission either (1) prior to the Effective Date of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (2) after the
Effective Date of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in such
registration statement and the Prospectus. As filed, such amendment and
form of final prospectus, or such final prospectus, shall contain all
Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein)
and on any date on which Option Securities are purchased, if such date
is not the Closing Date (a "settlement date"), the Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the Trust Indenture Act and the
respective rules thereunder. On the Effective Date and at the Execution
Time, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; on the Effective Date and on the
Closing Date, the Indenture did and will comply in all material
respects with the applicable requirements of the Trust Indenture Act
and the rules thereunder, and, on the Effective Date, the Prospectus,
if not filed pursuant to Rule 424(b), will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date and any
settlement date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company makes no
representations or warranties as to (i) that part of the Registration
Statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the
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Trustee or (ii) the information contained in or omitted from the
Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Convertible Notes Underwriter
through the Representatives specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(iii) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
as described in the Prospectus, and is duly qualified to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification, except where the
failure to be so qualified in any jurisdiction or to have such powers
or authorities would not have a material adverse effect on the
condition (financial or otherwise), earnings, business or properties of
the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business (a
"Material Adverse Effect").
(iv) All the outstanding shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as otherwise
set forth in the Prospectus, all outstanding shares of capital stock of
such subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest or any other security interests, claims, liens or
encumbrances, except where the failure to be so authorized and issued,
fully paid and nonassessable, owned by the Company or free and clear of
any such interests, claims, liens or encumbrances would not have a
Material Adverse Effect.
(v) Without limitation of the foregoing, each of the
subsidiaries listed on Annex A attached hereto (the "Insurance
Subsidiaries") is duly organized and licensed as an insurance company
in the jurisdiction of incorporation identified in Annex A hereto, is
duly licensed or authorized as an insurer or reinsurer in each other
jurisdiction where it is required to be so licensed or authorized to
conduct its business as described in the Prospectus, except where the
failure (individually or in the aggregate) to be so licensed or
authorized in any such jurisdiction would not have a Material Adverse
Effect; each of the Company and each Insurance Subsidiary has made all
required filings under applicable insurance company statutes and has
filed all notices, reports, documents or other information required to
be filed thereunder, except where the failure to have such
authorizations, approvals, orders, consents, licenses, certificates,
permits, registrations or qualifications (individually or in the
aggregate) would not have a Material Adverse Effect, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto); and none of the Company or any Insurance Subsidiary has
received any notification from any insurance regulatory authority to
the effect that any additional authorization, approval, order, consent,
license,
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certificate, permit, registration or qualification from any insurance
regulatory authority is needed to be obtained by any of the Company or
any subsidiary other than in any case where the failure to acquire such
additional authorization, approval, order, consent, license,
certificate, permit, registration or qualification (individually or in
the aggregate) would not have a Material Adverse Effect.
(vi) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable; the
shares of Common Stock initially issuable upon conversion of the
Securities have been duly authorized and, when issued upon conversion
of the Securities will be validly issued, fully paid and nonassessable;
the Board of Directors of the Company has duly and validly adopted
resolutions reserving such shares of Common Stock for issuance upon
conversion of the Securities; the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or other
rights to subscribe for the Securities or the shares of Common Stock
issuable upon conversion thereof, except as set forth in the Exchange
Agreement, dated as of March , 2002, between Citigroup Inc.
("Citigroup") and the Company; and, except as set forth in the
Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding.
(vii) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or the
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
under the headings "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Environmental Claims,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Asbestos Claims and Litigation," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Cumulative Injury Other Than Asbestos (XXXXX) Claims,"
"Business -- Environmental, Asbestos and Other Cumulative Injury
Claims," "Business -- Regulation," "Business -- Legal Proceedings" and
"Description of the Notes" fairly summarize the matters therein
described.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company.
(ix) The Indenture has been duly authorized and, assuming due
authorization, execution and delivery thereof by the Trustee, when
executed and delivered by the Company, will constitute a legal, valid,
binding instrument enforceable against the Company in accordance with
its terms, except to the extent that enforcement thereof may be limited
by (A) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity
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(regardless of whether enforceability is considered in a proceeding at
law or in equity); and the Securities have been duly authorized, and,
when executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Convertible Notes
Underwriters, will have been duly executed and delivered by the Company
and will constitute the legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture, except to the extent
that enforcement thereof may be limited by (Y) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (Z) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity), and will be
convertible into Common Stock in accordance with their terms.
(x) Each of the agreements listed on Annex B attached hereto
has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company enforceable
in accordance with its terms, except to the extent that enforcement
thereof may be limited by (A) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(xi) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(xii) No consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in
connection with the transactions contemplated herein or in the
Indenture, except such as have been obtained under the Act and the
Trust Indenture Act and such as may be required under the blue sky laws
or securities laws of any state or foreign jurisdiction in connection
with the purchase and distribution of the Securities by the Convertible
Notes Underwriters in the manner contemplated herein and in the
Prospectus, or except where the failure to obtain such consent,
approval, authorization, filing or order would not have a material
adverse effect on the issuance and sale of the Securities or the
consummation of any of the other transactions herein contemplated.
