EXHIBIT 1.1
$300,000,000
Xxxx & Xxxxxxx Funding Corp.
Xxxx & Xxxxxxx Holding Inc.
Xxxx & Xxxxxxx Holdings Corp.
10 3/8% Senior Notes Due 2013
Purchase Agreement
dated May 29, 2003
TABLE OF CONTENTS
PAGE
Section 1. Representations and Warranties of the Company and Funding...................................... 2
(a) Offering Memorandum................................................................... 2
(b) Supplemental Indenture................................................................ 3
(c) Registration Rights Agreement......................................................... 3
(d) Reorganization........................................................................ 3
(e) Escrow Agreement...................................................................... 3
(f) The Indenture......................................................................... 4
(g) The Securities........................................................................ 4
(h) The Exchange Securities............................................................... 4
(i) Purchase Agreement.................................................................... 4
(j) Descriptions of the Transaction Documents............................................. 4
(k) No Material Adverse Effect............................................................ 4
(l) Independent Accountants............................................................... 5
(m) Preparation of the Financial Statements............................................... 5
(n) Incorporation and Good Standing of Funding, the Company and its Subsidiaries.......... 5
(o) Capitalization........................................................................ 6
(q) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required.................................................. 6
(r) No Material Actions or Proceedings.................................................... 7
(s) Intellectual Property Rights.......................................................... 7
(t) All Necessary Licenses................................................................ 7
(u) Permits............................................................................... 8
(v) Title to Properties................................................................... 9
(w) Tax Law Compliance.................................................................... 9
(x) Company and Funding Not "Investment Companies"........................................ 10
(y) Insurance............................................................................. 10
(z) No Price Stabilization or Manipulation................................................ 10
(aa) Company's Accounting System........................................................... 10
(bb) ERISA Compliance...................................................................... 10
(cc) No Unlawful Payments.................................................................. 11
(dd) Solvency.............................................................................. 11
(ee) No Broker's Fees...................................................................... 12
(ff) Rule 144A Eligibility................................................................. 12
(gg) No Integration........................................................................ 12
(hh) No General Solicitation or Directed Selling Efforts................................... 12
(ii) Securities Law Exemptions............................................................. 12
(jj) Margin Rules.......................................................................... 12
(kk) Statistical and Market Data........................................................... 13
(ll) Employment Agreements................................................................. 13
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PAGE
Section 2. Purchase and Resale of the Securities; Payment and Delivery.................................... 13
Section 3. Covenants of the Company and Funding........................................................... 15
(a) Delivery of Copies.................................................................... 15
(b) Amendments or Supplements............................................................. 15
(c) Notice to the Representative.......................................................... 15
(d) Ongoing Compliance of the Offering Memorandum......................................... 15
(e) Clear Market.......................................................................... 16
(f) Supplying Information................................................................. 16
(g) Portal and DTC........................................................................ 16
(h) No Resales by the Company............................................................. 16
(i) No Integration........................................................................ 16
(j) No General Solicitation or Directed Selling Efforts................................... 16
(k) Blue Sky Compliance................................................................... 17
(l) Use of Proceeds....................................................................... 17
(m) Future Reports to the Representative.................................................. 17
Section 4. Payment of Expenses............................................................................ 17
Section 5. Conditions of the Obligations of the Initial Purchasers........................................ 18
(a) Accountants' Comfort Letter........................................................... 18
(b) No Material Adverse Change or Ratings Agency Change................................... 18
(c) Opinions of Outside Counsel for the Company........................................... 19
(d) Opinion of Internal Counsel of the Company............................................ 19
(e) Opinion of Counsel for the Initial Purchasers......................................... 19
(f) Officers' Certificate................................................................. 19
(g) Bring-down Comfort Letter............................................................. 19
(h) No Legal Impediment to Issuance....................................................... 20
(i) Good Standing......................................................................... 20
(j) Registration Rights Agreement......................................................... 20
(k) Portal and DTC........................................................................ 20
(l) Escrow Agreement; Payment by Company.................................................. 20
(m) Reorganization........................................................................ 20
(n) Additional Documents.................................................................. 20
(o) Capitalization of Funding............................................................. 20
Section 6. Reimbursement of Initial Purchasers' Expenses.................................................. 21
Section 7. Indemnification................................................................................ 21
(a) Indemnification of the Initial Purchasers............................................. 21
(b) Indemnification of the Company and Funding............................................ 22
(c) Notice and Procedures................................................................. 22
(d) Contribution.......................................................................... 23
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PAGE
(e) Limitation on Liability............................................................... 24
(f) Non-Exclusive Remedies................................................................ 24
Section 8. Termination of this Agreement.................................................................. 24
Section 9. Defaulting Initial Purchaser................................................................... 24
Section 10. Representations and Indemnities to Survive Delivery............................................ 26
Section 11. Notices........................................................................................ 26
Section 12. Successors; Third Party Beneficiary............................................................ 27
Section 13. Partial Unenforceability....................................................................... 27
Section 14. Governing Law Provisions....................................................................... 27
Section 15. General Provisions............................................................................. 27
Section 16. Certain Defined Terms.......................................................................... 28
Section 17. Authority of the Representative................................................................ 28
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PURCHASE AGREEMENT
May 29, 2003
X.X. XXXXXX SECURITIES INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Xxxx & Xxxxxxx Funding Corp., a corporation
organized under the laws of Delaware ("Funding"), proposes to issue and sell to
the several purchasers named in Schedule I hereto (the "Initial Purchasers"),
for whom you are acting as Representative (the "Representative"), $300,000,000
aggregate principal amount of Funding's 10 3/8% Senior Notes due 2013 (the
"Securities"). The Securities will be issued pursuant to an Indenture to be
dated as of June 5, 2003 (the "Indenture") between Funding, and The Bank of New
York, as trustee (the "Trustee").
On the Closing Date (as defined herein), the Initial
Purchasers will deposit, at the instruction of Funding, with Wilmington Trust
Company, as securities intermediary and escrow agent (the "Securities
Intermediary"), the gross proceeds of the offering of the Securities together
with certain other funds made available to Funding. Upon the satisfaction of
certain conditions as set forth in an agreement to be dated as of the Closing
Date among Funding, Xxxx & Xxxxxxx Holdings Corp., the Trustee and the
Securities Intermediary (together with the securities account control agreement
attached thereto, the "Escrow Agreement"), the Released Amount (as defined in
the Escrow Agreement) of the Escrow Funds (as defined in the Escrow Agreement)
will be released to Xxxx & Xxxxxxx Holdings Corp. or to another party at the
direction of Xxxx & Xxxxxxx Holdings Corp. and the Interest Escrow Amount shall
be deposited with the Trustee into an interest escrow account maintained by the
Trustee. Prior to the Closing Date, all of the issued and outstanding capital
stock of Xxxx & Xxxxxxx Holding Inc. will be contributed to Xxxx & Xxxxxxx
Holdings Corp. (the "Reorganization") in accordance with the terms of an
exchange agreement (the "Exchange Agreement") by and between Xxxx & Xxxxxxx
Holdings Corp. and Fairfax, Inc. Unless the context requires otherwise,
references in this Agreement to the "Company" shall, prior to the effective time
of the Reorganization, be deemed to refer to each of Xxxx & Xxxxxxx Holdings
Corp. and Xxxx & Xxxxxxx Holding Inc. and references to the "Company" following
the Reorganization shall be references only to Xxxx & Xxxxxxx Holdings Corp.
Upon and subject to release of the Released Amount to the
Company pursuant to the Escrow Agreement, the Company will assume the
obligations of Funding under the Securities and the Indenture (the
"Assumption"). The date of the consummation of the Assumption is referred to
herein as the "Assumption Date." The Assumption, if consummated, will be
consummated pursuant to a supplemental indenture in the form attached as Exhibit
F to the Indenture (the "Supplemental Indenture"). Notwithstanding anything
herein to the contrary, it is acknowledged and agreed that (a) unless the
Assumption shall have occurred, and until it shall occur, the Securities shall
not constitute liabilities of the Company and the Company shall not be
obligated to pay any principal, interest or premium thereon and (b) the Company
is under no obligation to, and has not agreed to, consummate the Assumption.
If the Assumption is not completed on or before August 29,
2003 (or such earlier date as may be required by the Escrow Agreement), Funding
will be required to redeem the Securities at the Special Mandatory Redemption
Price (as defined in the Indenture) on the Special Mandatory Redemption Date (as
defined in the Indenture).
