EXHIBIT 10 (HH)
DGI STATUTORY TRUST I
DONEGAL GROUP INC.
SUBSCRIPTION AGREEMENT
MAY 15, 2003
THIS SUBSCRIPTION AGREEMENT (this "Agreement") made among DGI Statutory
Trust I (the "Trust"), a statutory trust created under the Connecticut Statutory
Trust Act (Chapter 615 of Title 34 of the Connecticut General Xxxxxxxx, Xxxxxxx
000, XX XXX.), Xxxxxxx Group Inc., a Delaware corporation, with its principal
offices located at 0000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000 (the "Company"
and, collectively with the Trust, the "Offerors"), and I-Preferred Term
Securities II, Ltd. (the "Purchaser").
RECITALS:
A. The Trust desires to issue 15,000 of its Floating Rate Capital
Securities (the "Capital Securities"), liquidation amount $1,000.00 per Capital
Security, representing an undivided beneficial interest in the assets of the
Trust (the "Offering"), to be issued pursuant to an Amended and Restated
Declaration of Trust (the "Declaration") by and among the Company, U.S. Bank
National Association ("U.S. Bank"), the administrators named therein, and the
holders (as defined therein), which Capital Securities are to be guaranteed by
the Company with respect to distributions and payments upon liquidation,
redemption and otherwise pursuant to the terms of a Guarantee Agreement between
the Company and U.S. Bank, as trustee (the "Guarantee"); and
B. The proceeds from the sale of the Capital Securities will be
combined with the proceeds from the sale by the Trust to the Company of its
common securities, and will be used by the Trust to purchase an equivalent
amount of Floating Rate Junior Subordinated Deferrable Interest Debentures of
the Company (the "Debentures") to be issued by the Company pursuant to an
indenture to be executed by the Company and U.S. Bank, as trustee (the
"Indenture"); and
C. In consideration of the premises and the mutual representations and
covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF CAPITAL SECURITIES
1.1 Upon the execution of this Agreement, the Purchaser hereby agrees
to purchase from the Trust 15,000 Capital Securities at a price equal to
$1,000.00 per Capital Security (the "Purchase Price") and the Trust agrees to
sell such Capital Securities to the Purchaser for said Purchase Price. The
rights and preferences of the Capital Securities are set forth in the
Declaration. The Purchase Price is payable in immediately available funds on May
15, 2003, or such other business day as may be designated by the Purchaser, but
in no event later than May 22, 2003 (the "Closing Date"). The Offerors shall
provide the Purchaser wire transfer instructions no later than 1 day following
the date hereof.
1.2 The certificate for the Capital Securities shall be delivered by the Trust
on the Closing Date to the Purchaser or its designee.
1.3 The Placement Agreement, dated April 25, 2003 (the "Placement Agreement"),
among the Offerors and the Placement Agents identified therein includes certain
representations and warranties, covenants and conditions to closing and certain
other matters governing the Offering. The Placement Agreement is hereby
incorporated by reference into this Agreement and the Purchaser shall be
entitled to each of the benefits of the Placement Agents and the Purchaser under
the Placement Agreement and shall be entitled to enforce the obligations of the
Offerors under such Placement Agreement as fully as if the Purchaser were a
party to such Placement Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1 The Purchaser understands and acknowledges that neither the Capital
Securities, the Debentures nor the Guarantee have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities laws, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not be
offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any other
applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.
2.2 The Purchaser represents, warrants and certifies that (i) it is not a "U.S.
person" as such term is defined in Rule 902 under the Securities Act, (ii) it is
not acquiring the Capital Securities for the account or benefit of any such U.S.
person, (iii) the offer and sale of Capital Securities to the Purchaser
constitutes an "offshore transaction" under Regulation S of the Securities Act,
and (iv) it will not engage in hedging transactions with regard to the Capital
Securities unless such transactions are conducted in compliance with the
Securities Act and the Purchaser agrees to the legends and transfer restrictions
set forth on the Capital Securities certificate.
2.3 The Purchaser represents and warrants that it is purchasing the Capital
Securities for its own account, for investment, and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of the
Securities Act or other applicable securities laws, subject to any requirement
of law that the disposition of its property be at all times within its control
and subject to its ability to resell such Capital Securities pursuant to an
effective registration statement under the Securities Act or under Rule 144A or
any other exemption from registration available under the Securities Act or any
other applicable securities law.