(xiii) None of the execution and delivery of the Indenture or
this Agreement, the issue and sale of the Securities, the issuance of
the Common Stock upon conversion thereof, the consummation of any other
of the transactions herein or therein contemplated, the fulfillment of
the terms hereof or thereof will conflict with, or result in a breach
or violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant
to, (1) the charter or by-laws of the Company or any of its
subsidiaries, (2) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition,
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covenant or instrument to which the Company or any of its subsidiaries
is a party or bound or to which its or their property is subject, or
(3) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or any of its subsidiaries (including the
requirements of the insurance laws and regulations of its state of
incorporation and the insurance laws and regulations of other
applicable jurisdictions) of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties, except, in the case of clauses (2) and (3) above,
for such conflict, breach or violation that would not have a material
adverse effect on the issuance and sale of the Securities or the
consummation of any other of the transactions herein contemplated.
(xiv) No holders of securities of the Company have rights to
the registration of such securities under the Registration Statement.
(xv) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in
the Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein).
The selected financial data set forth under the caption "Selected
Historical Financial Information" in the Prospectus and Registration
Statement fairly present, on the basis stated in the Prospectus and the
Registration Statement, the information included therein.
(xvi) The statutory financial statements of the Insurance
Subsidiaries, from which certain ratios and other statistical data
included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) have been derived, have been prepared
for each relevant period in conformity with accounting practices
prescribed or permitted by the National Association of Insurance
Commissioners and the insurance departments of the states of domicile
of such subsidiaries, in effect at such time of preparation, except as
otherwise stated therein.
(xvii) There are no legal or governmental proceedings
(including, without limitation, actions or proceedings by any insurance
regulatory agency or body) pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, or to which
the Company or any of its subsidiaries is a party, or to which any of
their respective properties is subject, that (1) could reasonably be
expected to have a material adverse effect on the performance of this
Agreement or the Indenture or the consummation of any of the
transactions contemplated hereby or thereby or (2) are required to be
described in the Registration Statement or the Prospectus (exclusive of
any supplement thereto) but are not described as required.
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(xviii) Except as disclosed in the Prospectus, (1) all
reinsurance treaties, contracts, agreements and arrangements to which
the Company or any of the Insurance Subsidiaries is a party and as to
which any of them reported recoverables, premiums due or other amounts
in its most recent statutory financial statements are in full force and
effect, except where the failure of such treaties, contracts,
agreements and arrangements to be in full force and effect would not
have a Material Adverse Effect, and none of the Company or any of the
Insurance Subsidiaries is in violation of, or in default in the
performance, observance or fulfillment of, any material obligation,
agreement, covenant or condition contained therein, which violation or
default would, singly or in the aggregate, have a Material Adverse
Effect and (2) neither the Company nor any of the Insurance
Subsidiaries has received any notice from any other party to any
reinsurance treaty, contract, agreement or arrangement that such other
party intends not to perform such treaty, contract, agreement or
arrangement in any material respect, and the Company and the Insurance
Subsidiaries have no knowledge that any of the other parties to such
treaties, contracts, agreements or arrangements will be unable to
perform its obligations under such treaty, contract, agreement or
arrangement in any material respect, except to the extent (A) the
Company or the Insurance Subsidiaries have established reserves in
their financial statements which they deem adequate for potential
uncollectible reinsurance or (B) such nonperformance would not have a
Material Adverse Effect.
(xix) To the best knowledge of the Company, no change in any
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, except
as set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(xx) Neither the Company nor any subsidiary is in violation or
default of (1) any provision of its charter or by-laws, (2) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (3) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary (including the
requirements of the insurance laws and regulations of its state of
incorporation and the insurance laws and regulations of other
applicable jurisdictions) or any of its properties, as applicable,
except, in the case of each of clauses (2) or (3) above, for such
violation or default that would not have a Material Adverse Effect.
(xxi) KPMG LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and
delivered their report with respect to the audited consolidated
financial statements and schedules included in the Prospectus, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
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(xxii) There are no transfer taxes or other similar fees or
charges under federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company
or sale by the Company of the Securities or upon the issuance of Common
Stock upon the conversion thereof.
(xxiii) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a Material Adverse Effect), except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto),
and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any
of the foregoing is due and payable (except for any such tax,
assessment, fine or penalty that is currently being contested in good
faith or as would not have a Material Adverse Effect), except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(xxiv) No labor problem or dispute with the employees of the
Company or any of its subsidiaries exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers, that could have a
Material Adverse Effect, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(xxv) The Company and its subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities (including
insurance departments) necessary to conduct their respective
businesses, and no event or events have occurred which would result in
the impairment, modification, termination or revocation of any such
license, certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(xxvi) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (1) transactions are executed in accordance with
management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only
in accordance with management's general or specific authorization; and
(4) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxvii) The Company has not taken, directly or indirectly, any
action that has constituted or that was designed to or might reasonably
be expected to cause
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or result in, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(xxviii) Each of the Company and its subsidiaries has
fulfilled its obligations, if any, under the minimum funding standards
of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Employee Retirement Income Security
Act of 1974 ("ERISA") and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of
ERISA and such regulations and published interpretations) in which
employees of the Company and its subsidiaries are eligible to
participate, except where the failure to fulfill such obligations would
not have a Material Adverse Effect, and each such plan is in compliance
in all material respects with the presently applicable provisions of
ERISA and such regulations and published interpretations. The Company
and its subsidiaries have not incurred any unpaid liability to the
Pension Benefit Guaranty Corporation (other than for the payment of
premiums in the ordinary course) or to any such plan under Title IV of
ERISA, except where the failure to fulfill such obligations or any such
noncompliance would not have a Material Adverse Effect.
