Exhibit 10.01
PLACEMENT AGREEMENT
among
QUANTA CAPITAL STATUTORY TRUST II,
Issuer
QUANTA CAPITAL HOLDINGS LTD.,
Sponsor
and
XXXXX BROS. & COMPANY
Placement Agent
Dated as of February 22, 2005
PLACEMENT AGREEMENT, dated as of February 22, 2005 (this "Agreement"),
among Quanta Capital Statutory Trust II, a statutory trust created under the
laws of the State of Delaware (the "Issuer"), Quanta Capital Holdings Ltd., a
Bermuda corporation, as Sponsor under the Declaration, as defined below (the
"Sponsor" and, together with the Issuer, the "Trust Parties"), and Xxxxx Bros. &
Company, as placement agent (the "Placement Agent").
WHEREAS, the Issuer proposes to issue U.S. $20,000,000 Trust Preferred
Securities Due June 15, 2035 (the "Securities");
WHEREAS, the Securities will be issued pursuant to an Amended and Restated
Declaration of Trust to be dated as of February 24, 2005 (the "Declaration"),
among Quanta Capital Holdings Ltd., as Sponsor, JPMorgan Chase Bank, N.A., as
Institutional Trustee, Chase Manhattan Bank USA, National Association, as
Delaware Trustee, and the Administrators named therein;
WHEREAS, the Issuer has agreed not later than the February 24, 2005
("Closing Date"), to provide the Placement Agent with a copy of the Declaration
and any other documents required to be delivered pursuant to the terms hereof or
the Declaration;
WHEREAS, the Issuer will use the proceeds from the sale of the Securities
to purchase Debentures (as defined in the Declaration); and
WHEREAS, capitalized terms used herein but not otherwise defined herein
shall have the meaning ascribed thereto in the Declaration;
NOW IT IS HEREBY AGREED as follows:
1. PLACEMENT OF SECURITIES; COMPENSATION.
(a) On the terms and subject to the conditions of this Agreement and
in reliance upon the representations and warranties herein set forth, the Issuer
hereby appoints the Placement Agent as placement agent to place Securities, and
the Placement Agent hereby accepts such appointment. From the date hereof until
any termination of the Placement Agent's obligations hereunder, the Placement
Agent shall use its reasonable efforts to place Securities with investors
permitted by the terms hereof.
(b) The Securities shall be issued and sold free from all liens,
charges and encumbrances, equities and other third party rights of any nature
whatsoever, together with all rights of any nature.
(c) As compensation for the placement services to be provided by the
Placement Agent hereunder, the Issuer shall pay to the Placement Agent a fee in
an amount as agreed upon between the Issuer and the Placement Agent. Following
payment in full to the Placement Agent of all fees earned hereunder, the Issuer
shall have no further obligation hereunder to the Placement Agent with respect
to any fee. Such fees shall be due and payable upon sale and issuance of the
Securities. The Issuer shall have no obligation to pay any fees with respect to
any placement of the Securities which is not completed. No fee payable to any
other
placement agent by the Issuer or any other entity shall reduce or otherwise
affect the fees payable hereunder to the Placement Agent.
2. CLOSING. On the Closing Date, delivery of and payment for the
Securities shall be made at the offices of JPMorgan Chase Bank, National
Association or Xxxxxxx Xxxxx International, as applicable, and or such other
location or locations as shall be mutually acceptable to the parties hereto.
Delivery of the Securities shall be made against payment of the purchase price
therefor to the order of the Issuer in same day funds by transfer to an account
designated by the Sponsor or by such other means in same day funds as shall be
acceptable to the Placement Agent and Sponsor. Such payment shall be made upon
authorization from the Placement Agent (such authorization to be given if the
conditions to the Placement Agent's obligations set forth herein are either
satisfied or waived) against delivery of the Securities. The Securities will be
in the form requested by the Placement Agent in accordance with the terms of the
Declaration.
3. PAYMENT OF EXPENSES. The Sponsor agrees to pay all costs and
expenses incident to the performance of the obligations of the Sponsor and the
Issuer under this Placement Agreement, whether or not the transactions
contemplated herein are consummated or this Placement Agreement is terminated,
including all costs and expenses incident to (i) the authorization, issuance,
sale and delivery of the Securities and any taxes payable in connection
therewith; (ii) the fees and expenses of qua1ifying the Securities under the
securities laws of applicable jurisdictions, and (iii) the fees and expenses of
the counsel, the accountants and any other experts or advisors retained by the
Sponsor or the Issuer.