The Securities will be sold to the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance on exemptions therefrom. The Company and Funding have
prepared a preliminary offering memorandum dated May 15, 2003 (the "Preliminary
Offering Memorandum") and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning Funding,
the Company and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by Funding
and the Company to the Initial Purchasers pursuant to the terms of this
Agreement. The Company and Funding hereby confirm that they have authorized the
use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Securities by the Initial
Purchasers in the manner contemplated by this Agreement. Capitalized terms used
but not defined herein shall have the meanings given to such terms in the
Offering Memorandum.
Holders of the Securities (including the Initial Purchasers
and their direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement, to be dated the Closing Date (as defined below)
and substantially in the form attached hereto as Exhibit B (the "Registration
Rights Agreement"), pursuant to which the Company will agree to, following the
Assumption, file one or more registration statements with the Securities and
Exchange Commission (the "Commission") providing for the registration under the
Securities Act of the Securities or the Exchange Securities referred to (and as
defined) in the Registration Rights Agreement.
The Company and Funding, as applicable, each hereby confirms
its agreement with each of the Initial Purchasers concerning the purchase and
resale of the Securities, as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
FUNDING.
The Company and Funding, as applicable, each hereby represent
and warrant to each Initial Purchaser as follows:
(a) Offering Memorandum. The Preliminary Offering
Memorandum, as of its date and as supplemented by the information in
the Offering Memorandum, did not, and the Offering Memorandum, in the
form first used by the Initial Purchasers to confirm sales of the
Securities and as of the Closing Date, will not, contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
neither the Company nor Funding makes any representation or warranty
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with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Initial Purchaser
furnished to the Company and Funding in writing by such Initial
Purchaser through the Representative expressly for use in the
Preliminary Offering Memorandum and the Offering Memorandum.
(b) Supplemental Indenture. Upon the execution and
delivery of the Supplemental Indenture and such other documents
pursuant to the Escrow Agreement and due authorization, execution and
delivery of the Supplemental Indenture by the Trustee, (i) the
Indenture (as supplemented by the Supplemental Indenture) will
constitute the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
that the enforcement thereof may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws, from time to
time in effect, affecting creditors' rights generally or by equitable
principles relating to enforceability, regardless of whether
enforcement is considered in a proceeding in equity or at law (the
"Enforceability Exceptions"), and (ii) the Securities will constitute
the legal, valid and binding obligations of the Company, entitled to
the benefits of the Indenture and enforceable against the Company in
accordance with their terms, subject to the Enforceability Exceptions.
(c) Registration Rights Agreement. The Registration
Rights Agreement has been duly authorized by the Company and, when
executed and delivered by the Company, assuming the due authorization,
execution and delivery thereof by the Initial Purchasers, will
constitute the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject
to the Enforceability Exceptions.
(d) Reorganization. The Reorganization and the Exchange
Agreement have been duly authorized by the Company and when the
Exchange Agreement is executed and delivered by the Company and
Fairfax, Inc., will constitute the legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms, subject to the Enforceability Exceptions.
(e) Escrow Agreement. The Escrow Agreement has been duly
authorized by the Company and Funding and, assuming due authorization,
execution and delivery thereof by the Securities Intermediary and the
Trustee, when executed and delivered by each of the Company and
Funding, will constitute the legal, valid and binding obligation of
each of the Company and Funding, enforceable against each of the
Company and Funding in accordance with its terms, subject to the
Enforceability Exceptions. The Escrow Agreement is effective to create
in favor of the Trustee, for its benefit and the benefit of the holders
of the Securities, a valid security interest in all right, title and
interest of Funding in (a) the Escrow Account (as defined in the Escrow
Agreement) and all financial assets (as such term is defined in Section
8-102(a) of the Uniform Commercial Code of Delaware or any other
applicable jurisdiction (the "UCC")) held in the Escrow Account, (b)
all "security entitlements" (as such term is defined in Section
8-102(a) of the UCC) held in the Escrow Account and (c) all "proceeds"
(as such term is defined in Section 9-102(a) of the UCC) thereof, in
each case, securing the Secured Obligations (as de-
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fined in the Escrow Agreement). Such security interest is, after giving
effect to the Securities Account Control Agreement (as defined in the
Escrow Agreement), a perfected security interest having priority over
conflicting security interests as provided in Section 9-328(1) of the
UCC.
(f) The Indenture. The Indenture has been duly authorized
by Funding and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and
legally binding agreement of Funding enforceable against Funding in
accordance with its terms, subject to the Enforceability Exceptions;
and on the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and the rules and regulations of
the Commission applicable to an indenture that is qualified thereunder.
(g) The Securities. The Securities have been duly
authorized by Funding and, when duly executed, authenticated, issued
and delivered as provided in the Indenture and paid for as provided
herein, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of Funding enforceable
against Funding in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the
Indenture.
(h) The Exchange Securities. On the Closing Date, the
Exchange Securities have been duly authorized by the Company and, when
duly executed, authenticated, issued and delivered as contemplated by
the Registration Rights Agreement, will be duly and validly issued and
outstanding and will constitute valid and legally binding obligation of
the Company, enforceable against the Company in accordance with their
terms, subject to the Enforceability Exceptions, and will be entitled
to the benefits of the Indenture.
(i) Purchase Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, Funding and the Company, enforceable against the Company
and Funding in accordance with its terms, subject to the Enforceability
Exceptions, and except that rights to indemnity and contribution
thereunder may be limited by applicable law and public policy.
(j) Descriptions of the Transaction Documents. Each
Transaction Document (as defined below) conforms in all material
respects to the description thereof contained in the Preliminary
Offering Memorandum and the Offering Memorandum.
(k) No Material Adverse Effect. Except as otherwise
disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum, since the date of the most recent financial statements
appearing in the Preliminary Offering Memorandum and the Offering
Memorandum: (i) there has been no material adverse change, or any
development that could reasonably be expected to have a material
adverse effect, on (x) the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising
from transactions in the ordinary course of business, of the Company
and its subsidiaries, considered as one entity or (y) Funding's ability
to perform its
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obligations under the Transaction Documents in the manner contemplated
by the Offering Memorandum (a "Material Adverse Effect"); (ii) the
Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into any
material transaction or agreement not in the ordinary course of
business; and (iii) there has been no dividend or distribution of any
kind declared, paid or made by the Company or, except for dividends
paid to the Company or other subsidiaries, any of its subsidiaries on
any class of capital stock or repurchase or redemption by the Company
or any of its subsidiaries of any class of capital stock.
(l) Independent Accountants. To the Company's knowledge,
PricewaterhouseCoopers LLP, who have expressed their opinion with
respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) of the Company and its
subsidiaries included in the Offering Memorandum are independent public
or certified public accountants as required by the Securities Act.
(m) Preparation of the Financial Statements. The
financial statements and the related notes included in the Preliminary
Offering Memorandum and the Offering Memorandum present fairly the
consolidated financial position of the Company and its subsidiaries as
of the dates indicated and the results of their operations and cash
flows for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting principles as
applied in the United States ("GAAP") applied on a consistent basis
throughout the periods involved, except as may be expressly stated in
the related notes thereto. The financial data set forth in the
Preliminary Offering Memorandum and Offering Memorandum under the
captions "Offering memorandum summary--Summary financial data,"
"Selected historical financial data" and the "Actual" column under
"Capitalization" fairly present the information set forth therein on a
basis consistent with that of the financial statements contained in the
Preliminary Offering Memorandum and the Offering Memorandum.
(n) Incorporation and Good Standing of Funding, the
Company and its Subsidiaries. Each of Funding, the Company and United
States Fire Insurance Company, The North River Insurance Company and
Seneca Insurance Company, Inc. (collectively, the "Material
Subsidiaries") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Preliminary Offering Memorandum and the Offering Memorandum and, in the
case of the Company and Funding, to enter into and perform its
respective obligations under this Agreement and the other Transaction
Documents to which it is a party. Other than the Material Subsidiaries,
the Company does not have any subsidiary that is a "significant
subsidiary" within the meaning of Rule 405 under the Securities Act.
Each of Funding, the Company and each subsidiary of the Company is duly
qualified as a foreign corporation to transact business and is 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 so qualify or to
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be in good standing would not, individually or in the aggregate, result
in a Material Adverse Effect. Funding does not and will not have any
subsidiaries.
(o) Capitalization. Xxxx & Xxxxxxx Holding Inc. has an
authorized capitalization as set forth in the Preliminary Offering
Memorandum and the Offering Memorandum in the column entitled "Actual"
under the heading "Capitalization." All the outstanding shares of
capital stock or other equity interests of each Material Subsidiary
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim.