(xxix) The Company and its subsidiaries own, possess, license
or have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct
of the Company's business as now conducted, except where the failure to
so own, possess, license or have other rights to use such Intellectual
Property would not have a Material Adverse Effect, or as proposed in
the Prospectus to be conducted, and the Company is not aware of any
material claim to the contrary or any material challenge by any other
person to the rights of the Company or its subsidiaries with respect to
the foregoing, except as set forth or contemplated in the Prospectus
(exclusive of any supplement thereto).
(xxx) Neither any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act)
nor A.M. Best Co. has (A) taken any action to, or to the Company's
knowledge, threatened to decrease the rating of any debt securities of
the Company or any of its subsidiaries or the financial strength or the
claims paying ability of the Company, any of its subsidiaries or any
intracompany insurance pool to which any Insurance Subsidiary of the
Company belongs or (B) given any notice of any intended or potential
decrease in any such rating or of a possible change in any such rating
that does not indicate the direction of the possible change.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Convertible Notes
Underwriters in connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby, to
each Convertible Notes Underwriter.
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(b) Citigroup represents and warrants to, and agrees with,
each Convertible Notes Underwriter as set forth below in this Section 1(b).
(i) This Agreement has been duly authorized, executed and
delivered by Citigroup.
(ii) Each of the agreements listed on Annex B attached hereto
has been duly authorized, executed and delivered by Citigroup and
constitutes a valid and binding obligation of Citigroup enforceable in
accordance with its terms, except to the extent that enforcement
thereof may be limited by (A) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(iii) Citigroup has not taken, directly or indirectly, any
action that has constituted or that was designed to or might reasonably
be expected to cause or result in, under the Exchange Act or otherwise,
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(iv) None of the execution and delivery of the Indenture or
this Agreement, the issue and sale of the Securities, the issuance of
the Common Stock upon conversion thereof, the consummation of any other
of the transactions herein contemplated, the fulfillment of the terms
hereof or thereof will conflict with, or result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of Citigroup or any of its subsidiaries pursuant to,
(1) the charter or by-laws of Citigroup or any of its subsidiaries, (2)
the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which Citigroup or any of its
subsidiaries is a party or bound or to which its or their property is
subject, or (3) any statute, law, rule, regulation, judgment, order or
decree applicable to Citigroup or any of its subsidiaries (including
the requirements of the insurance laws and regulations of its state of
incorporation and the insurance laws and regulations of other
jurisdictions which are applicable to such subsidiary) of any court,
regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over Citigroup or any of its
subsidiaries or any of its or their properties, except in the case of
clauses (2) and (3) above, for such conflict, breach or violation that
would not have a material adverse effect on the issuance and sale of
the Securities or the consummation of any of the transactions herein
contemplated.
(v) In respect of any statements in or omissions from the
Registration Statement or the Prospectus or any supplements thereto
made in reliance upon and in conformity with information furnished in
writing to the Company by Citigroup specifically for use in connection
with the preparation thereof, Citigroup hereby makes the same
representations and warranties to each Convertible Notes
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Underwriter as the Company makes to such Convertible Notes Underwriter
under the second sentence of paragraph (a)(ii) of this Section.
Any certificate signed by any officer of Citigroup and
delivered to the Representatives or counsel for the Convertible Notes
Underwriters in connection with the offering of the Securities shall be deemed a
representation and warranty by Citigroup, as to matters covered thereby, to each
Convertible Notes Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Convertible Notes Underwriter, and each
Convertible Notes Underwriter agrees, severally and not jointly, to purchase
from the Company, at a purchase price of % of the principal amount thereof, plus
accrued interest, if any, from March 27, 2002 to the Closing Date, the principal
amount of the Underwritten Securities set forth opposite such Convertible Notes
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several Convertible Notes Underwriters to purchase, severally
and not jointly, the Option Securities at the same purchase price as the
Convertible Notes Underwriters shall pay for the Underwritten Securities, plus
accrued interest, if any, from March 27, 2002 to the settlement date for the
Option Securities. Said option may be exercised only to cover over-allotments in
the sale of the Underwritten Securities by the Convertible Notes Underwriters.