Notwithstanding the foregoing, if the sale of the Securities provided for
in this Placement Agreement is not consummated because any condition set forth
herein to be satisfied by either the Sponsor or the Issuer is not satisfied,
because this Placement Agreement is terminated pursuant to Section 10 or because
of any failure, refusal or inability on the part of the Sponsor or the Issuer to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by a reason of a default by the Placement
Agent, the Sponsor will reimburse the Placement Agent upon demand for all
reasonable out-of-pocket expenses (including the fees and all reasonable
expenses of special counsel retained by the Placement Agent, which fees and
expenses shall not exceed $12,500) that shall have been incurred by the
Placement Agent in connection with the proposed placement of the Securities. The
Sponsor shall not in any event be liable to the Placement Agent for the loss of
anticipated profits from the transactions contemplated by this Placement
Agreement.
4. REPRESENTATIONS AND WARRANTIES. Each Trust Party hereby represents,
warrants and agrees to and with the Placement Agent that, as of the Closing
Date, and as to itself only and not as to the other:
(a) with respect to the Issuer, it is duly formed and validly existing
under the laws of the State of Delaware and, with respect to the Sponsor, and
its significant subsidiaries (as defined in Rule 1-02 of Regulation S-X) (the
"Significant Subsidiaries"), each is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, in each
case, with all requisite power and authority to own or transfer, as applicable,
the Debentures, to conduct its business as required under the Declaration, this
Agreement or any
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other documents relating to or otherwise in connection with the issue and sale
of the Securities (collectively, the "Transaction Documents") and to perform its
obligations hereunder and under each Transaction Document, and is lawfully
qualified to do business and is in good standing in those jurisdictions in which
it conducts business and where the failure to be so qualified or in good
standing would have a material adverse effect on the condition (financial or
otherwise), earnings or business of such Trust Party, whether or not occurring
in the ordinary course of business, or would otherwise be material in context of
the issuance of the Securities ("Material Adverse Effect");
(b) this Agreement has been duly authorized, executed and delivered by
such Trust Party and constitutes, and each of the Transaction Documents to which
such Trust Party is a party has been duly authorized by such Trust Party and,
when duly executed and delivered by the Placement Agent and the other parties
thereto (if any), on the Closing Date, will constitute, legal, valid and binding
obligations of such Trust Party, except as such obligations may be limited by
bankruptcy, insolvency, reorganization and other similar laws affecting the
rights of creditors generally and the application of general equitable
principles (regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law);
(c) neither the Issuer nor the Sponsor nor any of the Significant
Subsidiaries is in breach or violation of, or default under, with or without
notice or lapse of time or both, its corporate charter, bylaws or other
governing documents (including without limitation, the Declaration);
(d) all of the issued and outstanding capital stock of the Sponsor has
been duly authorized and validly issued and is fully paid and nonassessable;
(e) all of the issued and outstanding capital stock of each
Significant Subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable, except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 1831o or 12 U.S.C. Section 55, and is owned
by the Sponsor, directly or through subsidiaries, free of any security interest,
mortgage, pledge, lien, encumbrance, claim or equitable right; and none of the
issued and outstanding capital stock of the Sponsor 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
Sponsor or any of its Significant Subsidiaries or under any agreement to which
the Sponsor or any of its Significant Subsidiaries is a party or is otherwise
bound.
(f) with respect to the Issuer, on the Closing Date, the Securities
have been duly authorized by the Issuer and, when duly executed, authenticated,
issued and delivered in accordance with the Declaration against payment therefor
as contemplated herein, will be validly issued and represent undivided
beneficial interests in the assets of the Issuer, entitled to the benefits
provided by the Declaration;
(g) with respect to the Issuer, no consent, approval, authorization,
order, registration or qualification of or with any court or governmental agency
or body is required for the issue, sale or delivery of the Securities, except
for those which have been obtained and are in full force and effect, and no
consent, approval, authorization, order, registration or qualification
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of or with any court or governmental agency or body is required for the
consummation of the other transactions contemplated by the Transaction
Documents, except for those which have been obtained and are in full force and
effect, and except where the failure to obtain such consent, approval,
authorization, order, registration or qualification would not have a Material
Adverse Effect;
(h) the execution and delivery of the Transaction Documents, the issue
of the Securities and the consummation of the other transactions contemplated by
the Transaction Documents (and compliance with the terms thereof) do not and
will not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under the organizational documents of such Trust
Party; and the execution and delivery of the Transaction Documents, the issue of
the Securities and the consummation of the other transactions contemplated by
the Transaction Documents (and compliance with the terms thereof) do not and
will not conflict with or result in a breach of any indenture, trust deed,
mortgage or other agreement or instrument to which such Trust Party is a party
or by which it or any of its properties is bound, or infringe any existing
applicable law, rule, regulation, judgment, order or decree of any government,
governmental body or court, domestic or foreign, having jurisdiction over such
Trust Party or any of its properties, except for such conflicts, breaches,
defaults or infringements that would not have a Material Adverse Effect;
(i) there are no pending actions, suits or proceedings against or
affecting such Trust Party or any of its properties and, to the best of such
Trust Party's knowledge, no such suits or proceedings are threatened or
contemplated that individually or in aggregate could reasonably be expected to
have a Material Adverse Effect on the Issuer's issuance of the Securities;
(j) no event has occurred which, had the applicable Securities already
been issued, would reasonably be expected to (whether or not with the giving of
notice and/or the passage of time and/or the fulfillment of any other
requirement) constitute an Event of Default under the Declaration;
(k) the Declaration does not require qualification under the U.S.
