EXHIBIT 10.5
$13,000,000
InCapS (SM)
Xxxxxxxx Capital Trust I
PLACEMENT AGREEMENT
New York, New York
May 13, 0000
XXXXXXX X'XXXXX & PARTNERS, L.P.
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxxxx Capital Trust I (the "Trust"), a statutory trust organized
under the Delaware Statutory Trust Act, 12 Del. C. Sections 3801 et seq. (the
"Delaware Act"), Xxxxxxxx (U.S.A.), Inc., an Oklahoma corporation (the
"Company" and together with the Trust, the "Offerors") confirm their
agreement (the "Agreement") with Sandler X'Xxxxx & Partners, L.P., as agent
of the Offerors (the "Placement Agent"), with respect to the issue and sale
by the Trust and the placement by the Placement Agent of 13,000 InCapS(SM)
(liquidation amount of $1,000 per security) of the Trust (the "Capital
Securities"). The Capital Securities will be guaranteed by the Company to
the extent provided in the Guarantee Agreement, to be dated as of the Closing
Date (as defined in Section 2(a) hereof) (the "Guarantee Agreement"),
between the Company, as guarantor, and Wilmington Trust Company, as guarantee
trustee (the "Guarantee Trustee"), with respect to distributions and payments
upon liquidation, redemption and otherwise.
The entire proceeds from the sale of the Capital Securities will be
combined with the entire proceeds from the sale by the Trust to the Company
of its common securities (the "Common Securities"), and will be used by the
Trust to purchase $13,403,000 aggregate principal amount of Fixed Rate Junior
Subordinated Debt Securities due 2033 (the "Subordinated Debt Securities")
issued by the Company. The Capital Securities and the Common Securities will
be issued pursuant to the Amended and Restated Declaration of Trust, to be
dated as of the Closing Date (the "Declaration"), among the Company, as
sponsor, the Administrators named therein (the "Administrators"), Wilmington
Trust Company, as institutional trustee (the "Institutional Trustee"),
Wilmington Trust Company, as Delaware trustee (the "Delaware Trustee"), and
the holders, from time to time, of undivided beneficial interests in the
assets of the Trust. The Subordinated Debt Securities will be issued pursuant
to the Indenture, to be dated as of the Closing Date (the "Indenture"),
between the Company and Wilmington Trust Company, as indenture trustee (the
"Indenture Trustee"). The Indenture, the Guarantee Agreement, the
Declaration, this Agreement and the Subscription Agreement (as defined in
Section 2(a) hereof) are hereinafter referred to collectively as the
"Operative Documents."
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Trust and the Company, jointly and severally, represent and
warrant to the Placement Agent and the Purchaser (as defined in Section 2(a)
hereof) of Capital Securities as of the date hereof and as of the Closing
Date, and agree with the Placement Agent and the Purchaser, as follows:
(i) SIMILAR OFFERINGS. Within a period of six months before or
after the date hereof, the Offerors have not, directly or indirectly,
solicited any offer to buy or offered to sell, and will not, directly or
indirectly, solicit any offer to buy or offer to sell, in the United States
or to any United States citizen or resident, any security which is or would
be integrated with the sale of the Capital Securities (including any
securities of the same or a similar class as the Capital Securities, other
than the Capital Securities) in a manner that would require the Capital
Securities to be registered under the Securities Act of 1933, as amended (the
"1933 Act").
(ii) INCORPORATED DOCUMENTS. The documents of the Company filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the Securities Exchange Act of 1934, as amended (the "1934 Act"), from
and including the commencement of the fiscal year covered by the Company's
most recent Annual Report on Form 10-K, at the time they were or hereafter
are filed by the Company with the Commission (collectively, the "1934 Act
Reports"), complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), and, at the date of this Agreement
and on the Closing Date, do not and will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and other than such instruments,
agreements, contracts and other documents as are filed as exhibits to the
Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K, there are no instruments, agreements, contracts
or documents of a character described in Item 601 of Regulation S-K
promulgated by the Commission to which the Company or any of its subsidiaries
is a party.
(iii) INDEPENDENT ACCOUNTANTS. The accountants of the Company
who certified the financial statements included in the 1934 Act Reports
(the "Independent Accountants") are independent public accountants of the
Company and its subsidiaries within the meaning of the 1933 Act and the rules
and regulations of the Commission thereunder (the "1933 Act Regulations").
(iv) FINANCIAL STATEMENTS AND INFORMATION. The consolidated
historical financial statements of the Company, together with the related
schedules and notes, included in the 1934 Act Reports present fairly, in all
material respects, the respective consolidated financial positions of the
Company and its consolidated subsidiaries at the respective dates indicated,
and the consolidated statements of income, changes in stockholders' equity and
cash flows of the Company and its consolidated subsidiaries for the respective
periods specified; said financial statements have been prepared in conformity
with generally accepted accounting principles in the United States applied on
a consistent basis throughout the periods involved, except as disclosed in the
notes to such financial statements; the supporting schedules, if any, included
in the 1934 Act Reports present fairly, in all material respects, the
information required to be stated
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therein and any pro forma financial statements and the related notes thereto
included in the 1934 Act Reports present fairly the information shown therein,
have been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to
give effect to the transactions and circumstances referred to therein; the
statutory financial statements of National American Insurance Company, an
Oklahoma corporation (the "Insurance Subsidiary"), as filed with the
applicable insurance regulatory authorities in the jurisdiction in which each
such Insurance Subsidiary is organized (each such regulatory authority, the
"State Regulatory Authority") for the years ended December 31, 2002, 2001 and
2000 and for any quarters ended subsequent to December 31, 2002, including all
supporting documents filed therewith (collectively, the "Insurance Subsidiary
Financial Statements"): (i) have been prepared in accordance with statutory
accounting principles promulgated by the National Association of Insurance
Commissioners, as applied, with respect to the Insurance Subsidiary, by the
applicable State Regulatory Authority of such entity, consistently applied for
the periods covered thereby and present fairly the statutory financial
position of such Insurance Subsidiaries as at the respective dates thereof
and the results of operations of such Insurance Subsidiaries for the
respective periods then ended; and (ii) complied in all material respects
with all applicable laws, rules and regulations when filed, and, to the
knowledge of the Company, no material deficiency has been asserted with
respect to the Insurance Subsidiary Financial Statements by any applicable
Regulatory Agency. As used herein, the term "Regulatory Agency" means any
federal or state agency charged with the supervision or regulation of
insurance companies, or any court, administrative agency or commission or
other governmental agency, authority or instrumentality having supervisory
or regulatory authority with respect to the Company or any of its
subsidiaries.
(v) NO MATERIAL ADVERSE CHANGE. Since the respective dates as
of which information is given in the 1934 Act Reports, there has not been (A)
any material adverse change in the condition, financial, regulatory or
otherwise, or in the earnings, business affairs or business prospects of the
Trust or of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material Adverse
Effect") or (B) any dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock other than regular
dividends on the Company's common stock declared and paid consistent with
past practice.