Said option may be exercised in whole or in part at any time on or before the
30th day after the date of the Prospectus upon written or telegraphic notice by
the Representatives to the Company setting forth the principal amount of Option
Securities as to which the several Convertible Notes Underwriters are exercising
the option and the settlement date. The principal amount of Option Securities to
be purchased by each Convertible Notes Underwriter shall be the same percentage
of the total principal amount of Option Securities to be purchased by the
several Convertible Notes Underwriters as such Convertible Notes Underwriter is
purchasing of the Underwritten Securities, subject to such adjustments as you in
your absolute discretion shall make to eliminate any fractional Securities.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time, on
March 27, 2002, or at such time on such later date not more than three Business
Days after the foregoing date as the Representatives shall designate, which date
and time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the Securities being herein called the "Closing Date"). Delivery of
the Securities shall be made to the Representatives for the respective accounts
of the several Convertible Notes Underwriters against payment by the several
Convertible Notes Underwriters through the Representatives of the purchase price
thereof to or upon the order of the Company by wire transfer payable in same-day
funds to an account specified by the Company. Delivery of the Underwritten
Securities and the
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Option Securities shall be made through the facilities of The Depository Trust
Company unless the Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
the Option Securities (at the expense of the Company) to the Representatives, at
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Convertible Notes
Underwriters, against payment by the several Convertible Notes Underwriters
through the Representatives of the purchase price thereof to or upon the order
of the Company by wire transfer payable in same-day funds to an account
specified by the Company. If settlement for the Option Securities occurs after
the Closing Date, the Company will deliver to the Representatives on the
settlement date for the Option Securities, and the obligation of the Convertible
Notes Underwriters to purchase the Option Securities shall be conditioned upon
receipt of, supplemental opinions, certificates and letters confirming as of
such date the opinions, certificates and letters delivered on the Closing Date
pursuant to Section 6 hereof.
4. Offering by Convertible Notes Underwriters. It is
understood that the several Convertible Notes Underwriters propose to offer the
Securities for sale to the public as set forth in the Prospectus.
5. Agreements. (a) The Company agrees with the several
Convertible Notes Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto to
be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company
will promptly advise the Representatives (A) when the Registration
Statement, if not effective at the Execution Time, shall have become
effective, (B) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement shall have been
filed with the Commission, (C) when, prior to termination of the
offering of the Securities, any amendment to the Registration Statement
shall have been filed or become effective, (D) of any request by the
Commission or its staff for any amendment of the Registration
Statement, or any Rule 462(b) Registration Statement, or for any
supplement to
12
the Prospectus or for any additional information, (E) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (F) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the institution or
threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon
as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, the Company
promptly will (A) notify the Representatives of any such event, (B)
prepare and file with the Commission, subject to the second sentence of
subparagraph (a)(i) of this Section 5, an amendment or supplement which
will correct such statement or omission or effect such compliance and
(C) supply any supplemented Prospectus to you in such quantities as you
may reasonably request.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
(iv) The Company will furnish to the Representatives and
counsel for the Convertible Notes Underwriters signed copies of the
Registration Statement (including exhibits thereto) and to each other
Convertible Notes Underwriter a copy of the Registration Statement
(without exhibits thereto) and, so long as delivery of a prospectus by
a Convertible Notes Underwriter or dealer may be required by the Act,
as many copies of each Preliminary Prospectus and the Prospectus and
any supplement thereto as the Representatives may reasonably request.
(v) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate and will maintain
such qualifications in effect so long as required for the distribution
of the Securities; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not
now so qualified or to take any action that would subject it to service
of process in suits, other than those arising out of the offering or
sale of the Securities, or taxation in any jurisdiction where it is not
now so subject.
13
(vi) The Company will reserve and keep available at all times,
free of preemptive rights, the full number of shares of Common Stock
issuable upon conversion of the Securities.
(vii) The Company will not, without the prior written consent
of Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition of
(whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by the Company or any affiliate of the
Company or any person in privity with the Company or any affiliate of
the Company), directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act with respect to, any other
shares of Common Stock or shares of the Company's Class B Common Stock
("Class B Common Stock") or any securities convertible into, or
exercisable or exchangeable for, shares of Common Stock or shares of
Class B Common Stock (including the Securities); or publicly announce
an intention to effect any such transaction, for a period of 180 days
after the date of the Convertible Notes Underwriting Agreement,
provided, however, that (A) the Company may issue and sell Common Stock
in the concurrent offering of the Common Stock contemplated by the
Prospectus, (B) the Company may issue shares of Common Stock upon
conversion of the Securities, (C) the Company may grant options to
purchase shares of Common Stock or Class B Common Stock, (D) the
Company may issue shares of Common Stock or Class B Common Stock upon
the conversion of securities or the exercise of warrants outstanding at
the Execution Time or upon the exercise of options under its stock
option plans, (E) the Company may issue restricted shares of Common
Stock or Class B Common Stock pursuant to the Company's 2002 stock
incentive plan, (F) the Company may issue or sell shares of Common
Stock or Class B Common Stock in connection with an acquisition or
business combination and (G) the Company may issue shares of Common
Stock or Class B Common Stock in connection with the transactions
contemplated under the heading "Summary -- Our Corporate
Reorganization" in the Prospectus.
(viii) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(ix) Between the date hereof and the Closing Date, the Company
will not do or authorize any act or thing that would result in an
adjustment of the conversion price of the Securities.