Trust Indenture Act of 1939, as amended;
(l) neither the Issuer nor any affiliate of the Issuer nor any person
acting on behalf thereof has made offers or sales of the Securities under
circumstances that would require the registration of the Securities under the
U.S. Securities Act of 1933, as amended (the "Securities Act");
(m) the Issuer is not an "investment company" as defined in the U.S.
Investment Company Act of 1940, as amended;
(n) with respect to the Issuer, any taxes, fees and other governmental
charges in connection with the execution and delivery of this Agreement and any
Transaction Document or the execution, delivery and sale of the Securities have
been or will be paid on or prior to the Closing Date;
(o) there are no contracts, agreements or understandings between any
of the Trust Parties or any affiliate thereof and any person granting such
person the right to require the
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Issuer to file a registration statement under the Securities Act, with respect
to any Securities owned or to be owned by such person; and
(p) subject to compliance by the Placement Agent with the relevant
provisions of Section 6 hereof, the sale of the Securities pursuant to this
Agreement is exempt from the registration and prospectus delivery requirements
of the Securities Act. In the case of each offer or sale of Securities, no form
of general solicitation or general advertising was used by the Issuer or its
representatives, including, but not limited to, advertisements, articles,
notices or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
Neither the Issuer nor any person acting on its behalf (other than the Placement
Agent) has offered or sold, nor will the Issuer or any person acting on its
behalf (other than the Placement Agent) offer or sell directly or indirectly,
any Securities or any other security in any manner that, assuming the accuracy
of the representations and warranties and the performance of the covenants given
by the Placement Agent, would render the issuance and sale of any of the
Securities as contemplated hereby a violation of Section 5 of the Securities Act
or the registration or qualification requirements of any state securities laws,
nor has the Issuer authorized, nor will it authorize, any person to act in such
manner.
(q) The audited consolidated financial statements (including the notes
thereto) and schedules of the Sponsor and its consolidated subsidiaries for the
year ended December 31, 2003 (the "Financial Statements") and the interim
unaudited consolidated financial statements of the Sponsor and its consolidated
subsidiaries for the period ended September 30, 2004 (the "Interim Financial
Statements") provided to the Placement Agent are the most recent available
audited and unaudited consolidated financial statements of the Sponsor and its
consolidated subsidiaries, respectively, and fairly present in all material
respects, in accordance with generally accepted accounting principles, the
financial position of the Sponsor and its consolidated subsidiaries, and the
results of operations and changes in financial condition as of the dates and for
the periods therein specified, subject, in the case of Interim Financial
Statements, to year-end adjustments. There has been no material adverse change
or development with respect to the Interim Financial Statements or earnings of
the Sponsor and its subsidiaries, taken as a whole. Such consolidated financial
statements and schedules have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved (except as otherwise noted therein). The accountants of the Sponsor who
certified the Financial Statements are independent public accountants of the
Sponsor and its Subsidiaries within the meaning of the Securities Act and the
rules and regulations thereunder as in effect on the date of this Agreement.
(r) The Sponsor's regulatory reports provided to the Placement Agent
are the most recent available such report and the information therein fairly
presents in all material respects the financial position of the Sponsor and its
subsidiaries.
(s) Since the respective dates of the the Interim Financial Statements
and the regulatory reports there has been no material adverse change or
development with respect to the financial condition or earnings of the Sponsor
and its subsidiaries, taken as a whole.