All of Funding's authorized capital stock has been issued and
is outstanding and is and will be held by Policy, Inc. Funding has not
and will not engage in any transactions other than entering into the
Transaction Documents to which it is a party and transactions directly
related to performing its obligations under the Transaction Documents
as described in the Preliminary Offering Memorandum and the Offering
Memorandum.
(q) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither Funding nor the Company
nor any of the Material Subsidiaries is in violation of its certificate
of incorporation or by-laws. Neither Funding nor the Company nor any of
the Company's subsidiaries is in default (or, with the giving of notice
or lapse of time or both, would be in default) ("Default") under any
indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which any of them is a party or
by which it or any of them may be bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject (each,
an "Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The
execution, delivery and performance by Funding and the Company of each
of their respective obligations under this Agreement, the Exchange
Agreement, the Escrow Agreement, the Securities, the Indenture, the
Supplemental Indenture, the Exchange Securities and the Registration
Rights Agreement (collectively, the "Transaction Documents"), the
issuance and sale of the Securities and compliance by Funding and the
Company with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents (a) have been duly authorized
by all necessary corporate action and will not result in any violation
of the provisions of the certificate of incorporation or by-laws of
Funding, the Company or any subsidiary of the Company, (b) will not
conflict with or constitute a breach of, or Default under, or, except
or any lien for the benefit of holders of the Securities, result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of Funding, the Company or any of the Company's
subsidiaries pursuant to, or require the consent of any other party to,
any Existing Instrument, except for such conflicts, breaches, Defaults,
liens, charges or encumbrances as would not, individually or in the
aggregate, result in a Material Adverse Effect and (c) will not result
in any violation of any law, administrative regulation or
administrative or court decree applicable to Funding, the Company or
any subsidiary of the Company, except for any violations which would
not, individually or in the aggregate, result in a Material Adverse
Effect. No material consent, approval (other
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than the approval of the Ohio insurance regulatory authority with
respect to the Reorganization (which approval is expected to be
obtained prior to the Closing Date)), authorization, other order of,
registration of, filing of or qualification of or with any court or
other governmental or regulatory authority is required for the
execution, delivery and performance by Funding and the Company of each
of the Transaction Documents to which it is or will be a party, the
issuance and sale of the Securities by Funding and compliance by
Funding and the Company with the terms thereof and the consummation of
the transactions contemplated by the Transaction Documents, except for
such consents, approvals, authorizations, orders and registrations or
qualifications as may be required (i) under applicable state securities
laws in connection with the purchase and resale of the Securities by
the Initial Purchasers and (ii) with respect to the Exchange Securities
under the Securities Act and applicable state securities laws as
contemplated by the Registration Rights Agreement.
(r) No Material Actions or Proceedings. Except as
described in the Preliminary Offering Memorandum and the Offering
Memorandum, there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company's knowledge,
threatened (i) against or, to the best of the Company's knowledge,
affecting the Company or any of its subsidiaries, (ii) which has as the
subject thereof any officer or director of, or property owned by, the
Company or any of its subsidiaries or (iii) relating to environmental
or discrimination matters, where in any such case (A) such action, suit
or proceeding could reasonably be expected to be determined adversely
to the Company or such subsidiary and (B) any such action, suit or
proceeding, if so determined adversely, would reasonably be expected to
have a Material Adverse Effect or would reasonably be expected to
adversely affect the consummation of the transactions contemplated by
this Agreement. No labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the best of the Company's
knowledge, is threatened or imminent, which might reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect.
(s) Intellectual Property Rights. The Company and its
subsidiaries own or possess sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals, trade secrets and other
similar rights (collectively, "Intellectual Property Rights")
reasonably necessary to conduct their businesses as now conducted; and
the expected expiration of any of such Intellectual Property Rights
would not have a Material Adverse Effect. Neither the Company nor any
of its subsidiaries has received any notice of infringement or conflict
with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable decision,
would have a Material Adverse Effect
(t) All Necessary Licenses. Each of United States Fire
Insurance Company, The North River Insurance Company, Xxxx and Xxxxxxx
Insurance Company, Xxxx & Xxxxxxx Indemnity Company, Xxxx & Xxxxxxx
Underwriters Co. of Ohio, Xxxx & Xxxxxxx Specialty Insurance Company
and Seneca Insurance Company, Inc. (each an "Insurance Subsidiary" and
collectively, the "Insurance Subsidiaries") is duly licensed to conduct
an
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insurance business under the insurance statutes of each jurisdiction in
which the conduct of its business requires such licensing, except for
such jurisdictions or licensing requirements for which the failure of
the Insurance Subsidiaries to be so licensed would not, individually or
in the aggregate, have a Material Adverse Effect. Each of the Company
and its subsidiaries that is so required has filed all reports,
information statements and other documents with the insurance
regulatory authorities of its jurisdiction of incorporation and
domicile as are required to be filed pursuant to the insurance statutes
of such jurisdictions, including the statutes relating to companies
which control insurance companies, and the rules, regulations and
interpretations of the insurance regulatory authorities thereunder (the
"Insurance Laws"), and has duly paid all taxes (including franchise
taxes and similar fees) it is required to have paid under the Insurance
Laws, except where the failure to file such statements or reports or
pay such taxes would not, individually or in the aggregate, have a
Material Adverse Effect. Each of the Company and its subsidiaries
maintains its books and records in accordance with the Insurance Laws,
except where the failure to so maintain its books and records would not
have a Material Adverse Effect. Each of the Insurance Subsidiaries has
all other necessary authorizations, approvals, orders, consents,
certificates, permits, registrations and qualifications of and from all
insurance regulatory authorities necessary to conduct their respective
businesses as described in the Preliminary Offering Memorandum or
Offering Memorandum, except (i) for approval from the insurance
regulatory authority in Ohio with respect to the Reorganization (which
approval is expected to be obtained prior to the Closing Date) or (ii)
where the failure to have such authorizations, approvals, orders,
consents, certificates, permits, registrations or qualifications would
not, individually or in the aggregate, have a Material Adverse Effect.
The Company and each of its Insurance Subsidiaries has not received any
notification from any insurance regulatory authority to the effect that
any additional authorization, approval, order, consent, certificate,
permit, registration or qualification is needed to be obtained by the
Company or any of its Insurance Subsidiaries in any case where it could
be reasonably expected that (x) the Company or any of its Insurance
Subsidiaries would be required either to obtain such additional
authorization, approval, order, consent, certificate, permit,
registration or qualification or to cease or otherwise limit the
writing of certain business and (y) the failure to obtain such
additional authorization, approval, order, consent, certificate,
permit, registration or qualification or the limiting of the writing of
such business would have a Material Adverse Effect; and no insurance
regulatory authority having jurisdiction over the Company or any of its
Insurance Subsidiaries has issued any order or decree impairing,
restricting or prohibiting (i) the payment of dividends by any of the
Insurance Subsidiaries to its parent, other than those restrictions
applicable to insurance companies generally, or (ii) the continuation
of the business of the Company or any of the Insurance Subsidiaries in
all material respects as presently conducted.
(u) Permits. The Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations, other than
the approval of the Ohio insurance regulatory authority with respect to
the Reorganization (which approval is expected to be obtained prior to
the Closing Date), issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities
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that are necessary for the ownership or lease of their respective
properties or the conduct of their respective businesses as described
in the Preliminary Offering Memorandum and the Offering Memorandum,
except where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect; and
except as described in the Preliminary Offering Memorandum and the
Offering Memorandum, neither the Company nor any of its subsidiaries
has received notice of any revocation or material modification of any
license, certificate, permit or authorization that is material to the
business of the Company and its subsidiaries, taken as a whole, or has
any reason to believe that any such license, certificate, permit or
authorization will not be renewed in the ordinary course. Each of the
Company and its subsidiaries is in compliance with the requirements of
the Insurance Laws of its jurisdiction of incorporation and the
Insurance Laws of other jurisdictions which are applicable to the
Company or such subsidiary, except where the failure to so comply would
not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the Preliminary
Offering Memorandum or Offering Memorandum, the Company and each of the
Insurance Subsidiaries has received all material approvals (other than
the approval of the Ohio insurance regulatory authority with respect to
the Reorganization (which approval is expected to be obtained prior to
the Closing Date)) of acquisition of control and/or affiliate
transactions in each jurisdiction where such approvals are required
except where the failure to obtain any such approval would not have a
Material Adverse Effect.