(x) The Company agrees to pay the costs and expenses relating
to the following matters: (A) the preparation of the Indenture and
other document
14
relating to the issuance of the Securities and the issuance of the
Common Stock upon conversion of the Securities; (B) the fees and
expenses of the Trustee; (C) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and each amendment or supplement to any of
them; (D) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of
such copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, and all amendments or supplements to any of them, as
may, in each case, be reasonably requested for use in connection with
the offering and sale of the Securities; (E) the preparation, printing,
authentication, issuance and delivery of certificates for the
Securities, including any stamp or transfer taxes in connection with
the original issuance and sale of the Securities; (F) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum
and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (G) the
registration of the Securities under the Exchange Act and the listing
of the Securities on the New York Stock Exchange; (H) any registration
or qualification of the Securities for offer and sale under the
securities or blue sky laws of the several states (including filing
fees and the reasonable fees and expenses of counsel for the
Convertible Notes Underwriters relating to such registration and
qualification); (I) any filings required to be made with the National
Association of Securities Dealers, Inc. (including filing fees and the
reasonable fees and expenses of counsel for the Convertible Notes
Underwriters relating to such filings); (J) the transportation and
other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the
Securities; (K) the fees and expenses of the Company's accountants and
the fees and expenses of counsel (including local and special counsel)
for the Company; and (L) all other costs and expenses incident to the
performance by the Company of its obligations hereunder.
(b) Citigroup agrees with the several Convertible Notes
Underwriters that:
(i) Citigroup will not, without the prior written consent of
Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition of
(whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by the Company or any affiliate of the
Company or any person in privity with the Company or any affiliate of
the Company), directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act with respect to, any other
shares of Common Stock or shares of Class B Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares
of Common Stock or shares of Class B Common Stock (including the
Securities); or publicly announce an intention to effect any such
transaction, for a period of 180 days after the date of the Convertible
Notes Underwriting Agreement, provided, however,
15
that (A) the Company may issue and sell Common Stock in the concurrent
offering of Common Stock contemplated by the Prospectus, (B) the
Company may issue shares of Common Stock upon conversion of the
Securities, (C) the Company may grant options to purchase shares of
Common Stock or Class B Common Stock, (D) the Company may issue shares
of Common Stock or Class B Common Stock upon the conversion of
securities or the exercise of warrants outstanding at the Execution
Time or upon the exercise of options under its stock option plans, (E)
the Company may issue restricted shares of Common Stock or Class B
Common Stock pursuant to the Company's 2002 stock incentive plan, (F)
the Company may issue or sell shares of Common Stock or Class B Common
Stock in connection with an acquisition or business combination, (G)
Citigroup may privately transfer shares of the Company's Common Stock
or Class B Common Stock, as long as the acquirer of such shares agrees
in writing to be bound by the obligations and restrictions set forth in
this clause (i), and (H) the Company may issue shares of Common Stock
or Class B Common Stock in connection with the transactions
contemplated under the heading "Summary -- Our Corporate
Reorganization" in the Prospectus.
(ii) Citigroup will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
6. Conditions to the Obligations of the Convertible Notes
Underwriters. The obligations of the Convertible Notes Underwriters to purchase
the Underwritten Securities and the Option Securities, as the case may be, shall
be subject to the accuracy of the representations and warranties on the part of
the Company and Citigroup contained herein as of the Execution Time, the Closing
Date and any settlement date pursuant to Section 3 hereof, to the accuracy of
the statements of the Company and Citigroup made in any certificates pursuant to
the provisions hereof, to the performance by each of the Company and Citigroup
of their respective obligations hereunder and to the following additional
conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or (ii)
9:30 AM on the Business Day following the day on which the public
offering price was determined, if such determination occurred after
3:00 PM New York City time on such date; if filing of the Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be filed in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or threatened.
16
(b) The Company shall have requested and caused Skadden, Arps,
Slate, Xxxxxxx & Xxxx, special counsel for the Company and Citigroup,
to have furnished to the Representatives their opinion, dated the
Closing Date and addressed to the Representatives, substantially in the
form of Exhibit A.
(c) The Company shall have requested and caused Simpson,
Thacher & Xxxxxxxx, special counsel for the Company, to have furnished
to the Representatives their opinion, dated the Closing Date and
addressed to the Representatives, substantially in the form of Exhibit
B.
(d) The Company and Citigroup shall have requested and caused
Xxxxx X. Xxxxxxxx, Esq., corporate counsel for the Company and
Citigroup, to have furnished to the Representatives his opinion, dated
the Closing Date and addressed to the Representatives, substantially in
the form of Exhibit C.
(e) The Company shall have requested and caused Xxxxxxxx &
Xxxxxxxx LLC, special Connecticut counsel for the Company, to have
furnished to the Representatives their opinion, dated the Closing Date
and addressed to the Representatives, substantially in the form of
Exhibit D.
(f) The Representatives shall have received from Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, counsel for the Convertible Notes
Underwriters, such opinion or opinions, dated the Closing Date and
addressed to the Representatives, with respect to the issuance and sale
of the Securities, the Indenture, the Registration Statement, the
Prospectus (together with any supplement thereto) and other related
matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(g) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct on and as of the
Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no
17
material adverse change in the condition (financial or
otherwise), earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except
as set forth in or contemplated in the Prospectus (exclusive
of any supplement thereto).