(vi) INTERNAL CONTROLS. Each of the Company and its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with the management's general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
the management's general or specific authorization, (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences,
(v) material information relating to the Company and its subsidiaries is made
known to management, (vi) management has evaluated the effectiveness of such
internal accounting controls and (vii) management has disclosed to the
Independent Accountants and the audit committee (A) all significant
deficiencies in the design or operation of internal controls which
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could adversely affect the ability of the Company and its subsidiaries to
record, process, summarize, and report financial data, and have identified
for the Independent Accountants any material weaknesses in internal controls
and (B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the internal controls of the Company
and its subsidiaries, and any such deficiencies or fraud would not, singularly
or in the aggregate, be expected to result in a Material Adverse Effect.
(vii) REGULATORY MATTERS. Neither the Company nor any of its
subsidiaries is subject or is party to, or has received any notice or advice
that any of them may become subject or party to, any investigation with
respect to any corrective, suspension or cease-and-desist order, agreement,
consent agreement or other regulatory enforcement action, proceeding or order
with or by, or is a party to any commitment letter or similar undertaking to,
or is subject to any directive by, or has been a recipient of any supervisory
letter from, or has adopted any board resolutions at the request of, any
Regulatory Agency that currently relates to or restricts in any material
respect their business or that in any manner relates to their capital and
surplus adequacy or their management (each, a "Regulatory Agreement"), nor has
the Company or any of its subsidiaries been advised by any Regulatory Agency
that it is considering issuing or requesting any such Regulatory Agreement;
there is no unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations of
the Company or any of its subsidiaries which, in the reasonable judgment of
the Company, is expected to result in a Material Adverse Effect; and without
limiting the generality of the foregoing, there are no restrictions or
limitations on the authority of the Insurance Subsidiary to pay dividends to
the Company, directly or indirectly, other than general restrictions and
limitations applicable to all insurance companies domiciled in the state of
organization of such Insurance Subsidiary pursuant to applicable law.
(viii) NO UNDISCLOSED LIABILITIES. Neither the Company nor any of
its subsidiaries has any material liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its subsidiaries giving rise to any such liability), except (i)
for liabilities set forth in the financial statements referred to in Section
1(a)(iv) above and (ii) normal fluctuations in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business
of the Company and all of its subsidiaries since the date of the most recent
balance sheet included in such financial statements.
(ix) INSURANCE RESERVING PRACTICES. The Company and its
Insurance Subsidiaries have made no material change in their insurance
reserving practices since the respective dates as of which information is
given in the 1934 Act Reports.
(x) REINSURANCE TREATIES. All reinsurance and retrocessional
treaties, contracts, agreements and arrangements to which the Insurance
Subsidiary is a party are in full force and effect and the Insurance
Subsidiary is not in violation of, or in default in the performance,
observance or fulfillment of, any obligation, agreement, covenant or
condition contained therein, with such exceptions that would not, singularly
or in the aggregate, have a
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Material Adverse Effect; and no Insurance Subsidiary has received any notice
from any of the other parties to such treaties, contracts, agreements or
arrangements that such other party intends not to perform thereunder and, to
the best knowledge of the Company, none of the other parties to such treaties,
contracts, agreements or arrangements will be unable to perform thereunder
except to the extent adequately and properly reserved for in the consolidated
financial statements of the Company, with such exceptions that would not,
singularly or in the aggregate, have a Material Adverse Effect.
(xi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Oklahoma and has full power and authority under such laws
to own, lease and operate its properties and to conduct its business, to enter
into and perform its obligations under each of the Operative Documents to
which it is a party, and to issue the Subordinated Debt Securities.
(xii) GOOD STANDING OF THE SUBSIDIARIES. Each "significant
subsidiary" (as defined in Rule 1-02 of Regulation S-X) of the Company (a
"Significant Subsidiary") and the Insurance Subsidiary has been duly organized
and is validly existing as an entity in good standing under the laws of the
jurisdiction in which it is chartered and has full power and authority under
such laws to own, lease and operate its properties and to conduct its current
and contemplated business.
(xiii) FOREIGN QUALIFICATIONS. Each of the Company and its
subsidiaries is duly qualified as a foreign entity to transact business and
is each in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to be so qualified would not
singularly, or in the aggregate, in the reasonable judgment of the Company,
be expected to result in a Material Adverse Effect.
(xiv) CAPITAL STOCK DULY AUTHORIZED AND VALIDLY ISSUED. All of
the issued and outstanding capital stock of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; all of the
issued and outstanding capital stock of each subsidiary of the Company has
been duly authorized and validly issued, is fully paid and nonassessable and
is owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equitable
right; and none of the issued and outstanding capital stock of the Company or
its Significant Subsidiaries was issued in violation of any preemptive or
similar rights arising by operation of law, under the charter, by-laws or
code of regulations of the Company or any of its Significant Subsidiaries or
under any agreement to which the Company or any of its Significant
Subsidiaries is a party.
(xv) GOOD STANDING OF THE TRUST. The Trust has been duly
created and is validly existing in good standing as a statutory trust under
the Delaware Act with the power and authority to own property and to conduct
its business as provided in the Declaration, to enter into and perform its
obligations under the Operative Documents to which it is a party, and to
issue the Capital Securities and the Common Securities; the Trust is not a
party to or otherwise bound by any agreement other than the Operative
Documents to which it is a party; and the Trust is, and will be, under current
law, classified for United States federal income tax purposes as a grantor
trust and not as an association taxable as a corporation.
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(xvi) AUTHORIZATION OF COMMON SECURITIES. On the Closing Date,
the Common Securities will have been duly authorized for issuance by the Trust
pursuant to the Declaration and, when duly issued and executed in accordance
with the Declaration and delivered by the Trust to the Company against payment
therefor in accordance with the subscription agreement therefor, will be
validly issued and fully paid and nonassessable undivided common beneficial
ownership interests in the assets of the Trust; the issuance of the Common
Securities is not subject to preemptive or other similar rights; and on the
Closing Date, all of the issued and outstanding Common Securities of the Trust
will be owned directly by the Company, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equitable right.
(xvii) AUTHORIZATION OF CAPITAL SECURITIES. On the Closing Date,
the Capital Securities will have been duly authorized for issuance by the
Trust pursuant to the Declaration and, when duly issued, executed and
authenticated in accordance with the Declaration and delivered by the Trust
against payment therefor as provided herein and in the Subscription Agreement,
will be validly issued and fully paid and nonassessable undivided preferred
beneficial ownership interests in the assets of the Trust; the issuance of
the Capital Securities will not be subject to preemptive or other similar
rights; and the Capital Securities will be in the form contemplated by, and
entitled to the benefits of, the Declaration.
(xviii) AUTHORIZATION OF THIS AGREEMENT. This Agreement has been
duly authorized, executed and delivered by each of the Offerors.
(xix) AUTHORIZATION OF DECLARATION. The Declaration has been
duly authorized by the Company and, on the Closing Date, will have been duly
executed and delivered by the Company and the Administrators, and assuming
due authorization, execution and delivery of the Declaration by the
Institutional Trustee and the Delaware Trustee, the Declaration will
constitute a valid, legal and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance 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) (collectively, the "Enforceability Exceptions").
(xx) AUTHORIZATION OF GUARANTEE AGREEMENT. The Guarantee
Agreement has been duly authorized by the Company and, on the Closing Date,
will have been duly executed and delivered by the Company, and assuming due
authorization, execution and delivery of the Guarantee Agreement by the
Guarantee Trustee, the Guarantee Agreement will constitute a valid, legal
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability may be
limited by the Enforceability Exceptions.