(v) Title to Properties. Except as otherwise disclosed in
the Preliminary Offering Memorandum and the Offering Memorandum, the
Company and each of its subsidiaries has good and marketable title to
all the properties and assets reflected as owned by each of them in the
Preliminary Offering Memorandum and the Offering Memorandum, in each
case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not
materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. The real property,
improvements, equipment and personal property held under lease by the
Company or any subsidiary are held under valid and enforceable leases,
with such exceptions as would not have a Material Adverse Effect.
(w) Tax Law Compliance. All necessary federal, state and
foreign income and franchise tax returns required to be filed with
respect to the Company and its consolidated subsidiaries, other than
those which would not, individually or in the aggregate, have a
Material Adverse Effect, have been filed. Except as would not have a
Material Adverse Effect, all taxes required to be paid by any of them
and, if due and payable, any related or similar assessment, fine or
penalty levied against any of them, have been paid, except assessments
against which appeals have been or will be promptly taken in good faith
or as to which adequate reserves have been provided. Adequate charges,
accruals and reserves have been made in the applicable financial
statements referred to in Section 1(l) above in respect of all federal,
state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its consolidated
subsidiaries has not been finally determined.
-9-
(x) Company and Funding Not "Investment Companies".
Neither Funding nor the Company is, and after receipt of payment for
the Securities and the Assumption, neither will be, required to be
registered as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(y) Insurance. Except as would not have a Material
Adverse Effect, neither the Company nor any of its subsidiaries has
been denied any insurance coverage which it has sought or for which it
has applied. Except as would not have a Material Adverse Effect, the
Company and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures
against such losses and risks as are adequate to protect the Company
and its subsidiaries and their respective businesses; and neither the
Company nor any of its subsidiaries has (i) received any material
notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made
in order to continue such insurance or (ii) any reason to believe that
it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage at reasonable
cost from similar insurers as may be necessary to continue its
business.
(z) No Price Stabilization or Manipulation. Neither
Funding, the Company nor any of the Company's subsidiaries has 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 Securities.
(aa) Company's Accounting System. The Company and its
consolidated subsidiaries maintain a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(bb) ERISA Compliance. The Company and its subsidiaries
and each "employee benefit plan" (within the meaning of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
and published interpretations thereunder ("ERISA")) established or
maintained, by the Company, its subsidiaries and their "ERISA
Affiliates" (as defined below) are in compliance with ERISA and the
Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (the "Code"), except such as will
not, individually or in the aggregate, have a Material Adverse Effect.
"ERISA Affiliate" means, with respect to the Company and a subsidiary,
any member of any group of organizations described in Sections 414(b),
(c), (m) or (o) of the Code of which the Company or such subsidiary is
a member. No "reportable event" (as defined under ERISA) has occurred
or is reasonably expected to occur with respect to any "employee
benefit plan" for which the Company, its subsidiaries
-10-
or any of their ERISA Affiliates would have any liability, which might
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. No "employee benefit plan" for which the
Company, its subsidiaries or any of their ERISA Affiliates would have
any liability, if such "employee benefit plan" were terminated, would
have any "amount of unfunded benefit liabilities" (as defined under
ERISA) which might reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect. Neither the Company, its
subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "employee
benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code,
which might reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect. Each "employee benefit plan"
established or maintained by the Company, its subsidiaries and any of
their ERISA Affiliates that is intended to be qualified under Section
401(a) of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would cause the loss of such
qualification, and which might reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect. No event or series
of events of the nature described in this Section 1(w) has occurred or
is reasonably expected to occur for which the Company, its subsidiaries
or any of their ERISA Affiliates would have any liability which might
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
(cc) No Unlawful Payments. Neither the Company nor any of
its subsidiaries nor, to the best knowledge of the Company, any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries has (i) used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or
is in violation of any provision of the Foreign Corrupt Practices Act
of 1977; or (iv) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(dd) Solvency. On and immediately after the Assumption and
the application of the Released Amount as contemplated by the
Preliminary Memorandum and the Offering Memorandum, the Company will be
Solvent. As used in this paragraph, the term "Solvent" means, with
respect to a particular date, that on such date (i) the present fair
market value (or present fair saleable value) of the assets of the
Company is not less than the total amount required to pay the
liabilities of the Company on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured;
(ii) the Company is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and commitments as they
mature and become due in the normal course of business; (iii) assuming
consummation of the issuance of the Securities as contemplated by this
Agreement and the Preliminary Offering Memorandum and the Offering
Memorandum, the Company is not incurring debts or liabilities beyond
its ability to pay as such debts and liabilities mature; (iv) the
Company is not engaged in any business or transaction, and does not
propose to engage in any business or transaction, for which its
property would constitute unreasonably small capital after giving due
consideration to the
-11-
prevailing practice in the industry in which the Company is engaged;
and (v) the Company is not a defendant in any civil action that would
result in a judgment that the Company is or would become unable to
satisfy.
(ee) No Broker's Fees. Neither Funding nor the Company nor
any of the Company's subsidiaries is a party to any contract, agreement
or understanding with any person (other than this Agreement) that would
give rise to a valid claim against any of them or any Initial Purchaser
for a brokerage commission, finder's fee or like payment in connection
with the offering and sale of the Securities.
(ff) Rule 144A Eligibility. On the Closing Date, the
Securities will not be of the same class as securities listed on a
national securities exchange registered under Section 6 of the Exchange
Act or quoted in an automated inter-dealer quotation system; and each
of the Preliminary Offering Memorandum and the Offering Memorandum, as
of its respective date, contains or will contain all the information
that, if requested by a prospective purchaser of the Securities, would
be required to be provided to such prospective purchaser pursuant to
Rule 144A(d)(4) under the Securities Act.
(gg) No Integration. Neither Funding nor the Company nor
any of the Company's affiliates (as defined in Rule 501(b) of
Regulation D of the Securities Act ("Regulation D") has, directly or
through any agent, sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Securities Act), that is or will be integrated with the sale of the
Securities in a manner that would require registration of the
Securities under the Securities Act.
(hh) No General Solicitation or Directed Selling Efforts.
None of Funding, the Company or any of the Company's affiliates or any
other person acting on any of their behalfs (other than the Initial
Purchasers, as to which no representation is made) has (i) solicited
offers for, or offered or sold, the Securities by means of any form of
general solicitation or general advertising within the meaning of Rule
502(c) of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act or (ii)
engaged in any directed selling efforts within the meaning of
Regulation S under the Securities Act ("Regulation S"), and all such
persons have complied with the offering restrictions requirement of
Regulation S.
(ii) Securities Law Exemptions. Assuming the accuracy of
the representations and warranties of the Initial Purchasers contained
in Section 2(b) (including Annex A hereto) and their compliance with
their agreements set forth therein, it is not necessary, in connection
with the issuance and sale of the Securities to the Initial Purchasers
and the offer, resale and delivery of the Securities by the Initial
Purchasers in the manner contemplated by this Agreement and the
Offering Memorandum, to register the Securities under the Securities
Act or to qualify the Indenture under the Trust Indenture Act.
(jj) Margin Rules. Neither the issuance, sale and delivery
of the Securities, the Assumption nor the application of the proceeds
thereof by Funding and the Company as described in the Offering
Memorandum will violate Regulation T, U or X of the Board
-12-
of Governors of the Federal Reserve System or any other regulation of
such Board of Governors.
(kk) Statistical and Market Data. Nothing has come to the
attention of the Company that has caused the Company to believe that
the statistical and market-related data included in the Preliminary
Offering Memorandum and the Offering Memorandum is not based on or
derived from sources that are reliable and accurate in all material
respects.
(ll) Employment Agreements. Other than the agreements
described in the Preliminary Offering Memorandum and the Offering
Memorandum, neither the Company nor any of its subsidiaries or parent
companies has any written agreement with any officer (other than the
chief executive officer of Xxxx & Xxxxxxx Holdings Corp.) that is named
in the "Management" section of the Preliminary Offering Memorandum and
the Offering Memorandum relating to the terms and conditions of such
officer's employment.
Any certificate signed by an officer of Funding or the Company
and delivered to the Representative or to counsel for the Initial Purchasers
shall be deemed to be a representation and warranty by Funding or the Company to
each Initial Purchaser as to the matters set forth therein.