(h) The Company shall have requested and caused KPMG LLP to
have furnished to the Representatives, at the Execution Time and at the
Closing Date, letters, dated respectively as of the Execution Time and
as of the Closing Date, substantially in the form of Exhibit E hereto.
(i) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(h) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto),
the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(j) Subsequent to the Execution Time, there shall not have
been (i) any decrease in the rating of any debt securities of the
Company or any of its subsidiaries or the financial strength or the
claims paying ability of the Company, any of its subsidiaries or any
intracompany insurance pool to which any Insurance Subsidiary belongs
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) or A.M. Best Co. or
(ii) any notice given of any intended or potential decrease in any such
rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
(k) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
(l) The Securities shall have been listed and admitted and
authorized for trading on the New York Stock Exchange, subject to
notice of issuance, and satisfactory evidence of such actions shall
have been provided to the Representatives, and the Company shall have
caused the shares of Common Stock initially issuable upon conversion of
the Securities to be approved for listing, subject to issuance, on the
New York Stock Exchange.
18
(m) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit F
hereto from each officer and director of the Company and each
Participant in the Directed Share Program addressed to the
Representatives.
(n) The Company shall have consummated the transactions
contemplated under the caption "Summary -- Our Corporate Reorganization" in the
Prospectus.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Convertible Notes Underwriters, this Agreement and all obligations of the
Convertible Notes Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the Representatives. Notice of such cancellation
shall be given to the Company in writing or by telephone or facsimile confirmed
in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, counsel for
the Convertible Notes Underwriters, at Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, xx
the Closing Date.
7. Reimbursement of Convertible Notes Underwriters' Expenses.
If the sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Convertible Notes Underwriters set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Convertible Notes Underwriters,
the Company will reimburse the Convertible Notes Underwriters severally through
Xxxxxxx Xxxxx Barney Inc. on demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Convertible Notes Underwriter, the directors,
officers, employees and agents of each Convertible Notes Underwriter and each
person who controls any Convertible Notes Underwriter within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the registration statement for the registration of the Securities
as originally filed or in any amendment thereof, or in any Preliminary
Prospectus or the Prospectus, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each
19
such indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Convertible Notes Underwriter through the Representatives
specifically for inclusion therein; provided further that with respect to any
untrue statement or omission of material fact made in any Preliminary
Prospectus, the indemnity agreement contained in this Section 8(a) shall not
inure to the benefit of any Convertible Notes Underwriter from whom the person
asserting any such loss, claim, damage or liability purchased the securities
concerned, to the extent that any such loss, claim, damage or liability of such
Convertible Notes Underwriter occurs under the circumstance where it shall have
been determined by a court of competent jurisdiction by final and nonappealable
judgment that (w) the Company had previously furnished copies of the Prospectus
to the Representatives, (x) delivery of the Prospectus was required by the Act
to be made to such person, (y) the untrue statement or omission of a material
fact contained in the Preliminary Prospectus was corrected in the Prospectus and
(z) there was not sent or given to such person, at or prior to the written
confirmation of the sale of such securities to such person, a copy of the
Prospectus. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Each Convertible Notes Underwriter severally and not
jointly agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs the Registration Statement, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Convertible Notes Underwriter, but only with reference to written
information relating to such Convertible Notes Underwriter furnished to the
Company by or on behalf of such Convertible Notes Underwriter through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Convertible Notes Underwriter may otherwise have. The
Company acknowledges that the statements set forth in the last paragraph of the
cover page regarding delivery of the Securities and, under the heading
"Underwriting" (i) the list of Convertible Notes Underwriters and their
respective participation in the sale of the Securities, (ii) the third full
paragraph related to concessions and reallowances, (iii) the tenth and eleventh
full paragraphs related to stabilization, syndicate covering transactions and
penalty bids in any Preliminary Prospectus and the Prospectus, (iv) the
fifteenth full paragraph related to the assumption by Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated (the "Independent Underwriter") of all
responsibilities as the "qualified independent underwriter" (within the meaning
of National Association of Securities Dealers, Inc. Conduct Rule 2720) and (v)
the seventeenth paragraph related to electronic distribution of the Prospectus
and allocation for electronic distribution of the Securities constitute the only
information furnished in writing by or on behalf of the several Convertible
Notes Underwriters for inclusion in any Preliminary Prospectus or the
Prospectus.
20
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.