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(t) Neither the Sponsor nor any of its Significant Subsidiaries is
subject to or party to, or has received any notice or advice that any of them
may become subject to any investigation with respect to, any agreement, consent
decree or other regulatory enforcement action, proceeding or order with or by,
or is subject to any directive by, any Regulatory Agency (as defined below) that
currently restricts in any material respect the conduct of their business or
that in any material manner relates to their capital adequacy, their credit
policies or the management or their business (each, a "Regulatory Agreement"),
nor has the Sponsor or any of its Significant Subsidiaries been advised by any
Regulatory Agency that it is considering issuing or requesting any such
Regulatory Agreement that, in the reasonable judgment of the Sponsor, is
expected to result in a Material Adverse Effect; and there is no unresolved
violation or criticism by any Regulatory Agent with respect to any report or
statement relating to any examinations of the Sponsor or any of its Significant
Subsidiaries which, in the reasonable judgment of the Sponsor, is expected to
result in a Material Adverse Effect. As used herein, the term "Regulatory
Agency" means any federal or state agency, or any court, administrative agency
or commission or other governmental agency, authority or instrumentality having
supervisory or regulatory authority with respect to the Sponsor or its
Significant Subsidiaries.
(u) The Sponsor has no present intention to exercise its option to
defer payments of interest on the Debentures as provided in the Indenture. The
Sponsor believes that the likelihood that it would exercise its right to defer
payments of interest on the Debentures as provided in the Indenture at any time
during which the Debentures are outstanding is remote.
5. UNDERTAKINGS BY THE ISSUER. The Issuer agrees with the Placement
Agent as follows:
(a) Neither the Issuer, nor any of its affiliates nor any person
authorized to act on its behalf (other than the Placement Agent), will engage in
any directed selling efforts with respect to the Securities to any U.S. Person
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. Terms used in this paragraph
have the meanings given to them by Regulation S under the Securities Act.
(b) Neither the Issuer, nor any of its affiliates nor any person
authorized to act on its behalf (other than the Placement Agent), will make
offers or sales of Securities under circumstances that would require the
registration of the Securities under the Securities Act.
(c) For so long as any of the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144, the Issuer will provide
or cause to be provided to any holder of Securities and any prospective
purchaser of the Securities designated by such a holder, upon the request of
such holder or prospective purchaser, the information required to be provided to
such holder or prospective purchaser by Rule 144A(d)(4).
(d) During the period from the date of this Agreement to the Closing
Date, the Sponsor and the Issuer shall use their best efforts to cause their
representations and warranties contained in Section 4 hereof to be true as of
the Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of the Closing Date.
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(e) The Sponsor and the Issuer will not claim, and will actively
resist any attempts by others to claim, the benefits of any usury laws against
holders of Capital Securities or the Debentures.
(f) Unless and to the extent required to be disclosed pursuant to the
rules and regulations of the Securities and Exchange Commission, the Sponsor
shall not identify the Placement Agent in a press release or any other public
statement without the consent of such Placement Agent.
6. SELLING RESTRICTIONS. The Placement Agent represents and warrants
to the Issuer that:
(a) It understands that the Securities have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. It has not
offered or sold, and will not offer or sell, the Securities within the United
States except to persons whom it reasonably believes to be Qualified
Institutional Buyers (as defined in Rule 144A under the Securities Act),
institutional Accredited Investors (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) or to certain persons in transactions outside the
United States in accordance with Regulation S under the Securities Act. In
connection with any offer or sale in the United States or to or for the benefit
of a U.S. Person, it will take reasonable steps to ensure that the purchaser of
such Securities is aware that such offer or sale is being made in reliance on
Rule 144A or Regulation D in a manner that would not require registration of the
Securities under the Securities Act or any blue sky law of any State and that
future transfers of the Securities may not be made except in compliance with
applicable securities laws.
(b) Neither it nor any person acting on its behalf has engaged or will
engage in any form of general solicitation or general advertising (as those
terms are used in Rule 502(c) of Regulation D) in connection with any offer or
sale of the Securities in the United States.
(c) It will not offer or sell the Securities outside the United
States, except in accordance with the representations described herein and the
restrictions set forth below:
It has offered and sold the Securities, and will offer and sell the
Securities, during the applicable Distribution Compliance Period (as
defined in Rule 902 of Regulations S), only in accordance with Rule 903 or
904 of Regulation S under the Securities Act. Accordingly, it represents
and agrees that neither it, nor any of its affiliates nor any person acting
on its or their behalf has engaged or will engage in any directed selling
efforts with respect to the Securities, and that it and they have complied
and will comply with the offering restriction requirements of Regulation S.