(xxi) AUTHORIZATION OF INDENTURE. The Indenture has been duly
authorized by the Company and, on the Closing Date, will have been duly
executed and delivered by the Company, and assuming due authorization,
execution and delivery of the Indenture by the Indenture Trustee, the
Indenture will constitute a valid, legal and binding
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agreement of the Company, enforceable against the Company in accordance with
its terms, except to the extent that enforceability may be limited by the
Enforceability Exceptions.
(xxii) AUTHORIZATION OF SUBORDINATED DEBT SECURITIES. The
Subordinated Debt Securities have been duly authorized by the Company; on the
Closing Date, the Subordinated Debt Securities will have been duly executed by
the Company and, when authenticated in the manner provided for in the
Indenture and delivered by the Company to the Trust against payment therefor
as contemplated in the subscription agreement therefor, will constitute valid,
legal and binding obligations of the Company, enforceable against the Company
in accordance with their terms, except to the extent that enforceability may
be limited by the Enforceability Exceptions; the Subordinated Debt Securities
will be in the form contemplated by, and entitled to the benefits of, the
Indenture; and the Company has no present intention to exercise its option to
defer payments of interest on the Subordinated Debt Securities as provided in
the Indenture.
(xxiii) AUTHORIZATION OF ADMINISTRATORS. Each of the Administrators
of the Trust is an officer or employee of the Company and has been duly
authorized by the Company to execute and deliver the Declaration.
(xxiv) NOT AN INVESTMENT COMPANY. Neither the Trust nor the
Company is, and immediately following consummation of the transactions
contemplated hereby and the application of the net proceeds therefrom neither
the Trust nor the Company will be, an "investment company" or an entity "
controlled" by an "investment company", in each case within the meaning of
Section 3(a) of the Investment Company Act of 1940, as amended (the "1940
Act"), without regard to Section 3(c) of the 1940 Act.
(xxv) ABSENCE OF DEFAULTS AND CONFLICTS. The Trust is not in
violation of the trust certificate of the Trust filed with the State of
Delaware (the "Trust Certificate") or the Declaration, and neither the Company
nor any of its Significant Subsidiaries or Insurance Subsidiaries is in
violation of its charter, by-laws or code of regulations; except as set forth
in Schedule 1(a)(xxv) attached hereto, none of the Trust, the Company or any
subsidiary of the Company is in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which it is a party or by which it or any of
them may be bound or to which any of its properties or assets is subject
(collectively, "Agreements and Instruments"), except for such defaults under
Agreements and Instruments that, in the reasonable judgment of the Company,
are not expected to result in a Material Adverse Effect; and the execution,
delivery and performance of the Operative Documents by the Trust or the
Company, as the case may be, the issuance, sale and delivery of the Capital
Securities and the Subordinated Debt Securities, the consummation of the
transactions contemplated by the Operative Documents, and compliance by the
Trust and the Company with the terms of the Operative Documents to which they
are a party have been duly authorized by all necessary corporate action on the
part of the Company and, on the Closing Date, will have been duly authorized
by all necessary action on the part of the Trust and do not and will not,
whether with or without the giving of notice or passage of time or both,
violate, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any, security interest, mortgage, pledge, lien, charge, encumbrance, claim or
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equitable right upon any properties or assets of the Trust or the Company or
any of its Significant Subsidiaries or Insurance Subsidiaries pursuant to any
of the Agreements and Instruments, nor will such action result in any
violation of the provisions of the charter, by-laws or code of regulations
of the Company or any of its Significant Subsidiaries or Insurance
Subsidiaries or the Declaration or the Trust Certificate, or violation by the
Company or any of its Significant Subsidiaries or Insurance Subsidiaries of
any applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, government authority, agency (including, without
limitation, each applicable Regulatory Agency) or instrumentality or court,
domestic or foreign, having jurisdiction over the Trust or the Company or any
of its Significant Subsidiaries or Insurance Subsidiaries or their respective
properties or assets (collectively, "Governmental Entities"). As used herein,
a "Repayment Event" means any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Trust or the Company
or any of its Significant Subsidiaries or Insurance Subsidiaries prior to its
scheduled maturity.
(xxvi) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the executive officers of the Company, is imminent, which, in
the reasonable judgment of the Company, is expected to result in a Material
Adverse Effect.
(xxvii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation (including, without limitation, any
action to revoke or deny renewal of any Insurance License (as defined in
paragraph (xxix) below)) before or brought by any Governmental Entity, now
pending, or, to the knowledge of the Trust or the Company, threatened, against
or affecting the Trust or the Company or any of its subsidiaries, which, in
the reasonable judgment of the Trust or the Company is expected to result in
a Material Adverse Effect or materially and adversely affect the consummation
of the transactions contemplated by the Operative Documents or the performance
by the Trust or the Company of its obligations hereunder or thereunder; and
the aggregate of all pending legal or governmental proceedings to which the
Trust or the Company or any of its subsidiaries is a party or of which any of
their respective properties or assets is the subject, including ordinary
routine litigation incidental to the business, are not, in the reasonable
judgment of the Company or the Trust, expected to result in a Material
Adverse Effect.
(xxviii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification
or decree of, any Governmental Entity, other than those that have been made
or obtained, is necessary or required for the authorization, execution,
delivery or performance by the Trust or the Company of their respective
obligations under the Operative Documents, the Subordinated Debt Securities
or the Capital Securities, as applicable, or the consummation by the Trust,
the Company of the transactions contemplated by the Operative Documents.
(xxix) POSSESSION OF LICENSES AND PERMITS. Each of the Trust,
the Company and the subsidiaries of the Company, other than the Insurance
Subsidiary, possesses such permits, orders, certificates, licenses,
approvals, consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate Governmental Entities
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necessary to conduct the business now operated by it, with such exceptions
that would not, in the reasonable judgment of the Company, be expected to,
singularly or in the aggregate, have a Material Adverse Effect; the Insurance
Subsidiary is duly licensed or authorized (including, without limitation,
from the State Regulatory Authority) as an insurer in each jurisdiction where
it is required to be so licensed or authorized to conduct its business
(collectively "Insurance Licenses"), with such exceptions that would not, in
the reasonable judgment of the Company, be expected to, singularly or in the
aggregate, have a Material Adverse Effect; each of the Trust, the Company and
the subsidiaries of the Company is in compliance with the terms and conditions
of all of its Governmental Licenses and Insurance Licenses, as applicable,
except where the failure so to comply, in the reasonable judgment of the
Company, is not expected to, singularly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses and Insurance Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or Insurance Licenses or the failure of such
Governmental Licenses or Insurance Licenses to be in full force and effect,
in the reasonable judgment of the Company, is not expected to have a Material
Adverse Effect; and none of the Trust, the Company or any subsidiary of the
Company has received any notice of proceedings, and to the knowledge of the
Trust or the Company, there has been no threatened action, suit, proceeding
or investigation, relating to the revocation, termination, suspension or
modification of any such Governmental Licenses or Insurance Licenses which,
singularly or in the aggregate, in the reasonable judgment of the Company or
the Trust, is expected to result in a Material Adverse Effect.