SECTION 2. PURCHASE AND RESALE OF THE SECURITIES; PAYMENT AND
DELIVERY
(a) Sale of Securities. Funding agrees to issue and sell
the Securities to each of the Initial Purchasers as provided in this Agreement,
and each Initial Purchaser, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from Funding the respective
principal amount of Securities set forth opposite such Initial Purchaser's name
in Schedule 1 hereto at a price equal to 94.8182385% of the principal amount
thereof plus accrued interest, if any, from June 5, 2003 to the Closing Date.
Funding will not be obligated to deliver any of the Securities except upon
payment for all the Securities to be purchased as provided herein.
(b) Resale by Initial Purchasers. Funding and the Company
each understand that the Initial Purchasers intend to offer the Securities for
resale on the terms set forth in the Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents, warrants and agrees that:
(i) it is a qualified institutional buyer within
the meaning of Rule 144A under the Securities Act (a "QIB")
and an accredited investor within the meaning of Rule 501(a)
under the Securities Act;
(ii) it has not solicited offers for, or offered
or sold, and will not solicit offers for, or offer or sell,
the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of
Regulation D or
-13-
in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act; and
(iii) it has not solicited offers for, or offered
or sold, and will not solicit offers for, or offer or sell,
the Securities as part of their initial offering except:
(A) within the United States to persons
whom it reasonably believes to be QIBs in
transactions pursuant to Rule 144A under the
Securities Act ("Rule 144A") and in connection with
each such sale, it has taken or will take reasonable
steps to ensure that the purchaser of the Securities
is aware that such sale is being made in reliance on
Rule 144A; or
(B) in accordance with the restrictions
set forth in Annex A hereto.
(c) Reliance on Representations. Each Initial Purchaser
acknowledges and agrees that Funding and the Company and, for purposes of the
opinions to be delivered to the Initial Purchasers pursuant to Sections 5(c) and
5(d), counsel for the Company and counsel for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers, and compliance by the Initial Purchasers with their
agreements, contained in paragraph (b) above (including Annex A hereto), and
each Initial Purchaser hereby consents to such reliance.
(d) Acknowledgement. Funding and the Company each
acknowledges and agrees that the Initial Purchasers may offer and sell
Securities to or through any affiliate of an Initial Purchaser and that any such
affiliate may offer and sell Securities purchased by it to or through any
Initial Purchaser.
(e) Closing Date. Payment for and delivery of the
Securities will be made at the offices of Xxxxxx Xxxxxx & Xxxxxxx LLP at 10:00
A.M., New York City time, on June 5, 2003, or at such other time or place on the
same or such other date, not later than the fifth business day thereafter, as
the Representative, Funding and the Company may agree upon in writing. The time
and date of such payment and delivery is referred to herein as the "Closing
Date."
(f) Payment for Securities. Payment for the Securities
shall be made by wire transfer in immediately available funds to the Securities
Intermediary as contemplated by the Escrow Agreement against delivery to the
nominee of The Depository Trust Company, for the account of the Initial
Purchasers, of one or more global notes representing the Securities
(collectively, the "Global Note"), with any transfer taxes payable in connection
with the sale of the Securities duly paid by the Company. The Global Note will
be made available for inspection by the Representative not later than 1:00 P.M.,
New York City time, on the business day prior to the Closing Date.
-14-
SECTION 3. COVENANTS OF THE COMPANY AND FUNDING.
The Company and Funding, as applicable, each hereby covenants
and agrees with each Initial Purchaser as follows:
(a) Delivery of Copies. The Company will deliver to the
Initial Purchasers as many copies of the Preliminary Offering
Memorandum and the Offering Memorandum (including all amendments and
supplements thereto) as the Representative may reasonably request.
(b) Amendments or Supplements. Before making or
distributing any amendment or supplement to the Preliminary Offering
Memorandum or the Offering Memorandum, the Company will furnish to the
Representative and counsel for the Initial Purchasers a copy of the
proposed amendment or supplement for review, and will not distribute
any such proposed amendment or supplement to which the Representative
reasonably object.
(c) Notice to the Representative. Prior to the
effectiveness of a Registration Statement registering the Securities or
the Exchange Securities in accordance with the Registration Rights
Agreement, the Company and Funding will advise the Representative
promptly, and confirm such advice in writing, (i) of the issuance by
any governmental or regulatory authority of any order preventing or
suspending the use of the Preliminary Offering Memorandum or the
Offering Memorandum or the initiation or threatening of any proceeding
for that purpose; (ii) of the occurrence of any event at any time prior
to the completion of the initial offering of the Securities as a result
of which the Offering Memorandum as then amended or supplemented would
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances existing when the Offering Memorandum is
delivered to a purchaser, not misleading; and (iii) of the receipt by
the Company or Funding of any notice with respect to any suspension of
the qualification of the Securities for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose; and the Company and Funding will each use its reasonable
best efforts to prevent the issuance of any such order preventing or
suspending the use of the Preliminary Offering Memorandum or the
Offering Memorandum or suspending any such qualification of the
Securities and, if any such order is issued, will obtain as soon as
possible the withdrawal thereof.
(d) Ongoing Compliance of the Offering Memorandum. If at
any time prior to the completion of the initial offering of the
Securities (i) any event shall occur or condition shall exist as a
result of which the Offering Memorandum as then amended or supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances existing when the Offering Memorandum is
delivered to a purchaser, not misleading or (ii) it is necessary to
amend or supplement the Offering Memorandum to comply with law, the
Company will immediately notify the Initial Purchasers thereof and
forthwith prepare and, subject to paragraph (b) above, furnish to the
Initial Purchasers
-15-
such amendments or supplements to the Offering Memorandum as may be
necessary so that the statements in the Offering Memorandum as so
amended or supplemented will not, in the light of the circumstances
existing when the Offering Memorandum is delivered to a purchaser, be
misleading or so that the Offering Memorandum will comply with law.
(e) Clear Market. During the period from the date hereof
through and including the date that is 90 days after the date hereof,
neither the Company nor Funding will, without the prior written consent
of the Representative, offer, sell, contract to sell or otherwise
dispose of any debt securities issued or guaranteed by the Company or
Funding and having a tenor of more than one year.
(f) Supplying Information. While the Securities remain
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, the Company will, during any period
in which the Company is not subject to and in compliance with Section
13 or 15(d) of the Exchange Act, furnish to holders of the Securities
and prospective purchasers of the Securities designated by such
holders, upon the request of such holders or such prospective
purchasers, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
(g) Portal and DTC. The Company will assist the Initial
Purchasers in arranging for the Securities to be designated Portal
Market securities in accordance with the rules and regulations adopted
by the National Association of Securities Dealers, Inc. ("NASD")
relating to trading in the Portal Market and for the Securities to be
eligible for clearance and settlement through The Depository Trust
Company ("DTC").
(h) No Resales by the Company. Until the issuance of the
Exchange Securities neither, the Company nor Funding will, or permit
any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Securities that have been acquired by any of
them, except for Securities purchased by the Company or any of its
affiliates and resold in a transaction registered under the Securities
Act.
(i) No Integration. Neither the Company nor Funding nor
any of their affiliates (as defined in Rule 501(b) of Regulation D)
will, directly or through any agent, sell, offer for sale, solicit
offers to buy or otherwise negotiate in respect of, any security (as
defined in the Securities Act), that is or will be integrated with the
sale of the Securities in a manner that would require registration of
the Securities under the Securities Act.
(j) No General Solicitation or Directed Selling Efforts.
None of the Company nor Funding nor any of their affiliates or any
other person acting on its or their behalf (other than the Initial
Purchasers, as to which no covenant is given) will (i) solicit offers
for, or offer or sell, the Securities by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c)
of Regulation D or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act or (ii) engage in any
directed selling efforts within the meaning of Regulation S, and all
such persons will comply with the offering restrictions requirement of
Regulation S.
-16-
(k) Blue Sky Compliance. The Company and Funding shall
use their reasonable best efforts in cooperation with the
Representative and counsel for the Initial Purchasers to qualify or
register the Securities for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws of those
jurisdictions designated by the Representative, shall comply with such
laws and shall continue such qualifications, registrations and
exemptions in effect so long as required for the distribution of the
Securities. Notwithstanding the foregoing, the Company and Funding
shall not be required to qualify as a foreign corporation or to take
any action that would subject either of them to general service of
process in any such jurisdiction where it is not presently qualified or
where it would be subject to taxation as a foreign corporation.
(l) Use of Proceeds. Following the Assumption, the
Company shall apply the Released Amount in the manner described under
the caption "Use of Proceeds" in the Offering Memorandum.