It agrees that, at or prior to the confirmation of sale of Securities, it
shall have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases the Securities through
it during the applicable Distribution Compliance Period a confirmation or
notice of substantially the following effect:
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"The Securities offered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered or
sold within the United States or to, or for the account or benefit of, U.S.
Persons (i) as part of their distribution at any time or (ii) until forty
calendar days after the later of the commencement of the offering of the
Securities or the Closing Date, to persons other than the Placement Agent
or other distributors in reliance on Regulation S and the Closing Date,
except in either case in accordance with Regulations S or Regulation D or
other exemptive provisions under the Securities Act. Terms used above have
the meanings given to them by Regulation S."
(d) It acknowledges that no action has been or will be taken by the
Issuer or any other person that would permit the offer or sale of the Securities
in any jurisdiction where action to implement such offer or sale of the
Securities is required. The Placement Agent shall not offer or sell any
Securities in any jurisdiction except in compliance with applicable law, and the
Placement Agent agrees, at its own expense, to comply with all such laws. The
Placement Agent shall at its own expense obtain any consent, approval or
authorization required for it to offer or sell the Securities under the laws or
regulations of any jurisdiction where it proposes to make offers or sales of
Securities.
7. CONDITIONS PRECEDENT. The obligations of the Placement Agent
hereunder shall be subject to the accuracy of the representations and warranties
of each Trust Party contained herein as of the date hereof, and, as of the
Closing Date (as if made on the Closing Date), to the accuracy of the statements
of each Trust Party made in any certificates delivered pursuant hereto on such
date, to the performance by each Trust Party of its obligations hereunder, and
to the following additional conditions:
(a) The Issuer shall have obtained all governmental authorizations
required, if any, in connection with the issue and sale of the Securities and
the performance of its obligations hereunder and under the Transaction Documents
to which it is a party.
(b) Each Trust Party shall have furnished to the Placement Agent a
certificate of such Trust Party signed by, in the case of the Issuer, an
Administrator and, in the case of the Sponsor, the principal executive,
financial or accounting officer of the Issuer, dated the Closing Date, to the
effect that such signatory has examined this Agreement and that the
representations and warranties of such party in this Agreement are true and
correct in all material respects on and as of the Closing Date with the same
effect as if made on the Closing Date, and such party has performed all its
obligations and satisfied all the conditions on its part to be satisfied at or
prior to the Closing Date.
(c) The Trust Parties shall have furnished to the Placement Agent the
corporate opinion of counsel for the Trust Parties, dated the Closing Date, in
substantially the form set out in Annex A.
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(d) The conditions precedent to the performance by the Issuer of its
obligations under the Declaration shall have been satisfied or waived.
(e) Prior to the Closing Date, the Issuer shall furnish to the
Placement Agent such further information, certificates and documents as the
Placement Agent may reasonably request.
If any of the conditions specified in this Section 7 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates referred to in or contemplated by this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Placement Agent and its counsel, this Agreement and all
obligations of the Placement Agent hereunder may be canceled by the Placement
Agent at, or at any time prior to, the Closing Date. Notice of such cancellation
shall be given to the Issuer in writing or by telephone or facsimile confirmed
in writing.
8. INDEMNIFICATION.
(a) Each Trust Party agrees, jointly and severally, to indemnify and
hold harmless the Placement Agent and each person, if any, who controls the
Placement Agent within the meaning of the Securities Act, or the U.S. Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the respective
affiliates, officers, directors and employees of the Placement Agent and each
such person (and each and all referred to in Section 8(b) as an "indemnified
party"), against any losses, claims, damages or liabilities, joint or several,
to which the Placement Agent or such controlling person and the respective
affiliates, officers, directors and employees of the Placement Agent and each
such person may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are connected with the execution and delivery
by such Trust Party, and the consummation by such Trust Party of the
transactions contemplated by, this Agreement or any other Transaction Document.
Each Trust Party agrees, jointly and severally, to reimburse the Placement Agent
and each such affiliate, officer, director, employee or controlling person for
any legal or other expenses reasonably incurred by the Placement Agent and each
such affiliate, officer, director, employee or controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action arising out of or being connected with the execution and delivery by such
Trust Party, and the consummation by such Trust Party of the transactions
contemplated by, this Agreement or the other Transaction Documents. This
indemnity agreement will be in addition to any liability that any of the Trust
Parties may otherwise have.