(xxx) TITLE TO PROPERTY. Each of the Trust, the Company and the
subsidiaries of the Company has good and marketable title to all of its
respective real and personal properties, in each case free and clear of all
liens, encumbrances and defects, except such as, in the reasonable judgment
of the Trust or the Company, singularly or in the aggregate, are not expected
to result in a Material Adverse Effect; and all of the leases and subleases
under which the Trust, the Company or any subsidiary of the Company holds
properties are in full force and effect, except when the failure of such
leases and subleases to be in full force and effect, in the reasonable
judgment of the Company, singularly or in the aggregate, is not expected to
have a Material Adverse Effect, and none of the Trust, the Company or any
subsidiary of the Company has any notice of any claim of any sort that has
been asserted by anyone adverse to the rights of the Trust, the Company or
any subsidiary of the Company under any of the leases or subleases under which
the Trust, the Company or any subsidiary of the Company holds properties, or
affecting or questioning the rights of such entity to the continued possession
of the leased or subleased premises under any such lease or sublease, except
when such claim, in the reasonable judgment of the Company, singularly or in
the aggregate, is not expected to have a Material Adverse Effect.
(xxxi) STABILIZATION. The Company has not taken and will not
take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or manipulation of
the price of the Capital Securities.
(xxxii) NO GENERAL SOLICITATION. Neither the Trust or the Company
nor any of their Affiliates (as defined in Rule 501(b) under the 0000 Xxx) or
any person acting on its or any of their behalf (other than the Placement
Agent, as to whom the Offerors make no representation) has engaged or will
engage, in connection with the offering of the Capital
9
Securities, in any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the 1933 Act.
(xxxiii) NO DIRECTED SELLING EFFORTS. Neither the Trust or the
Company nor any of their Affiliates or any person acting on its or any of
their behalf (other than the Placement Agent, as to whom the Offerors make
no representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the 1933 Act ("Regulation S") with
respect to the offering of the Capital Securities.
(xxxiv) NO REGISTRATION. Subject to compliance by the Placement
Agent with the relevant provisions of Section 6 hereof, it is not necessary in
connection with the offer, sale and delivery of the Capital Securities by the
Trust in the manner contemplated by this Agreement to register the Capital
Securities, the guarantee as described in the Guarantee Agreement or the
Subordinated Debt Securities under the 1933 Act or to qualify the Declaration,
the Guarantee Agreement or the Indenture under the Trust Indenture Act of
1939, as amended.
(xxxv) AUTHORIZATION OF SUBSCRIPTION AGREEMENT. The Subscription
Agreement has been duly authorized, executed and delivered by each of the
Offerors, and assuming due authorization, execution and delivery of the
Subscription Agreement by the Purchaser, the Subscription Agreement will
constitute a valid, legal and binding agreement of each of the Offerors,
enforceable against each of the Offerors in accordance with its terms, except
to the extent that enforceability may be limited by the Enforceability
Exceptions.
(b) Any certificate signed by any Trustee of the Trust or any duly
authorized officer of the Company or any of its subsidiaries and delivered to
the Placement Agent or to counsel for the Placement Agent shall be deemed a
representation and warranty by the Trust or the Company, as the case may be,
to the Placement Agent as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY THROUGH PLACEMENT AGENT; CLOSING.
(a) The Offerors propose to issue and sell the Capital Securities on
May 22, 2003 (or such other date mutually agreed to by the Offerors and the
Placement Agent) (the "Closing Date") to InCapS Funding I, Ltd., a newly
formed company with limited liability incorporated under the laws of the
Cayman Islands (the "Purchaser"), pursuant to the terms of the Capital
Securities Subscription Agreement, entered into on the date hereof (the
"Subscription Agreement"), between the Offerors and the Purchaser. In
addition, the Offerors agree that the Purchaser shall be entitled to the
benefit of, and to rely on, the provisions of this Agreement to the extent
such provisions address or relate to the Purchaser or the Capital Securities
to be purchased by the Purchaser.
(b) The Offerors hereby grant to the Placement Agent the exclusive
right to arrange the placement of the Capital Securities with the Purchaser
on their behalf. The Placement Agent accepts such right and agrees to use its
best efforts, on and prior to the Closing Date, to effect such placement.
(c) Deliveries of certificates for the Capital Securities shall be made
by the Trust to or on behalf of the Purchaser at the offices of Sidley Xxxxxx
Xxxxx & Xxxx LLP in The City of New York, and payment of the purchase price
for the Capital Securities shall be made by
10
the Purchaser to the Trust by wire transfer of immediately available funds to
a bank designated by the Company contemporaneous with closing on the Closing
Date.
Certificates for the Capital Securities in the aggregate liquidation
amount thereof shall be registered in the name of the Purchaser.
(d) As compensation to the Placement Agent for its placement of the
Capital Securities and in view of the fact that the proceeds of the sale of
the Capital Securities will be used to purchase the Subordinated Debt
Securities of the Company, the Company hereby agrees to pay on the Closing
Date to the Placement Agent in immediately available funds a commission of
$30.00 per Capital Security to be delivered by the Trust hereunder on the
Closing Date.
(e) In performing its duties under this Agreement, the Placement Agent
shall be entitled to rely upon any notice, signature or writing which the
Placement Agent shall in good faith believe to be genuine and to be signed or
presented by a proper party or parties. The Placement Agent may rely upon
any opinions or certificates or other documents delivered by the Offerors or
their counsel or designees either to it or the Purchaser. In addition, in
connection with the performance of its duties under this Agreement, the
Placement Agent shall not be liable for any error of judgment or any action
taken or omitted to be taken unless it was grossly negligent or engaged in
willful misconduct in connection with such performance or non-performance.
No provision of this Agreement shall require the Placement Agent to expend
or risk its own funds or otherwise incur any financial liability on behalf of
the Purchaser in connection with the performance of any of its duties
hereunder. The Placement Agent shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement.
SECTION 3. NOTICE OF MATERIAL EVENTS. The Offerors covenant with the
Placement Agent and the Purchaser that, prior to the completion of the initial
placement of the Capital Securities through the Placement Agent, the Offerors
will immediately notify the Placement Agent, and confirm such notice in
writing, of any event or development that, in the reasonable judgment of the
Company, is expected to result in a Material Adverse Effect.
SECTION 4. PAYMENT OF EXPENSES. Whether or not this Agreement or the
Subscription Agreement is terminated or the sale of the Capital Securities is
consummated, the Company, as borrower under the Subordinated Debt Securities,
will pay all expenses incident to the performance of its obligations under
this Agreement, including (i) the preparation, issuance and delivery of the
certificates for the Capital Securities and Subordinated Debt Securities, (ii)
the fees and disbursements of the Company's counsel, accountants and other
advisors, and (iii) after May 22, 2003, the fees and disbursements of counsel
for any trustee appointed under any of the Operative Documents.
SECTION 5. CONDITIONS OF PLACEMENT AGENT'S OBLIGATIONS. The
obligations of the Placement Agent and the Purchaser on the Closing Date are
subject to the accuracy of the representations and warranties of the Offerors
contained in Section 1 hereof or in certificates of any Administrator of the
Trust or any officer of the Company or any of its subsidiaries delivered
pursuant to the provisions hereof, to the performance by the Offerors of their
obligations hereunder, and to the following further conditions:
11
(a) OPINION OF COUNSEL FOR THE OFFERORS. On the Closing Date, the
Placement Agent and the Purchaser shall have received the favorable opinion,
dated as of the Closing Date, of Xxxxxxx Xxxxxxxx & Xxxx, special counsel for
the Offerors, in substantially the form set out in Annex A hereto, in form
and substance reasonably satisfactory to counsel for the Placement Agent.