An indemnifying party shall not be liable under this Section 8 to any
indemnified party regarding any settlement or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
is consented to by such indemnifying party, which consent shall not be
unreasonably withheld.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Convertible Notes
Underwriters severally agree to contribute to the aggregate losses, claims,
damages and liabilities (including legal or
21
other expenses reasonably incurred in connection with investigating or defending
same) (collectively "Losses") to which the Company and one or more of the
Convertible Notes Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Convertible Notes Underwriters on the other from the offering of
the Securities; provided, however, that in no case shall (i) any Convertible
Notes Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Convertible Notes Underwriter hereunder or (ii) the
Independent Underwriter in its capacity as "qualified independent underwriter"
(within the meaning of National Association of Securities Dealers, Inc. Conduct
Rule 2720) be responsible for any amount in excess of the compensation received
by the Independent Underwriter for acting in such capacity. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company and the Convertible Notes Underwriters severally shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and of the Convertible
Notes Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
the Company, and benefits received by the Convertible Notes Underwriters shall
be deemed to be equal to the total underwriting discounts and commissions, in
each case as set forth on the cover page of the Prospectus. Benefits received by
the Independent Underwriter in its capacity as "qualified independent
underwriter" shall be deemed to be equal to the compensation received by the
Independent Underwriter for acting in such capacity. Relative fault shall be
determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Company on the
one hand or the Convertible Notes Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Convertible Notes Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls a Convertible Notes Underwriter within the meaning of either the Act or
the Exchange Act and each director, officer, employee and agent of a Convertible
Notes Underwriter shall have the same rights to contribution as such Convertible
Notes Underwriter, and each person who controls the Company within the meaning
of either the Act or the Exchange Act, each officer of the Company who shall
have signed the Registration Statement and each director of the Company shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) Without limitation of and in addition to its obligations
under the other paragraphs of this Section 8, the Company agrees to indemnify
and hold harmless the
22
Independent Underwriter, its directors, officers, employees and agents and each
person who controls the Independent Underwriter within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject,
insofar as such losses, claims, damages or liabilities (or action in respect
thereof) arise out of or are based upon the Independent Underwriter's acting as
a "qualified independent underwriter" (within the meaning of National
Association of Securities Dealers, Inc. Conduct Rule 2720) in connection with
the offering contemplated by this Agreement, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability results from the gross negligence or willful misconduct of the
Independent Underwriter.
(f) In the event that the indemnity and contribution provided in
paragraph (a), (d) or (e) of this Section 8 is unavailable to or insufficient to
hold harmless any Convertible Notes Underwriter, any director, officer, employee
or agent of any Convertible Notes Underwriter or any person who controls any
Convertible Notes Underwriter within the meaning of either the Act or the
Exchange Act by reason of the Company having failed to fulfill in any respect
its payment obligations under any such paragraph, Citigroup agrees to indemnify
and hold harmless any such indemnified person, or to contribute to the Losses of
any such indemnified person, as the case may be, to the extent of such
unavailability or insufficiency. Notwithstanding anything to the contrary in
this Section 8, in no case shall Citigroup be responsible for any amount under
the indemnity and contribution provisions of this Section 8 in excess of
$250,000,000.
9. Default by a Convertible Notes Underwriter. If any one or more
Convertible Notes Underwriters shall fail to purchase and pay for any of the
Securities agreed to be purchased by such Convertible Notes Underwriter or
Convertible Notes Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Convertible Notes Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the amount
of Securities set forth opposite their names in Schedule I hereto bears to the
aggregate amount of Securities set forth opposite the names of all the remaining
Convertible Notes Underwriters) the Securities which the defaulting Convertible
Notes Underwriter or Convertible Notes Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Convertible Notes Underwriter or Convertible
Notes Underwriters agreed but failed to purchase shall exceed 10% of the
aggregate amount of Securities set forth in Schedule I hereto, the remaining
Convertible Notes Underwriters shall have the right to purchase all, but shall
not be under any obligation to purchase any, of the Securities, and if such
nondefaulting Convertible Notes Underwriters do not purchase all the Securities,
this Agreement will terminate without liability to any nondefaulting Convertible
Notes Underwriter, the Company or Citigroup. In the event of a default by any
Convertible Notes Underwriter as set forth in this Section 9, the Closing Date
shall be postponed for such period, not exceeding five Business Days, as the
Representatives shall determine in order that the required changes in the
Registration Statement and the
23
Prospectus or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Convertible Notes
Underwriter of its liability, if any, to the Company, Citigroup and any
nondefaulting Convertible Notes Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
and Citigroup prior to delivery of and payment for the Securities, if at any
time prior to such time (a) trading in the Company's Common Stock shall have
been suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (b) a
banking moratorium shall have been declared either by federal, New York State or
Connecticut State authorities or (c) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war, or other calamity or crisis the effect of which on financial
markets is such as to make it, in the sole judgment of the Representatives,
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus (exclusive of any supplement
thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers, of Citigroup or its officers, and of the Convertible
Notes Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of any Convertible Notes Underwriter or the Company or Citigroup or any of the
officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telefaxed to the Xxxxxxx Xxxxx Xxxxxx Inc. General Counsel (fax
no.: (000) 000-0000) and confirmed to the General Counsel, Xxxxxxx Xxxxx Barney
Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: General
Counsel; if sent to the Company, will be mailed, delivered or telefaxed to the
Company's General Counsel (fax no.: (000) 000-0000) and confirmed to it at
Travelers Property Casualty Corp., Xxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx,
00000, attention of the legal department; or, if sent to Citigroup, will be
mailed, delivered or telefaxed to Citigroup's Co-General Counsel (fax no.: (212)
000-0000) and confirmed to it, at Citigroup Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, attention of the Legal Department.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
24
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for convenience
only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a legal holiday or a day on which banking institutions or trust companies
are authorized or obligated by law to close in New York City or
Connecticut.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a)(i) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or,
if no filing pursuant to Rule 424(b) is required, shall mean the form of
final prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective), and, in
the event any post-effective amendment
25
thereto or any Rule 462(b) Registration Statement becomes effective prior
to the Closing Date, shall also mean such registration statement as so
amended or such Rule 462(b) Registration Statement, as the case may be.