(b) 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 of the commencement thereof; but the
omission and/or delay to so notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party unless such
omission and/or delay caused actual prejudice to the indemnifying party; in case
any such action is brought against any indemnified party, and it notified the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may elect by written
notice, to assume the defense thereof, with counsel
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satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. Counsel provided by the indemnifying party
may represent the indemnifying party as well as all indemnified parties
hereunder subject to the following provisions. If the defendants in any 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 that are different
from or additional to or in conflict with those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. The
reasonable fees and expenses of such separate counsel for the indemnified party
shall be paid by the indemnifying party. Notwithstanding anything to the
contrary contained herein, such indemnified party may continue any such action
on its own at its own expense. The indemnifying party may avoid its duty to
indemnify under this Section 8 if the indemnified party, without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), effects any settlement or compromise of, or consents to
the entry of any judgment in, any pending or threatened action in respect of
which any indemnifying party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnifying party from all liability
on any claims that are the subject matter of such action. The indemnifying party
shall not be liable for any settlement of any claim affected without its
consent.
9. CONTRIBUTION.
(a) In order to provide for just and equitable contribution in
circumstances under which the indemnification provided for in Section 8 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 Sponsor and the
Trust, on the one hand, and the Placement Agent, on the other hand, from the
offering of the Securities 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 Sponsor and the Trust, 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.
(b) The relative benefits received by the Sponsor and the Trust, on
the one hand, and the Placement Agent, on the other hand, in connection with the
offering of the Securities shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
(before deducting expenses) received by the Sponsor and the Trust and the
Discount received by the Placement Agent bear to the aggregate of such net
proceeds and commissions.
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(c) The Sponsor and the Trust and the Placement Agent agree that it
would not be just and equitable if contribution pursuant to this Section 9 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 9. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an Indemnified Party and referred to above in this Section
9 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.
(d) Notwithstanding any provision of this Section 9 to the contrary,
the Placement Agent shall not be required to contribute any amount in excess of
the Discount.
(e) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) For purposes of this Section 9, the Placement Agent, each person,
if any, who controls the Placement Agent within the meaning of section 15 of the
Securities Act or Section 20 of the Exchange Act and the respective partners,
directors, officers, employees and agents of the Placement Agent or any such
controlling person shall have the same rights to contribution as the Placement
Agent, while each officer and director of the Sponsor, each officer and director
of the Company, each trustee of the Trust and each person, if any, who controls
either the Company or the Sponsor within the meaning of section 15 of the
Securities Act or section 20 of the Exchange Act shall have the same rights to
contribution as the Company and the Trust.
10. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Placement Agent, by written notice given to the
Sponsor and the Issuer prior to delivery of and payment for the Securities, if
prior to such time (i) a downgrading shall have occurred in the rating accorded
the Sponsor's debt securities or preferred stock, if any, by any "nationally
recognized statistical rating organization," as that term is used by the
Commission in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of the Sponsor's debt
securities or preferred stock, if any, (ii) the Issuer shall be unable to sell
and deliver to the Purchaser at least $20,000,000 stated liquidation value of
Securities, (iii) a suspension or material limitation in trading in securities
generally shall have occurred on the New York Stock Exchange, (iv) a suspension
or material limitation in trading in any of the Sponsor's securities shall have
occurred on the exchange or quotation system upon which the Sponsor's securities
are traded, if any, (v) a general moratorium on commercial banking activities
shall have been declared either by federal or Delaware authorities or (vi) there
shall have occurred any outbreak or escalation of hostilities, or declaration by
the United States of a national emergency or war or other calamity or crisis,
including acts of terrorism, the effect of which on financial markets is such as
to make it, in the Placement Agent's judgment, impracticable or inadvisable to
proceed with the offering or delivery of the Securities.
-11-
11. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The representations,
warranties, agreements and undertakings in this Agreement shall continue in full
force and effect despite completion of the arrangements for the issue and
placement of the Securities or any investigation made by or on behalf of the
Placement Agent.
12. NOTICES.
(a) Any communication shall be given by letter or facsimile, in the
case of notices to the Issuer, to it at:
Quanta Capital Statutory Trust II
c/o Quanta Capital Holdings Ltd.
Cumberland House
0 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxx XX 00
Attention: Controller
Facsimile: (000) 000-0000
in the case of notices to the Sponsor, to it at:
Quanta Capital Holdings Ltd.