Such counsel may state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates
of Administrators of the Trust, officers of the Company or any of its
subsidiaries and public officials.
(b) OPINION OF SPECIAL DELAWARE COUNSEL FOR THE TRUST. On the Closing
Date, the Placement Agent and the Purchaser shall have received the favorable
opinion, dated as of the Closing Date, of Morris, James, Hitchens & Xxxxxxxx
LLP, special Delaware counsel for the Trust, in substantially the form set out
in Annex B hereto, in form and substance reasonably satisfactory to counsel
for the Placement Agent.
(c) OPINION OF SPECIAL TAX COUNSEL FOR THE OFFERORS. On the Closing
Date, the Placement Agent and the Purchaser shall have received an opinion,
dated as of the Closing Date, of Xxxxxxx Xxxxxxxx & Wood, special tax counsel
for the Offerors, that (i) the Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an association
taxable as a corporation and (ii) the Subordinated Debt Securities will
constitute indebtedness of the Company for United States federal income tax
purposes, in substantially the form set out in Annex C hereto. Such opinion
may be conditioned on, among other things, the initial and continuing accuracy
of the facts, financial and other information, covenants and representations
set forth in certificates of officers of the Company and other documents
deemed necessary for such opinion.
(d) OPINION OF COUNSEL TO THE GUARANTEE TRUSTEE, THE INSTITUTIONAL
TRUSTEE, THE DELAWARE TRUSTEE AND THE INDENTURE TRUSTEE. On the Closing Date,
the Placement Agent and the Purchaser shall have received the favorable
opinion, dated as of the Closing Date, of Morris, James, Hitchens & Xxxxxxxx
LLP, counsel for the Guarantee Trustee, the Institutional Trustee, the
Delaware Trustee and the Indenture Trustee, in substantially the form set out
in Annex D hereto, in form and substance reasonably satisfactory to counsel
for the Placement Agent.
(e) CERTIFICATES. On the Closing Date, there shall not have been, since
the date hereof or since the respective dates as of which information is given
in the 1934 Act Reports, any Material Adverse Effect, and the Placement Agent
shall have received a certificate of the Chairman, the Chief Executive
Officer, the President, any Executive Vice President or any Vice President of
the Company and of the Chief Financial Officer or Chief Accounting Officer of
the Company and a certificate of an Administrator of the Trust, dated as of
the Closing Date, to the effect that (i) there has been no such Material
Adverse Effect, (ii) the representations and warranties in Section 1 hereof
were true and correct when made and are true and correct with the same force
and effect as though expressly made on and as of the Closing Date, and (iii)
the Offerors have complied with all agreements and satisfied all conditions
on their part to be performed or satisfied on or prior to the Closing Date.
(f) MAINTENANCE OF RATINGS. From the date of this Agreement through the
Closing Date, (i) there shall not have occurred a downgrading in or withdrawal
of the rating assigned to the debt securities or preferred stock of the Trust,
the Company or the Insurance
12
Subsidiary or the financial strength or claims paying ability of the Trust,
the Company or the Insurance Subsidiary, in each case by A.M. Best & Co. or
any "nationally recognized statistical rating organization," as that term is
defined by the Commission for the purposes of Rule 436(g)(2) under the 1933
Act, and (ii) neither A.M. Best & Co. nor any such organization shall have
publicly announced that it has under surveillance or review its rating of any
debt security, preferred stock or the financial strength or the claims paying
ability of the Trust, the Company or the Insurance Subsidiary.
(g) PURCHASER'S SALE OF SECURITIES. The Purchaser shall have sold
securities issued by it in such an amount that the net proceeds therefrom
shall be available on the Closing Date and shall be sufficient to purchase
the Capital Securities and all other capital securities, surplus notes and
senior notes contemplated in agreements similar to this Agreement and the
Subscription Agreement.
(h) ADDITIONAL DOCUMENTS. On the Closing Date, the Placement Agent and
the Purchaser shall have been furnished such documents and opinions as they
may reasonably request in connection with the issue, sale and placement of
the Capital Securities; and all proceedings taken by the Offerors in
connection with the issuance, sale and placement of the Capital Securities
shall be satisfactory in form and substance to the Placement Agent and the
Purchaser.
(i) TERMINATION OF AGREEMENT. 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 Placement Agent by notice to the
Offerors at any time on or prior to the Closing Date. If the sale of the
Capital Securities provided for herein is not consummated because any
condition set forth in Section 5(a), (b), (c), (d), (e), (f) or (h) is not
satisfied, because of any termination pursuant to Section 10(a) hereof or
because of any refusal, inability or failure on the part of the Offerors to
perform any agreement herein or comply with any provision hereof, the
Company will reimburse the Placement Agent upon demand for all documented
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by the Placement Agent in connection
with the proposed offering of the Capital Securities. In addition, such
termination shall be subject to Section 4 hereof, and Sections 7 and 8 hereof
shall survive any such termination and remain in full force and effect.
SECTION 6. OFFERS AND SALES OF THE CAPITAL SECURITIES.
(a) OFFER AND SALE PROCEDURES. The Placement Agent and the Offerors
hereby establish and agree to observe the following provisions with respect to
the offer, issue, sale and placement of the Capital Securities:
(i) OFFERS AND SALES ONLY TO THE PURCHASER. Offers and sales
of the Capital Securities will be made only to the Purchaser in a transaction
not requiring registration under the 1933 Act.
(ii) NO GENERAL SOLICITATION. No general solicitation or
general advertising (within the meaning of Rule 502(c) under the 0000 Xxx)
has been or will be used in connection with the offering of the Capital
Securities.
13
(iii) NO DIRECTED SELLING EFFORTS. No directed selling efforts
(within the meaning of Regulation S) has been or will be used with respect to
the offering of the Capital Securities.
(iv) PURCHASER NOTIFICATION. Prior to or contemporaneously with
the purchase of the Capital Securities by the Purchaser, the Placement Agent
will take reasonable steps to inform the Purchaser that the Capital Securities
(A) have not been and will not be registered under the 1933 Act, (B) are being
sold to them without registration under the 1933 Act in accordance with an
exemption from registration under the 1933 Act and (C) may not be offered,
sold or otherwise transferred except in accordance with the legend set forth
in Section 8.2(c) of the Declaration.
(b) COVENANTS OF THE OFFERORS. Each of the Offerors, jointly and
severally, covenant with the Placement Agent and the Purchaser as follows:
(i) DUE DILIGENCE. In connection with the initial placement
of the Capital Securities, the Offerors agree that, prior to any offer or sale
of the Capital Securities through the Placement Agent, the Placement Agent and
the Purchaser shall have the right to make reasonable inquiries into the
business of the Trust, the Company and the subsidiaries of the Company. The
Offerors also agree to provide answers to the Placement Agent and the
Purchaser, if requested, concerning the Trust, the Company and the
subsidiaries of the Company (to the extent that such information is
available or can be acquired and made available without unreasonable effort
or expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the Capital
Securities and the Subordinated Debt Securities.