(m) Future Reports to the Representative. Until the third
anniversary of the date hereof, the Company will, to the extent that
any such materials are not publicly available free of charge, furnish
to the Representative: (i) as soon as practicable after the end of each
fiscal year, copies of the Annual Report of the Company containing the
balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the year
then ended and the opinion thereon of the Company's independent public
or certified public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other report filed by the Company with the Commission; and (iii) from
time to time, such other public information concerning the Company as
the Representative may reasonably request.
SECTION 4. PAYMENT OF EXPENSES.
(a) Whether or not the transactions are consummated or
this Agreement is terminated the Company agrees to pay or cause to be paid all
costs, fees and expenses incident to the performance of its and Funding's
obligations hereunder and in connection with the transactions contemplated
hereby, including without limitation, (i) the costs incident to the
authorization, issuance, sale, preparation and delivery of the Securities and
any taxes payable in connection therewith; (ii) the costs incident to the
preparation and printing of the Preliminary Offering Memorandum and the Offering
Memorandum (including any amendment or supplement thereto) and the distribution
thereof; (iii) the fees and expenses of the Company's counsel and public or
certified public independent accountants and other advisors; (iv) the reasonable
fees and expenses incurred in connection with the registration or qualification
and determination of eligibility for investment of the Securities under the laws
of such jurisdictions as the Representative may designate and the preparation,
printing and distribution of a Blue Sky Memorandum (including the reasonable
related fees and expenses of counsel for the Initial Purchasers); (v) any fees
charged by rating agencies for rating the Securities; (vi) the fees and expenses
of the Trustee and any paying agent (including related fees and expenses of any
counsel to such parties); (vii) all expenses and application fees incurred in
connection with the application for the inclusion of the Securities on the
Portal Market and the approval of the Securities for book-entry transfer by DTC;
(viii) all expenses incurred by the
-17-
Company in connection with any "road show" presentation to potential investors
and (ix) all fees and expenses incurred by or on behalf of Funding in connection
with the formation of Funding and the performance of its obligations under the
Transaction Documents. Except as provided in this Section 4, Section 6 and
Section 8 hereof, the Initial Purchasers shall pay their own expenses, including
the fees and disbursements of their counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL
PURCHASERS. The obligations of each Initial Purchaser to purchase and pay for
the Securities on the Closing Date shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in Section 1
hereof as of the date hereof and as of the Closing Date as though then made, to
the timely performance by the Company of its covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Representative shall have received from PricewaterhouseCoopers LLP,
independent public or certified public accountants for the Company, a
letter dated the date hereof addressed to the Initial Purchasers, in
form and substance satisfactory to the Representative, containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to Initial Purchasers, delivered
according to Statement of Auditing Standards No. 72 (or any successor
bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the
Preliminary Offering Memorandum and Offering Memorandum.
(b) No Material Adverse Change or Ratings Agency Change.
Subsequent to the execution and delivery of this Agreement:
(i) there shall not have occurred any change, or
any development that could reasonably be expected to result in
a change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not
arising from transactions in the ordinary course of business,
of the Company and its subsidiaries, considered as one entity,
the effect of which is, in the judgment of the Representative,
so material and adverse as to make it impractical or
inadvisable to proceed with the offering, sale or delivery of
the Securities on the terms and in the manner contemplated by
this Agreement and the Offering Memorandum;
(ii) no downgrading shall have occurred in (x)
the rating accorded the financial strength or claims paying
ability of the Company or any of the Material Subsidiaries
(including any pooling arrangement in which any such Material
Subsidiaries participates) by A.M. Best Company, Inc. or
Standard & Poor's Insurance Rating Services or (y) the
Securities or any other debt securities or preferred stock
issued or guaranteed by the Company by any "nationally
recognized statistical rating organization," as such term is
defined by the Commission for purposes of Rule 436(g)(2) under
the Securities Act and no such organization shall have
publicly announced that it has under surveillance or review,
or has changed its outlook with respect to, its rating of the
financial strength or claims paying ability
-18-
of the Company or any of its subsidiaries or the Securities or
of any other debt securities or preferred stock issued or
guaranteed by the Company (other than an announcement with
positive implications of a possible upgrading).
(c) Opinions of Outside Counsel for the Company. On the
Closing Date the Representative shall have received (i) the opinion and
10b-5 letter of Shearman & Sterling, counsel for the Company, dated as
of the Closing Date, the forms of which are attached as Exhibit A-1,
and (ii) the opinion of Potter Xxxxxxxx & Xxxxxxx LLP, counsel to
Funding, dated as of the Closing Date, the form of which is attached as
Exhibit A-3.
(d) Opinion of Internal Counsel of the Company. On the
Closing Date the Representative shall have received the opinion and
10b-5 letter of Xxxxxxx X. Xxxxxxxx, Esq., Corporate Secretary for Xxxx
& Xxxxxxx Holding Inc., dated as of the Closing Date, the forms of
which are attached as Exhibit A-2.
(e) Opinion of Counsel for the Initial Purchasers. On the
Closing Date the Representative shall have received an opinion of
Xxxxxx Xxxxxx & Xxxxxxx LLP, counsel for the Initial Purchasers, dated
as of the Closing Date, in form and substance satisfactory to the
Initial Purchasers.
(f) Officers' Certificate. On the Closing Date the
Representative shall have received a written certificate executed by
the Chief Executive Officer or President of the Company and the Chief
Financial Officer or Controller of the Company, dated as of such
Closing Date, to the effect set forth in subsection (b)(ii) of this
Section 5, and further to the effect that:
(i) for the period from and after the date of
this Agreement and prior to such Closing Date, there has not
occurred any event or development that could reasonably be
expected to have a Material Adverse Effect;
(ii) the representations and warranties of the
Company and Funding set forth in Section 1 of this Agreement
are true and correct with the same force and effect as though
expressly made on and as of such Closing Date; and
(iii) the Company and Funding has each complied
with all the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date.
(g) Bring-down Comfort Letter. On the Closing Date the
Representative shall have received from PricewaterhouseCoopers LLP,
independent public or certified public accountants for the Company, a
letter dated such date, in form and substance satisfactory to the
Representative, to the effect that they reaffirm the statements made in
the letter furnished by them pursuant to subsection (a) of this Section
5, except that the specified date referred to therein for the carrying
out of procedures shall be no more than three business days prior to
the Closing Date.
-19-
(h) No Legal Impediment to Issuance. No action shall have
been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing
Date, prevent the issuance or sale of the Securities; and no injunction
or order of any federal, state or foreign court shall have been issued
that would, as of the Closing Date, prevent the issuance or sale of the
Securities.
(i) Good Standing. The Representative shall have received
on and as of the Closing Date satisfactory evidence of the good
standing of Funding, the Company and the Insurance Subsidiaries in
their respective jurisdictions of organization and their good standing
in such other jurisdictions as the Representative may reasonably
request, in each case in writing or any standard form of
telecommunication, from the appropriate governmental authorities of
such jurisdictions.
(j) Registration Rights Agreement. The Initial Purchasers
shall have received a counterpart of the Registration Rights Agreement
that shall have been executed and delivered by a duly authorized
officer of the Company.
(k) Portal and DTC. The Securities shall have been
approved by the NASD for trading in the Portal Market and shall be
eligible for clearance and settlement through DTC.
(l) Escrow Agreement; Payment by Company. On or before
the Closing Date, the Company, Funding, the Trustee and the Securities
Intermediary shall have entered into the Escrow Agreement and the
Representative shall have received an executed copy thereof. On or
before the Closing Date, the Company shall have deposited or caused to
be deposited with the Securities Intermediary by wire transfer in
immediately available Funds, $15,405,208 in order to enable Funding to
pay the Special Mandatory Redemption Price if required.
(m) Reorganization. On or before the Closing Date, all
material governmental consents required to be obtained for the
Reorganization shall have been obtained and the Reorganization shall
have been consummated and the Initial Purchasers shall have received
satisfactory evidence thereof.
(n) Additional Documents. On or before the Closing Date
the Representative and counsel for the Initial Purchasers shall have
received such additional certificates, information and other documents
as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Securities as contemplated
herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the
conditions or agreements, herein contained.
(o) Capitalization of Funding. On or before the Closing
Date, Funding shall have been capitalized with at least $40,000 to pay
its reasonably estimated fees and expenses in connection with the
negotiation of the Transaction Documents and the performance of its
obligations thereunder.