2.4 The Purchaser represents and warrants that it has full power and authority
to execute and deliver this Agreement, to make the representations and
warranties specified herein, and to consummate the transactions contemplated
herein and it has full right and power to subscribe for Capital Securities and
perform its obligations pursuant to this Agreement.
2.5 The Purchaser, a Cayman Islands Company whose business includes issuance of
certain notes and acquiring the Capital Securities and other similar securities,
represents and warrants that it has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
purchasing the Capital Securities, has had the opportunity to ask questions of,
and receive answers and request additional information from, the Offerors and is
aware that it may be required to bear the economic risk of an investment in the
Capital Securities.
2.6 The Purchaser represents and warrants that no filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
governmental body, agency or court having jurisdiction over the Purchaser, other
than those that have been made or obtained, is necessary or required for the
performance by the Purchaser of its obligations under this Agreement or to
consummate the transactions contemplated herein.
2.7 The Purchaser represents and warrants that this Agreement has been duly
authorized, executed and delivered by the Purchaser.
2.8 The Purchaser represents and warrants that (i) the Purchaser is not in
violation or default of any term of its Memorandum of Association or Articles of
Association, of any provision of any mortgage, indenture, contract, agreement,
instrument or contract to which it is a party or by which it is bound or of any
judgment, decree, order, writ or, to its knowledge, any statute, rule or
regulation applicable to the Purchaser which would prevent the Purchaser from
performing any material obligation set forth in this Agreement; and (ii) the
execution, delivery and performance of and compliance with this Agreement, and
the consummation of the transactions contemplated herein, will not, with or
without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or the suspension, revocation, impairment, forfeiture or non-renewal of any
permit, license, authorization or approval applicable to the Purchaser, its
business or operations or any of its assets or properties which would prevent
the Purchaser from performing any material obligations set forth in this
Agreement.
2.9 The Purchaser represents and warrants that the Purchaser is an exempted
company with limited liability duly incorporated, validly existing and in good
standing under the laws of the jurisdiction where it is organized, with full
power and authority to perform its obligations under this Agreement.
2.10 The Purchaser understands and acknowledges that the Company will rely upon
the truth and accuracy of the foregoing acknowledgments, representations,
warranties and agreements and agrees that, if any of the acknowledgments,
representations, warranties or agreements deemed to have been made by it by its
purchase of the Capital Securities are no longer accurate, it shall promptly
notify the Company.
2.11 The Purchaser understands that no public market exists for any of the
Capital Securities, and that it is unlikely that a public market will ever exist
for the Capital Securities.
ARTICLE 3
MISCELLANEOUS
3.1 Any notice or other communication given hereunder shall be deemed sufficient
if in writing and sent by registered or certified mail, return receipt
requested, international courier or delivered by hand against written receipt
therefor, or by facsimile transmission and confirmed by telephone, to the
following addresses, or such other address as may be furnished to the other
parties as herein provided:
To the Offerors:
Donegal Group Inc.
0000 Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telecopier: 000-000-0000
To the Purchaser:
I-Preferred Term Securities II, Ltd.
x/x Xxxxxx Xxxxxxx Xxxxxxx
X.X. Xxx 0000 XX Xxxxxxxxxx House South Church Street Xxxxxx
Town, Grand Cayman Cayman Islands Attention: The Directors
Fax: 000-000-0000
Unless otherwise expressly provided herein, notices shall be
deemed to have been given on the date of mailing, except notice of change of
address, which shall be deemed to have been given when received.
3.2 This Agreement shall not be changed, modified or amended except by a writing
signed by the parties to be charged, and this Agreement may not be discharged
except by performance in accordance with its terms or by a writing signed by the
party to be charged.
3.3 Upon the execution and delivery of this Agreement by the Purchaser, this
Agreement shall become a binding obligation of the Purchaser with respect to the
purchase of Capital Securities as herein provided.
3.4 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE
PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS
HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
3.5 The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
3.6 This Agreement may be executed in one or more counterparts each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.
3.7 In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Offerors' and the Purchaser's rights and privileges
shall be enforceable to the fullest extent permitted by law.
SIGNATURES APPEAR ON THE FOLLOWING PAGE
IN WITNESS WHEREOF, I have set my hand the day and year first written
above.
I-PREFERRED TERM SECURITIES II, LTD.
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
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Title: Director
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IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the
day and year first written above.
DONEGAL GROUP INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Title: President
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DGI STATUTORY TRUST I
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Administrator