Xxxxxxxxxx Xxxxx
0 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxxx XX 00
Attention: Controller
Facsimile: (000) 000-0000
and in the case of notices to the Placement Agent, to it at:
Xxxxx Bros. & Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Asset Backed Securities
(b) Any such communication shall take effect, in the case of a letter,
at the time of delivery and in the case of facsimile, at the time of dispatch.
(c) Any communication not by facsimile shall be confirmed by letter
but failure to send or receive the letter of confirmation shall not invalidate
the original communication.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, EXCEPT WITH RESPECT TO AUTHORIZATION AND EXECUTION
BY OR ON BEHALF OF THE SPONSOR WHICH ARE REQUIRED TO BE GOVERNED BY THE LAWS OF
BERMUDA.
-12-
14. JURISDICTION.
(a) Each of the parties hereto hereby irrevocably submits to the
non-exclusive jurisdiction of any New York State or United States federal court
sitting in The City and County of New York over any suit, action or proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby which is brought by the Placement Agent, the Issuer or the Sponsor and
irrevocably waives, to the fullest extent it may effectively do so, any
objection which it may now or hereafter have to the laying of venue of any such
proceeding.
(b) The Sponsor has duly and irrevocably appointed CT Corporation
System in New York, New York as its agent to receive service of process with
respect to any such suit, action or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby.
(c) This Agreement will be effective under the laws of Bermuda to
confer personal jurisdiction over the Sponsor.
15. NO BANKRUPTCY PETITION. The Placement Agent covenants and agrees
that, prior to the date which is one year and one day after the payment in full
of all Securities issued by the Issuer, it will not institute against, or join
any other Person in instituting against, the Issuer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under any federal or state bankruptcy or similar law. The provisions
of this Section shall survive termination of this Agreement for any reason
whatsoever.
16. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns, and
no other person will have any right or obligations hereunder.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
18. DISCLOSURE OF TAX TREATMENT AND TAX STRUCTURE. Notwithstanding
anything herein to the contrary, any party to this Agreement (and each employee,
representative or other agent of any party to this Agreement) may disclose to
any and all persons, without limitation of any kind, the tax treatment and tax
structure of the offering and all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment and
tax structure. However, such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities laws. For this purpose, "tax
structure" means any facts relevant to the federal income tax treatment of the
offering contemplated by this Agreement but does not include information
relating to the identity of the Sponsor.
-13-
IN WITNESS WHEREOF, this Agreement has been entered into as of the date
hereinabove set forth.
Quanta Capital Holdings Ltd.
By: /s/ Xxxx X. Xxxxxxxx, Xx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Chief Financial Officer
Quanta Capital Statutory Trust II
By: Quanta Capital Holdings Ltd., as Sponsor
By: /s/ Xxxx X. Xxxxxxxx, Xx.
-----------------------------------------
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Administrator
Xxxxx Bros. & Company, as Placement Agent
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
-14-
ANNEX A
Pursuant to Section 7(c) of the Placement Agreement, special counsel for
the Offerors shall deliver an opinion in substantially the following form:
1. The Company is validly existing as a [MUTUAL/STOCK] insurance company in
good standing under the laws of Bermuda and the capital reserve accounts of the
Company and its insurance subsidiaries are in compliance with all applicable
regulatory authorities with jurisdiction over such entities. Each of the
Significant Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and each of the
Company and the Significant Subsidiaries has full corporate power and authority
to own or lease its properties and conduct its business as such business is
currently conducted in all material respects. [All outstanding shares of capital
stock of the Significant Subsidiaries have been duly authorized and validly
issued and are fully paid and nonassessable and owned of record and
beneficially, directly or indirectly by the Company].
2. The issuance, sale and delivery of the Securities in accordance with the
terms and conditions of the Placement Agreement and the Transaction Documents
have been duly authorized by all necessary actions of the Offeror's Board of
Directors (the "Board"). All of the Capital Securities have been duly and
validly authorized by the Board and, when delivered in accordance therewith,
will be duly and validly issued, fully paid and nonassessable, and will conform
to the description thereof in the applicable Transaction Documents. There are no
preemptive or other rights to subscribe for or to purchase any shares of capital
stock or equity securities of the Offerors or, to the best of our knowledge,
without a duty of inquiry, the Significant Subsidiaries pursuant to the
corporate Articles of Incorporation, Bylaws or other governing documents or, to
the best of our knowledge, any agreement or other instrument to which either
Offeror or any of the Significant Subsidiaries may be bound.