Such term shall include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
"Rule 424," "Rule 430A" and "Rule 462" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred to
in Section 1(a)(i) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, Citigroup and the several Convertible Notes Underwriters.
Very truly yours,
TRAVELERS PROPERTY CASUALTY CORP.
By:
-------------------------
Name:
Title:
CITIGROUP INC.
By:
-------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Xxxxxxx Xxxxx Xxxxxx Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx X. Xxxxxxx & Company, Inc.
Xxxxxxxx Capital Partners, L.P.
By: Xxxxxxx Xxxxx Barney Inc.
By:
-------------------------
Name:
Title:
For themselves and the other
several Convertible Notes
Underwriters named in
Schedule I to the foregoing
Agreement.
SCHEDULE I
PRINCIPAL AMOUNT OF
UNDERWRITTEN SECURITIES
CONVERTIBLE NOTES UNDERWRITERS TO BE PURCHASED
------------------------------ -----------------------
Xxxxxxx Xxxxx Xxxxxx Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Sachs & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx X. Xxxxxxx & Company, Inc.
Xxxxxxxx Capital Partners, L.P.
------------------------
Total
========================
ANNEX A
Insurance Subsidiaries of the Company
NAME JURISDICTION OF INCORPORATION
---- -----------------------------
[TO BE PROVIDED BY THE COMPANY]
ANNEX B
Agreements
[Intercompany Agreement, dated as of , between the Company and Citigroup]
[Tax Sharing Agreement, dated as of , between the Company and Citigroup]
[Indemnity Agreement, dated as of , between the Company and Citigroup]
[Line of Credit Agreement, dated as of , between the Company and Citigroup]
[Credit Agreement, dated as of , between the Company, Citigroup
and ]
[Intercompany Notes, dated as of , from Citigroup to the Company]
[Exchange Agreement, dated as of , between the Company and Citigroup]
EXHIBIT A
[FORM OF OPINION TO BE PROVIDED BY SKADDEN, ARPS, SLATE, XXXXXXX & XXXX]
EXHIBIT B
[FORM OF OPINION TO BE PROVIDED BY XXXXXXX XXXXXXX & XXXXXXXX]
EXHIBIT C
[FORM OF OPINION TO BE PROVIDED BY XXXXX X. XXXXXXXX, ESQ.]
EXHIBIT D
[FORM OF XXXXXXXX & XXXXXXXX LLC OPINION]
EXHIBIT E
[FORM OF COMFORT LETTER]
EXHIBIT F
[LETTERHEAD OF EACH OFFICER OR DIRECTOR OF TRAVELERS PROPERTY CASUALTY CORP.]
Travelers Property Casualty Corp.
Public Offering of
% Convertible Junior Subordinated Notes due 2032
, 20
Xxxxxxx Xxxxx Barney Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
Xxxxxx X. Xxxxxxx & Company, Inc.
Xxxxxxxx Capital Partners, L.P.
As Representatives of the several Convertible Notes Underwriters
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Convertible Notes Underwriting Agreement (the "Convertible Notes
Underwriting Agreement"), among Travelers Property Casualty Corp., a Connecticut
corporation (the "Company"), Citigroup Inc., a Delaware corporation
("Citigroup"), and you as representatives of a group of Convertible Notes
Underwriters named therein, relating to an underwritten public offering of %
Convertible Junior Subordinated Notes due 2032 (the "Notes"), of the Company.
In order to induce you and the other Convertible Notes Underwriters
to enter into the Convertible Notes Underwriting Agreement, the undersigned will
not, without the prior written consent of Xxxxxxx Xxxxx Xxxxxx Inc., offer,
sell, contract to sell, pledge or otherwise dispose of (or enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition of (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the undersigned or any
affiliate of the undersigned or any person in privity with the undersigned or
any affiliate of the undersigned), directly or indirectly, including the filing
(or participation in the filing) of a registration statement with the Securities
and Exchange Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of capital stock of the Company or any securities
convertible into, or exercisable or exchangeable for, such capital stock, or
publicly announce an intention to effect any such transaction, for a period of
180 days after the date of the Convertible Notes Underwriting Agreement, other
than shares of Common Stock disposed of as bona fide gifts approved by Xxxxxxx
Xxxxx Barney Inc.
If for any reason the Convertible Notes Underwriting Agreement shall
be terminated prior to the Closing Date (as defined in the Convertible Notes
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.
Yours very truly,
[SIGNATURE OF OFFICER OR DIRECTOR]
[NAME AND ADDRESS OF OFFICER OR DIRECTOR]