(ii) INTEGRATION. The Offerors agree that they will not, and
will cause their Affiliates not to, make any offer or sale of securities of
the Offerors of any class if, as a result of the doctrine of "integration"
referred to in Rule 502 under the 1933 Act, such offer or sale would render
invalid the exemption from the registration requirements of the 1933 Act
provided by Section 4(2) thereof or by Rule 144A or otherwise.
(iii) RESTRICTION ON REPURCHASES. Until the expiration of two
(2) years (or such shorter period as may hereafter be referred to in Rule
144(k) (or similar successor rule)) after the original issuance of the Capital
Securities, the Offerors will not, and will cause their Affiliates not to,
purchase or agree to purchase or otherwise acquire any Capital Securities
which are "restricted securities" (as such term is defined under Rule
144(a)(3) under the 1933 Act), whether as beneficial owner or otherwise,
unless, immediately upon any such purchase, the Offerors or any Affiliate
shall submit such Capital Securities to the Institutional Trustee for
cancellation.
SECTION 7. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE PLACEMENT AGENT AND THE PURCHASER. Each of
the Offerors agrees, jointly and severally, to indemnify and hold harmless:
(x) the Placement Agent and the Purchaser, (y) each person, if any, who
controls (within the meaning of Section 15 of the 1933 Act or Xxxxxxx 00 xx
xxx 0000 Xxx) the Placement Agent or the Purchaser (each such
14
person, a "controlling person") and (z) the respective partners, directors,
officers, employees and agents of the Placement Agent and the Purchaser or
any such controlling person, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, relating to or arising out of, or based
upon, in whole or in part, (A) any untrue statement or alleged untrue
statement of a material fact included in the 1934 Act Reports, or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; (B) any untrue statement or
alleged untrue statement of material fact contained in any information
(whether written or oral) or documents executed in favor of or furnished or
made available to the Placement Agent or the Purchaser by the Offerors; (C)
any omission or alleged omission to state in any information (whether written
or oral) or documents executed in favor of or furnished or made available to
the Placement Agent or the Purchaser by the Offerors a material fact necessary
to make the statements therein not misleading; or (D) the breach or alleged
breach of any representation, warranty and agreement of any Offeror contained
herein or in the Subscription Agreement;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, or breach or alleged breach of any such
representation, warranty or agreement; PROVIDED, that (subject to Section 7(c)
hereof) any such settlement is effected with the written consent of the
Offerors; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the Placement
Agent), reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, or breach or alleged breach of any such representation, warranty or
agreement, to the extent that any such expense is not paid under (i) or (ii)
above;
PROVIDED, HOWEVER, that the Company and the Insurance Subsidiaries agree,
jointly and severally, to indemnify and hold harmless the Trust against any
and all loss, liability, claim, damage and expense whatsoever, as incurred,
which is due from the Trust pursuant to the foregoing.
(b) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party
of any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof, and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. Counsel to the indemnified parties shall be selected by
the Placement Agent. An indemnifying party may participate at its own expense
in the defense of any such action; PROVIDED, HOWEVER, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
15
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 7 or Section 8 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(c) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have validly requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement, PROVIDED, HOWEVER, that an
indemnifying party shall not be liable for any such settlement effected
without its consent if such indemnifying party (1) reimburses such indemnified
party with respect to those fees and expenses of counsel that it determines
in good faith are reasonable and (2) provides written notice within 10 days
after receipt of the request for reimbursement to the indemnified party
substantiating the unpaid balance as unreasonable, in each case prior to the
date of such settlement.
SECTION 8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances under which the indemnification provided for in
Section 7 hereof is for any reason held to be unenforceable for the benefit of
an indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Offerors, on the
one hand, and the Placement Agent, on the other hand, from the offering of the
Capital Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Offerors, on the one hand,
and the Placement Agent, on the other hand, in connection with the statements,
omissions or breaches which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Offerors, on the one hand, and the
Placement Agent, on the other hand, in connection with the offering of the
Capital Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds
16
from the offering of the Capital Securities pursuant to this Agreement (before
deducting expenses) received by the Offerors and the total commission received
by the Placement Agent bear to the aggregate of such net proceeds and
commissions.
The Offerors and the Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 8.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement, omission or alleged omission or breach or
alleged breach.
Notwithstanding the provisions of this Section 8, the Placement Agent
shall not be required to contribute any amount in excess of the total
commissions received by it.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, the Purchaser, each person, if any, who
controls the Placement Agent or the Purchaser within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act and the respective partners,
directors, officers, employees and agents of the Placement Agent, the
Purchaser or any such controlling person shall have the same rights to
contribution as the Placement Agent, while each officer and director of the
Company, each Trustee of the Trust and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Offerors.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or Trustees of the
Trust submitted pursuant hereto shall remain operative and in full force and
effect, and shall survive delivery of the Capital Securities by the Trust.
SECTION 10. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Placement Agent may terminate this
Agreement, by notice to the Offerors, at any time on or prior to the Closing
Date if, since the time of execution of this Agreement or, in the case of
(i), since the respective dates as of which information is given in the
1934 Act Reports, (i) there has occurred any Material Adverse Effect, or
(ii) there has occurred any material adverse change in the financial markets
in the United States, any outbreak of hostilities or escalation thereof or
any other calamity or crisis, or any change or development involving
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the Placement Agent, impracticable
to
17
market the Capital Securities or to enforce contracts for the sale of the
Capital Securities, or (iii) trading in any securities of the Company has been
suspended or limited by the Commission or any national stock exchange or
market on or in which such securities are traded or quoted, or if trading
generally on the American Stock Exchange, the New York Stock Exchange or the
Nasdaq National Market has been suspended or limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers or any other
governmental authority, or (iv) a banking moratorium has been declared by
United States federal, Delaware or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 and Section 5 hereof, and
provided further that Sections 1, 7 and 8 hereof shall survive such
termination and remain in full force and effect.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Placement Agent shall be directed to Sandler X'Xxxxx & Partners, L.P., as
follows: 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx X. Xxxxxxx, Principal, with a copy to Sidley Xxxxxx Xxxxx & Xxxx LLP,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx;
and notices to the Offerors shall be directed to Chandler (U.S.A.), Inc., 0000
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: R. Xxxxxxx Xxxxxxx, with
a copy to Xxxxxxx Xxxxxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx X. Xxxxxx.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and
be binding upon each of the Placement Agent and the Offerors and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Placement Agent, the Purchaser and the Offerors, and their respective
successors and the controlling persons and other persons referred to in
Sections 1, 7 and 8 hereof and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. This Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the Placement Agent, the Purchaser and the Offerors and their
respective successors, and said controlling persons and other persons and
their heirs and legal representatives, and for the benefit of no other person,
firm or corporation.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW.
EACH OF THE TRUST AND THE COMPANY, ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE TRUST), HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE CITY OF NEW YORK
18
IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING RELATED TO THIS AGREEMENT
OR ANY OF THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES ANY DEFENSE OF
LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT. EACH OF THE TRUST AND THE COMPANY, ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE TRUST), IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF 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.
SECTION 14. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
19
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Placement Agent and the Offerors in accordance with its
terms.
