Exhibit 10(ddd)
$5,000,000
InCapS(SM)
FPIC 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:
FPIC Capital Trust I (the "Trust"), a statutory trust organized
under the Delaware Statutory Trust Act, 12 Del. C. ss. 3801 et seq. (the
"Delaware Act"), FPIC Insurance Group, Inc., a Florida 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 5,000 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 $5,155,000 aggregate principal amount of Floating 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
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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 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
First Professionals Insurance Company, Inc., a Florida corporation,
Anesthesiologists' Professional Assurance Co., a Florida corporation, Interlex
Insurance Company, a Missouri corporation and Intermed Insurance Company, a
Missouri corporation (each an "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, a "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 each 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 any 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
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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
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 any
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.
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(x) Reinsurance Treaties. All reinsurance and retrocessional
treaties, contracts, agreements and arrangements to which any Insurance
Subsidiary is a party are in full force and effect and no Insurance Subsidiary
is 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 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 and the Insurance Subsidiaries, 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 Florida 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 each 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, except as
set forth in Schedule 1(a)(xiv) attached hereto, 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
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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.
(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
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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 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; 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
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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 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
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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 any Insurance
Subsidiary, possesses such permits, orders, certificates, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses") issued
by the appropriate Governmental Entities 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; each Insurance Subsidiary is duly licensed or authorized
(including, without limitation, from its applicable 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, the Company or any subsidiary of 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.
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(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 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.
10
(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 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) the fees and disbursements of counsel for any trustee
appointed under any of the Operative Documents incurred on or prior to the
Closing Date.
11
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:
(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
12
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 any Insurance Subsidiary or the financial strength or
claims paying ability of the Trust, the Company or any 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 any 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:
13
(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.
(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
14
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 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.
15
(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 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
16
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 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.
17
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 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 FPIC Insurance Group, Inc., 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxx 00000, Attention: Xxx X. Xxxxxx, 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.
18
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 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. 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 Offeror.
SECTION 15. 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,
FPIC INSURANCE GROUP, INC.
By: /s/ Xxx X. Xxxxxx
-------------------------------------
Xxx X. Xxxxxx
Executive Vice President and Chief
Financial Officer
FPIC CAPITAL TRUST I
By: /s/ Xxxxxx Goes Xxxx
-------------------------------------
Xxxxxxx Goes 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)(xiv)
to the Placement Agreement by and between FPIC Insurance
Group, Inc. and Sandler X'Xxxxx & Partners, L.P.
The Company has pledged 100% of the issued and outstanding capital stock
of its wholly-owned subsidiaries, Employers Mutual, Inc., First Professionals
Insurance Company, Anesthesiologists Professional Assurance Company,
Administrators for the Professions, Inc. and FPIC Insurance Agency, Inc. The
stock was pledged as collateral to secure obligations incurred by the Company
under and with respect to a Revolving Credit and Term Loan Agreement, dated as
of August 31, 2001, as amended by that certain Amendment No. 1 to the Revolving
Credit and Term Loan Agreement, dated as of March 25, 2002, by that certain
Amendment No. 2 to the Revolving Credit and Term Loan Agreement, dated as of
November 21, 2002, and by that certain Amendment No. 3 to the Revolving Credit
and Term Loan Agreement, dated as of April 10, 2003 (the "Revolving Credit
Agreement"), by and among the Company, certain banks and other financial
institutions party thereto from time to time as lenders (the "Lenders") and
SunTrust Bank, as Administrative Agent and Collateral Agent for the Lenders (the
"Agent"). The pledge of the stock was made under a Stock Pledge Agreement, by
the Company in favor of the Agent, dated as of August 31, 2001, as supplemented
on January 11, 2003, and as amended by that certain Amendment No. 1 to Stock
Pledge Agreement by the Company in favor of the Agent, dated as of April 10,
2003. As of March 31 2003, approximately $45,750,000 was outstanding under the
Revolving Credit Agreement.
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 Florida.
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
any 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 any 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.
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In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of New York, the laws of the States of Florida and Missouri
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.
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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
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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.
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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.
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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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