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All opinions, certificates and additional documents mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Representative by notice to the Company at any time on or prior to the Closing
Date, which termination shall be without liability on the part of any party to
any other party, except that Section 4, Section 6 and Section 7 shall at all
times be effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If
this Agreement is terminated by the Representative pursuant to Section 5, or if
the sale to the Initial Purchasers of the Securities on the Closing Date is not
consummated because of any refusal, inability or failure on the part of Funding
or the Company to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Representative upon demand for all
reasonable out-of-pocket expenses that shall have been reasonably incurred by
the Representative and the Initial Purchasers in connection with the proposed
purchase and the offering and sale of the Securities, including but not limited
to reasonable fees and disbursements of counsel, travel expenses, postage,
facsimile and telephone charges.
SECTION 7. INDEMNIFICATION.
(a) Indemnification of the Initial Purchasers. The
Company and Funding each jointly and severally hereby agrees to indemnify and
hold harmless each Initial Purchaser, its affiliates, directors and officers and
each person, if any, who controls such Initial Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including, without
limitation, legal fees and other expenses incurred in connection with any suit,
action or proceeding or any claim asserted, as such fees and expenses are
incurred), joint or several, that arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto) or any omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except insofar as
such losses, claims, damages or liabilities arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Initial
Purchaser furnished to the Company and Funding in writing by such Initial
Purchaser through the Representative expressly for use therein; provided, that
with respect to any such untrue statement in or omission from the Preliminary
Offering Memorandum, the indemnity agreement contained in this paragraph (a)
shall not inure to the benefit of any Initial Purchaser to the extent that the
sale to the person asserting any such loss, claim, damage or liability was an
initial resale by such Initial Purchaser and any such loss, claim, damage or
liability of or with respect to such Initial Purchaser results from the fact
that both (i) a copy of the Offering Memorandum was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities to
such person and (ii) the untrue statement in or omission from such Preliminary
Offering Memorandum was corrected in the Offering Memorandum unless, in either
case, such failure to deliver the
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Offering Memorandum was a result of non-compliance by the Company with the
provisions of Section 3 hereof.
(b) Indemnification of the Company and Funding. Each
Initial Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Company and Funding, their respective directors and officers and
each person, if any, who controls the Company or Funding within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the indemnity set forth in paragraph (a) above, but only with respect
to any losses, claims, damages or liabilities that arise out of, or are based
upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such
Initial Purchaser furnished to the Company and Funding in writing by such
Initial Purchaser through the Representative expressly for use in the
Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto), it being understood and agreed that the only such
information consists of the following: the information contained in the third
paragraph, the fourth and fifth sentences of the eighth paragraph, the tenth
paragraph and the third sentence of the final paragraph under the heading "Plan
of Distribution."
(c) Notice and Procedures. If any suit, action,
proceeding (including any governmental or regulatory investigation), claim or
demand shall be brought or asserted against any person in respect of which
indemnification may be sought pursuant to either paragraph (a) or (b) above,
such person (the "Indemnified Person") shall promptly notify the person against
whom such indemnification may be sought (the "Indemnifying Person") in writing;
provided that the failure to notify the Indemnifying Person shall not relieve it
from any liability that it may have under this Section 7 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have to an Indemnified Person otherwise than under this Section 7. If any
such proceeding shall be brought or asserted against an Indemnified Person and
it shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others entitled to indemnification
pursuant to this Section 7 that the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Per-
-22-
sons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for any Initial Purchaser, its affiliates,
directors and officers and any control persons of such Initial Purchaser shall
be designated in writing by X.X. Xxxxxx Securities Inc. and any such separate
firm for the Company or Funding and any control persons of the Company or
Funding shall be designated in writing by the Company. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested that an Indemnifying Person reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (x) includes an unconditional release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (y) does not include any statement as to or any admission of
fault, culpability or a failure to act by or on behalf of any Indemnified
Person.
(d) Contribution. If the indemnification provided for in
paragraphs (a) and (b) above is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and Funding on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and Funding
on the one hand and the Initial Purchasers on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and Funding on the one hand and the
Initial Purchasers on the other shall be deemed to be in the same respective
proportions as the net proceeds (before deducting expenses) received by the
Company and Funding from the sale of the Securities and the total discounts and
commissions received by the Initial Purchasers in connection therewith, as
provided in this Agreement, bear to the aggregate offering price of the
Securities. The relative fault of the Company and Funding on the one hand and
the Initial Purchasers on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company and/or Funding or by the Initial Purchasers
and the parties'
-23-
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) Limitation on Liability. The Company, Funding and the
Initial Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Person in
connection with any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall an Initial Purchaser be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchaser with respect to the offering of the
Securities exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 7 are several in proportion to their respective
purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in
this Section 7 are not exclusive and shall not limit any rights or remedies that
may otherwise be available to any Indemnified Person at law or in equity.
SECTION 8. TERMINATION OF THIS AGREEMENT. This Agreement may
be terminated in the absolute discretion of the Representative, by notice to the
Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially
limited on the New York Stock Exchange or the over-the-counter market; (ii)
trading of any securities issued or guaranteed by the Company shall have been
suspended on any exchange or in any over-the-counter market; (iii) a general
moratorium on commercial banking activities shall have been declared by federal
or New York State authorities; or (iv) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis, either within or outside the United States, that, in the judgment of the
Representative, is material and adverse and makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Securities on
the terms and in the manner contemplated by this Agreement and the Offering
Memorandum.
SECTION 9. DEFAULTING INITIAL PURCHASER.
(a) If, on the Closing Date, any Initial Purchaser
defaults on its obligation to purchase the Securities that it has agreed to
purchase hereunder, the non-defaulting Initial Purchasers may in their
discretion arrange for the purchase of such Securities by other persons
satisfactory to the Company on the terms contained in this Agreement. If, within
36 hours after any such default by any Initial Purchaser, the non-defaulting
Initial Purchasers do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of 36 hours
-24-
within which to procure other persons satisfactory to the non-defaulting Initial
Purchasers to purchase such Securities on such terms. If other persons become
obligated or agree to purchase the Securities of a defaulting Initial Purchaser,
either the non-defaulting Initial Purchasers or the Company may postpone the
Closing Date for up to five full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other document
or arrangement, and the Company agrees to promptly prepare any amendment or
supplement to the Offering Memorandum that effects any such changes. As used in
this Agreement, the term "Initial Purchaser" includes, for all purposes of this
Agreement unless the context otherwise requires, any person not listed in
Schedule I hereto that, pursuant to this Section 9, purchases Securities that a
defaulting Initial Purchaser agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Initial Purchaser or Initial
Purchasers by the non-defaulting Initial Purchasers and the Company as provided
in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased does not exceed one-eleventh of the aggregate principal
amount of all the Securities, then the Company and Funding shall have the right
to require each non-defaulting Initial Purchaser to purchase the principal
amount of Securities that such Initial Purchaser agreed to purchase hereunder
plus such Initial Purchaser's pro rata share (based on the principal amount of
Securities that such Initial Purchaser agreed to purchase hereunder) of the
Securities of such defaulting Initial Purchaser or Initial Purchasers for which
such arrangements have not been made.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Initial Purchaser or Initial
Purchasers by the non-defaulting Initial Purchasers and the Company as provided
in paragraph (a) above, the aggregate principal amount of such Securities that
remains unpurchased exceeds one-eleventh of the aggregate principal amount of
all the Securities, or if the Company and Funding shall not exercise the right
described in paragraph (b) above, then this Agreement shall terminate without
liability on the part of the non-defaulting Initial Purchasers. Any termination
of this Agreement pursuant to this Section 9 shall be without liability on the
part of the Company, except that the Company will continue to be liable for the
payment of expenses as set forth in Section 4 hereof and except that the
provisions of Section 7 hereof shall not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Company, Funding or any
non-defaulting Initial Purchaser for damages caused by its default.
-25-
SECTION 10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE
DELIVERY. The respective indemnities, rights of contribution, agreements,
representations, warranties and other statements of Funding, the Company, their
officers, and each of the Initial Purchasers set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser, Funding or the
Company or any of their respective partners, officers, directors or controlling
persons, as the case may be, and will survive delivery of and payment for the
Securities sold hereunder and any termination of this Agreement.