Very truly yours,
XXXXXXXX (U.S.A.), INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Xxxxxxx X. Xxxxx
Senior Vice President
XXXXXXXX CAPITAL TRUST I
By: /s/ Xxxx X. Xxxx
---------------------------
Xxxx X. Xxxx
Administrator
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER X'XXXXX & PARTNERS, L.P.
By: Sandler X'Xxxxx & Partners Corp.,
the sole general partner
By: /s/ Xxxxxxxxx X. Xxxxxx
------------------------------
Name:
Title:
SCHEDULE 1(a)(xxv) TO THE PLACEMENT AGREEMENT
BY AND BETWEEN XXXXXXXX (U.S.A.), INC. AND SANDLER X'XXXXX & PARTNERS, L.P.
Under the circumstances described herein, performance of the payment
obligations under the Operative Documents may result in a default under an
Indenture, by and between the U.S. Trust Company of Texas, N.A., as trustee,
as amended by that First Amendment to Indenture, dated as of May 13, 2003, by
and between the Company and The Bank of New York Trust Company of Florida,
N.A. as successor trustee to the U.S. Trust Company of Texas, N.A. (the
"Senior Indenture"). Under the Senior Indenture, the Company has (a) issued
8.75% senior debentures due 2014 (the "Senior Debentures" and (b) agreed not
to make payments on the Subordinated Debt Securities if default under either
of the following three clauses shall have occurred and be continuing:
(i) the Company fails to comply with any of its covenants or
agreements in the Senior Debentures or the Senior Indenture (other than a
payment default) and such failure continues for 60 days after written notice
delivered to the trustee under the Senior Indenture (the "Senior Trustee");
(ii) the debt of the Company under the Senior Debentures is not paid
within any applicable grace period after final maturity or the acceleration by
the holders thereof because of a default and the total amount of such debt
unpaid or accelerated exceeds $5.0 million or its foreign currency equivalent
at the time and such failure continues for 20 days after delivery of notice to
the Senior Trustee; or
(iii) any judgment or decree for the payment of money in excess of
$5.0 million or its foreign currency equivalent at the time is entered against
the Company or any subsidiary of the Company and is not discharged, waived or
stayed and either (A) an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which proceeding is not stayed or
abandoned within 30 days following the commencement thereof, or (B) such
judgment or decree remains outstanding for a period of 60 days following the
entry thereof stayed and, in either case, the default continues for ten days
after the date on which the notice specified below shall have been given;
and, in the case of either (i), (ii) or (iii), the Senior Trustee or holder
of at least 25% in principal amount of the outstanding Senior Debentures
shall have given written notice to the Company of an intent to declare the
principal of and accrued but unpaid interest on all Senior Debentures due
and payable upon expiration of the applicable grace period if such default
is not cured.
Notwithstanding the foregoing, the Company expressly acknowledges and
agrees that nothing in this Schedule 1(a)(xxv) shall in any way limit, impair,
restrict, condition or otherwise modify the provisions of the Operative
Documents, the Capital Securities or the Subordinated Debt Securities,
including the rights and remedies of the Institutional Trustee, the Delaware
Trustee, the Indenture Trustee and the holders of such securities contained
therein.
21
ANNEX A
Pursuant to Section 5(a) of the Placement Agreement, special counsel for the
Offerors shall deliver an opinion in substantially the following form:
1. The Company is incorporated and is validly existing as a
corporation in good standing under the laws of the State of Oklahoma.
2. The Company has corporate power and authority to (i) execute and
deliver, and to perform its obligations under, the Operative Documents to
which it is a party and (ii) issue and perform its obligations under the
Subordinated Debt Securities.
3. (i) Each Significant Subsidiary is validly existing and in good
standing under the laws of the jurisdiction of its organization; and (ii) to
the best of our knowledge, all of the issued and outstanding shares of capital
stock of each Significant Subsidiary are owned of record by the Company,
directly or through other subsidiaries.
4. No consent, approval, authorization or order of or filing,
registration or qualification with any Governmental Entity is required under
any law or regulation of the United States or the states in which the
Company and the Insurance Subsidiary is organized in connection with the
authorization, execution, delivery and performance by the Company of the
Operative Documents or the Subordinated Debt Securities and the consummation
of the transactions contemplated thereby except as have already been obtained
or made.
5. Each of the Placement Agreement and the Subscription Agreement
has been duly authorized, executed and delivered by the Company and, assuming
due authorization, execution and delivery by the Placement Agent and the
Purchaser, respectively, constitutes a valid and binding instrument of the
Company enforceable against the Company in accordance with its terms, except
as rights to indemnity and contribution thereunder may be limited under
applicable law or public policy, and subject to the qualifications that (i)
enforcement thereof may be limited by bankruptcy, insolvency, receivership,
reorganization, liquidation, voidable preference, moratorium or other laws
(including the laws of fraudulent conveyance and transfer) or judicial
decisions affecting the enforcement of creditors' rights generally or the
reorganization of financial institutions and (ii) the enforceability of the
obligations of the Company thereunder is subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and to the effect of certain laws and
judicial decisions upon the availability and enforceability of certain
remedies, including the remedies of specific performance and self-help.
6. The Declaration has been duly authorized, executed and delivered
by the Company and the Administrators.
7. Each of the Guarantee Agreement and the Indenture has been duly
authorized, executed, and delivered by the Company and, assuming due
authorization, execution and delivery by the Guarantee Trustee and the
Indenture Trustee, respectively, constitutes a valid and binding instrument
of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution thereunder may be limited under
applicable law or public policy, and subject to the qualifications that (i)
enforcement thereof may be limited
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by bankruptcy, insolvency, receivership, reorganization, liquidation, voidable
preference, moratorium or other laws (including the laws of fraudulent
conveyance and transfer) or judicial decisions affecting the enforcement of
creditors' rights generally or the reorganization of financial institutions
and (ii) the enforceability of the Company's obligations thereunder is subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and to the effect of certain
laws and judicial decisions upon the availability and enforceability of
certain remedies, including the remedies of specific performance and
self-help.
8. The Subordinated Debt Securities have been duly authorized for
issuance by the Company pursuant to the Indenture and, when executed,
authenticated and delivered in the manner provided for in the Indenture and
paid for in accordance with the subscription agreement therefor, will
constitute valid and binding obligations of the Company and will entitle the
holders thereof to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, except as rights to indemnity and
contribution thereunder may be limited under applicable law or public policy,
and subject to the qualifications that (i) enforcement thereof may be limited
by bankruptcy, insolvency, receivership, reorganization, liquidation, voidable
preference, moratorium or other laws (including the laws of fraudulent
conveyance and transfer) or judicial decisions affecting the enforcement of
creditors' rights generally or the reorganization of financial institutions
and (ii) the enforceability of the Company's obligations thereunder is subject
to general principles of equity (regardless of whether such enforceability is
Considered in a proceeding in equity or at law) and to the effect of certain
laws and judicial decisions upon the availability and enforceability of
certain remedies, including the remedies of specific performance and self-help.
9. The execution, delivery and performance of the Operative
Documents, the Subordinated Debt Securities and the Capital Securities, as
applicable, by the Company and the Trust and the consummation by the Company
and the Trust of the transactions contemplated by the Operative Documents, as
applicable, will not result in any violation of the charter or bylaws of the
Company, any Significant Subsidiary or the Insurance Subsidiary, the
Declaration or the Trust Certificate.