3. The Offerors have all requisite corporate and trust power to enter into
and perform their obligations under the Transaction Documents, which have been
duly and validly authorized, executed and delivered by the Offerors and
constitute the legal, valid and binding obligations of the Offerors enforceable
in accordance with their terms, except as the enforcement thereof may be limited
by general principles of equity and by bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance or other laws relating to or
affecting creditors' rights generally, and except as the indemnification and
contribution provisions thereof may be limited under applicable laws and certain
remedies may not be available in the case of a non-material breach.
4. Each of the Transaction Documents has been duly authorized, executed and
delivered by the Company, and constitutes a valid and legally binding obligation
of the Company enforceable in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent
conveyance and other laws affecting the rights and remedies of creditors
generally and to general principles of equity.
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5. The Debt Securities have been duly authorized, executed and delivered by
the Company, are entitled to the benefits of the Indenture and when
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Trust, will constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium, fraudulent conveyance and other laws affecting the
rights and remedies of creditors generally and to general principles of equity.
6. Neither of the Offerors nor, any of the Significant Subsidiaries is in
breach or violation of, or default under, with or without notice or lapse of
time or both, its corporate charter, bylaws or other governing documents. The
execution, delivery and performance of the Transaction Documents and the
consummation of the transactions contemplated therein do not and will not
conflict with, result in the creation or imposition of any material lien, claim,
charge, encumbrance or restriction upon any property or assets of the Offerors
or, to the best of our knowledge, the Significant Subsidiaries or constitute a
material breach or violation of, or constitute a material default under, with or
without notice or lapse of time or both, any of the terms, provisions or
conditions of the articles of incorporation or charter, bylaws or other
governing documents of the Offerors or the Significant Subsidiaries or to the
best of our knowledge, without a duty of inquiry, any material contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease,
franchise, license or any other agreement or instrument to which the Offerors or
the Significant Subsidiaries is a party or by which any of them or any of their
respective properties may be bound or any order, decree, judgment, franchise,
license, permit, rule or regulation of any court, arbitrator, government, or
governmental agency or instrumentality, domestic or foreign, having jurisdiction
over the Offerors or the Significant Subsidiaries or any of their respective
properties which, in each case, is material to (i) the Offerors and the
Significant Subsidiaries on a consolidated basis and (ii) the transactions
contemplated in the Transaction Documents.
7. Except for filings, registrations, or qualifications that may be
required by securities laws, no authorization, approval, consent or order of, or
filing, registration or qualification with, any person (including, without
limitation, any court, governmental body or authority) is required under the
laws of the State of New York in connection with the transactions contemplated
in the Transaction Documents.
8. To the best of our knowledge (i) no action, suit or proceeding at law or
in equity is pending or threatened to which the Offerors or the Significant
Subsidiaries is or may be a party, and (ii) no action, suit or proceeding is
pending or threatened against or affecting the Offerors or the Significant
Subsidiaries or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding could
reasonably be expected to have a material adverse effect on the consummation of
the Transaction Documents or the issuance and sale of the securities
contemplated therein or the condition (financial or otherwise), earnings,
affairs, business, or results of operations of the Offerors and the Significant
Subsidiaries on a consolidated basis.
9. Assuming the accuracy of the representations and warranties and
compliance with the Transaction Documents, it is not necessary in connection
with the offering, sale and delivery
A-2
of the securities and the Guarantee Agreement to register the same under the
Securities Act of 1933, as amended, under the circumstances contemplated in the
Transaction Documents, and the Indenture, Declaration and Guarantee Agreement
are not required to be qualified under the Trust Indenture Act of 1939.
10. Neither the Company nor the Trust is an "investment company" or an
entity "controlled" by an "investment company", in each case within the meaning
of the Investment Company Act of 1940, as amended.
The foregoing opinion is, with your concurrence, predicated upon and
qualified in its entirety by the following:
(a) The foregoing opinion is based on and is limited to the law of the
State of New York, the General Corporation Law of the State of Delaware and the
relevant law of the United States of America.
(b) Whenever our opinion is based on circumstances "to the best of our
knowledge," "known to us," or similar expressions, we have relied exclusively on
certificates of officers or representatives of the Offerors or the Significant
Subsidiaries, as applicable (after discussing the contents thereof with such
officers), as to the existence or nonexistence of the circumstances upon which
our opinion is predicated. We have no reason to believe, however, that any such
certificate is untrue or inaccurate in any material respect.
This opinion is delivered solely to you and may not be used by you for any
other purpose and may not be quoted, circulated or published, in whole or in
part, or otherwise referred to or furnished to any other person other than your
counsel, without our express prior written authorization.
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