10. Assuming (i) the accuracy of the representations and warranties,
and compliance with the agreements, contained in the Placement Agreement and
the Subscription Agreement and (ii) that the Capital Securities are sold in
the manner contemplated by, and in accordance with, the Placement Agreement,
the Subscription Agreement and the Declaration, it is not necessary in
connection with the offer, sale and delivery of the Capital Securities by the
Trust to the Purchaser to register the Capital Securities, the Guarantee
Agreement or the Subordinated Debt Securities under the 1933 Act or to qualify
an indenture under the Trust Indenture Act of 1939, as amended.
11. Neither the Company nor the Trust is, and, following the issuance
of the Capital Securities and the consummation of the transactions
contemplated by the Operative Documents and the application of the proceeds
therefrom, neither the Company nor the Trust will be, an "investment company"
or entity "controlled" by an "investment company", in each case within the
meaning of Section 3(a) of the 1940 Act, without regard to Section 3(c) of
the 1940 Act.
A-2
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of New York, the laws of the State of [State of
Incorporation of the Company and each Insurance Subsidiary] and the Federal
laws of the United States and (B) rely as to matters involving the
application of laws of any jurisdiction other than New York, [State of
Incorporation of the Company and each Insurance Subsidiary] or the United
States, to the extent deemed proper and specified in such opinion, upon the
opinion of other counsel of good standing believed to be reliable and who are
satisfactory to you and as to matters of fact, to the extent deemed proper,
on certificates of responsible officers of the Company, the Insurance
Subsidiaries and public officials.
In the letter setting forth the foregoing opinions, or in a separate
letter, such counsel shall also state that:
To our knowledge, there are no restrictions or limitations on the
authority of any of the Insurance Subsidiaries to pay dividends to the
Company, directly or indirectly, other than general restrictions and
limitations applicable to all insurance companies domiciled in the state
of organization of such Insurance Subsidiary pursuant to applicable law.
To our knowledge, no Insurance License of any of the Insurance
Subsidiaries has been suspended, revoked, withdrawn, surrendered or limited
in anyway.
A-3
ANNEX B
Pursuant to Section 5(b) of the Placement Agreement, special Delaware
counsel for the Trust shall deliver an opinion in substantially the following
form:
1. The Trust has been duly formed and is validly existing in good
standing as a statutory trust under the Delaware Act.
2. The Declaration constitutes a valid and binding obligation of the
Sponsor and Trustees party thereto, enforceable against such Sponsor and
Trustees in accordance with its terms.
3. Under the Delaware Act and the Declaration, the Trust has the
requisite trust power and authority (i) to own its properties and conduct its
business, all as described in the Declaration, (ii) to execute and deliver,
and perform its obligations under, the Operative Documents to which it is a
party, (iii) to authorize, issue, sell and perform its obligations under its
Capital Securities and Common Securities, and (iv) to purchase and hold the
Subordinated Debt Securities.
4. The Capital Securities have been duly authorized for issuance by
the Trust and, when issued, executed and authenticated in accordance with the
Declaration and delivered against payment therefor in accordance with the
Declaration and the Subscription Agreement, will be validly issued and,
subject to the qualifications set forth in paragraph 5 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust and
the holders of the Capital Securities will be entitled to the benefits
provided by the Declaration.
5. Each holder of Capital Securities, in such capacity, will be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware. We note, however, that the holders of the Capital
Securities may be required to make payment or provide indemnity or security as
set forth in the Declaration.
6. Under the Declaration and the Delaware Act, the issuance of the
Capital Securities and Common Securities is not subject to preemptive rights.
7. The Common Securities have been duly authorized for issuance by
the Trust and, when issued and executed in accordance with the Declaration and
delivered against payment therefor in accordance with the Declaration and the
subscription agreement therefor, will be validly issued undivided beneficial
interests in the assets of the Trust and the holders of the Common Securities
will be entitled to the benefits provided by the Declaration.
8. Under the Declaration and the Delaware Act, the execution and
delivery by the Trust of the Operative Documents to which it is a party, and
the performance by the Trust of its obligations thereunder, have been duly
authorized by the requisite trust action on the part of the Trust.
9. The issuance and sale by the Trust of its Capital Securities and
Common Securities, the execution, delivery and performance by the Trust of
the Operative Documents to
B-1
which it is a party, the consummation by the Trust of the transactions
contemplated by the Operative Documents to which it is party, and the
compliance by the Trust with its obligations thereunder are not prohibited
by (i) the Declaration or the Trust Certificate, or (ii) any law or
administrative regulation of the State of Delaware applicable to the Trust.
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 its Capital Securities and Common Securities, the due
authorization, execution and delivery by the Trust of the Operative Documents
to which it is a party or the performance by the Trust of its obligations
under the Operative Documents to which it is a party.
11. The holders of the Capital Securities (other than those holders
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.
B-2
ANNEX C
Pursuant to Section 5(c) of the Placement Agreement, special tax counsel
for the Offerors shall deliver an opinion in substantially the following form:
1. Under current law and assuming the performance of the Operative
Documents in accordance with the terms described therein, the Subordinated
Debt Securities will be treated for United States federal income tax purposes
as indebtedness of the Company.
2. The Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a corporation.
C-1
ANNEX D
Pursuant to Section 5(d) of the Placement Agreement, counsel to the
Guarantee Trustee, the Institutional Trustee, the Delaware Trustee and the
Indenture Trustee shall deliver an opinion in substantially the following
form:
1. Wilmington Trust Company ("WTC") is a Delaware banking corporation
with trust powers, duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, with requisite corporate power and
authority to execute and deliver, and to perform its obligations under, the
Declaration, the Guarantee Agreement and the Indenture (collectively, the
"Transaction Documents").
2. The execution, delivery, and performance by WTC of the Transaction
Documents have been duly authorized by all necessary corporate action on the
part of WTC, and the Transaction Documents have been duly executed and
delivered by WTC.
3. The execution, delivery and performance of the Transaction
Documents by WTC and the consummation of any of the transactions by WTC
contemplated thereby are not prohibited by (i) the charter or bylaws of WTC,
(ii) any law or administrative regulation of the State of Delaware or the
United States of America governing the banking and trust powers of WTC, or
(iii) to our knowledge (based and relying solely on the Officer Certificates),
any agreements or instruments to which WTC is a party or by which WTC is bound
or any judgments or order applicable to WTC.
4. The Subordinated Debt Securities delivered on the date hereof have
been authenticated by due execution thereof and delivered by WTC, as Indenture
Trustee, in accordance with the Indenture. The Capital Securities delivered on
the date hereof have been authenticated by due execution thereof and delivered
by WTC, as Institutional Trustee, in accordance with the Declaration.
5. None of the execution, delivery and performance by WTC of the
Transaction Documents and the consummation of any of the transactions by WTC
contemplated thereby requires the consent, authorization, order or approval
of, the withholding of objection on the part of, the giving of notice to, the
registration with or the taking of any other action in respect of, any
governmental authority or agency, under any law or administrative regulation
of the State of Delaware or the United States of America governing the banking
and trust powers of WTC, except for the filing of the Trust Certificate with
the Office of the Secretary of State of the State of Delaware pursuant to the
Delaware Act (which filing has been duly made).
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