SECTION 11. NOTICES. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
If to the Initial Purchasers:
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212-270-1063
Attention: Xxxxx X. Xxxxx
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx LLP
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
If to the Company:
c/o Crum & Xxxxxxx Holdings Corp.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx Xxxx Xxxxxxxxx
with a copy to:
Shearman & Sterling
Commerce Court West
000 Xxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: 000-000-0000
Attention: Xxxxxxxxxxx Xxxxxxxx
If to Funding:
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Xxxx & Xxxxxxx Funding Corp.
c/o Wilmington Trust SP Services, Inc., as Administrator
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, XX 00000
with a copy to:
Shearman & Sterling
Commerce Court West
000 Xxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile: 000-000-0000
Attention: Xxxxxxxxxxx Xxxxxxxx
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 12. SUCCESSORS; THIRD PARTY BENEFICIARY. This
Agreement will inure to the benefit of and be binding upon the parties hereto,
including any substitute Initial Purchasers pursuant to Section 9 hereof, and
their respective successors, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section 7, and to any third
party beneficiary designated below and any successor of such third party
beneficiary, and no other person will have any right or obligation hereunder.
The term "successors" shall not include any purchaser of the Securities as such
from any of the Initial Purchasers merely by reason of such purchase.
SECTION 13. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 14. GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. GENERAL PROVISIONS. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the
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Section headings herein are for the convenience of the parties only and shall
not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 7, and is fully informed regarding said
provisions. Each of the parties hereto further acknowledges that the provisions
of Sections 7 hereto fairly allocate the risks in light of the ability of the
parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Preliminary Offering
Memorandum and Offering Memorandum (and any amendments and supplements thereto).
SECTION 16. CERTAIN DEFINED TERMS. For purposes of this
Agreement, (a) except where otherwise expressly provided, the term "affiliate"
has the meaning set forth in Rule 405 under the Securities Act; (b) the term
"business day" means any day other than a day on which banks are permitted or
required to be closed in New York City or Wilmington, Delaware; (c) the term
"Exchange Act" means the Securities Exchange Act of 1934, as amended; and (d)
the term "subsidiary" has the meaning set forth in Rule 405 under the Securities
Act.
SECTION 17. AUTHORITY OF THE REPRESENTATIVE. Any action by the
Initial Purchasers hereunder may be taken by X.X. Xxxxxx Securities Inc. on
behalf of the Initial Purchasers, and any such action taken by X.X. Xxxxxx
Securities shall be binding upon the Initial Purchasers.
-28-
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company and Funding the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
XXXX & XXXXXXX HOLDINGS CORP.
By: /s/ XXXX XXXX XXXXXXXXX
---------------------------------
Name: Xxxx Xxxx Xxxxxxxxx
Title: Chief Financial Officer
XXXX & XXXXXXX HOLDING INC.
By: /s/ XXXX XXXX XXXXXXXXX
---------------------------------
Name: Xxxx Xxxx Xxxxxxxxx
Title: Chief Financial Officer
XXXX & XXXXXXX FUNDING CORP.
By: /s/ XXXXXX X. XXXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
The foregoing Purchase Agreement is hereby confirmed and
accepted by the Initial Purchasers in New York, New York as of the date first
above written.
For itself and on behalf of the
several Initial Purchasers named
in the attached Schedule I.
J.P. XXXXXX SECURITIES INC.
By: /s/ XXXXXXXX XXX-XXXXX
-----------------------
Name: Xxxxxxxx Xxx-Xxxxx
Title: Vice President
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ANNEX A
Restrictions on Offers and Sales Outside the United States
In connection with offers and sales of Securities outside the
United States:
(a) Each Initial Purchaser acknowledges that the
Securities have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except pursuant to an exemption from, or in transactions not
subject to, the registration requirements of the Securities Act.
(b) Each Initial Purchaser, severally and not jointly,
represents, warrants and agrees that:
(i) Such Initial Purchaser has offered and sold
the Securities, and will offer and sell the Securities, (A) as part of
their distribution at any time and (B) otherwise until 40 days after
the later of the commencement of the offering of the Securities and the
Closing Date, only in accordance with Regulation S under the Securities
Act ("Regulation S") or Rule 144A or any other available exemption from
registration under the Securities Act.
(ii) None of such Initial Purchaser or any of its
affiliates or any other person acting on its or their behalf has
engaged or will engage in any directed selling efforts with respect to
the Securities, and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S.
(iii) At or prior to the confirmation of sale of
any Securities sold in reliance on Regulation S, such Initial Purchaser
will have sent to each distributor, dealer or other person receiving a
selling concession, fee or other remuneration that purchase Securities
from it during the distribution compliance period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering of the Securities and the date of original
issuance of the Securities, except in accordance with Regulation S or
Rule 144A or any other available exemption from registration under the
Securities Act. Terms used above have the meanings given to them by
Regulation S."
(iv) Such Initial Purchaser has not and will not
enter into any contractual arrangement with any distributor with
respect to the distribution of the Securities, except with its
affiliates or with the prior written consent of the Company.
Terms used in paragraph (a) and this paragraph (b) and not otherwise defined in
this Agreement have the meanings given to them by Regulation S.
(c) Each Initial Purchaser, severally and not jointly,
represents, warrants and agrees that:
(i) it has not offered or sold and, prior to the
date six months after the Closing Date, will not offer or sell any
Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom
within the meaning of the United Kingdom Public Offers of Securities
Regulations 1995 (as amended);
(ii) it has only communicated or caused to be
communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the
meaning of Section 21 of the United Kingdom Financial Services and
Markets Act 2000 (the "FSMA")) received by it in connection with the
issue or sale of any Securities in circumstances in which Section 21(1)
of the FSMA does not apply to the Company; and
(iii) it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it
in relation to the Securities in, from or otherwise involving the
United Kingdom.
(d) Each Initial Purchaser acknowledges that no action
has been or will be taken by the Company or Funding that would permit a public
offering of the Securities, or possession or distribution of the Preliminary
Offering Memorandum, the Offering Memorandum or any other offering or publicity
material relating to the Securities, in any country or jurisdiction where action
for that purpose is required.
-2-
SCHEDULE I
AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES
INITIAL PURCHASERS TO BE PURCHASED
X.X. Xxxxxx Securities Inc........................................ $ 164,424,000
Banc of America Securities LLC.................................... 109,615,000
RBC Dominion Securities Corporation............................... 14,423,000
Ferris, Baker, Xxxxx Incorporated................................. 11,538,000
--------------
Total $ 300,000,000
EXHIBIT A-1
[Form of Opinion of Counsel for the Company]
Opinion of Shearman & Sterling, counsel for the Company, to be
delivered pursuant to Section 5(c) of the Purchase Agreement.
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) Xxxx & Xxxxxxx Holding Inc. has an authorized
capitalization as set forth in the Offering Memorandum in the column titled
"Actual" under the heading "Capitalization;" and all the outstanding shares of
capital stock or other equity interests of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and are owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance or claim.
(iii) The Company has power and authority to execute and
deliver each of the Transaction Documents to which it is a party and to perform
its obligations thereunder; and all action required to be taken by the Company
for the due and proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions contemplated
thereby has been duly and validly taken.
(iv) Assuming the due authorization, execution and
delivery of the Indenture by Funding and the Trustee, the Indenture constitutes
a valid and legally binding agreement of Funding enforceable against Funding in
accordance with its terms, subject to the Enforceability Exceptions; and the
Indenture conforms in all material respects with the requirements of the Trust
Indenture Act and the rules and regulations of the Commission applicable to an
indenture that is qualified thereunder.
(v) When the Securities have been duly authorized,
executed and delivered by Funding and, when duly authenticated as provided in
the Indenture and paid for as provided in this Agreement, the Securities will be
duly and validly issued and outstanding and will constitute valid and legally
binding obligations of Funding enforceable against Funding in accordance with
their terms, subject to the Enforceability Exceptions, and will be entitled to
the benefits of the Indenture.
(vi) The Escrow Agreement has been duly authorized,
executed and delivered by the Company, and assuming due execution and delivery
thereof by Funding, the Trustee and the Securities Intermediary, constitutes a
valid and legally binding obligation of each of Funding and the Company in
accordance with its terms, subject to the Enforceability Exceptions. The Escrow
Agreement is effective to create in favor of the Trustee, for its benefit and
the benefit of the holders of the Securities, a valid security interest in all
right, title and interest of Funding in (a) the Escrow Account and all financial
assets (as such term is defined in Section 8-102(a) of the Uniform Commercial
Code of New York (the "UCC")) held in the Escrow Account, (b) all
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"security entitlements" (as such term is defined in Section 8-102(a) of the UCC)
held in the Wilmington Escrow Account and (c) all "proceeds" (as such term is
defined in Section 9-102(a) of the UCC) thereof, in each case, securing the
Secured Obligation.
(vii) The Supplemental Indenture, upon authorization,
execution and delivery thereof by the Company and the Trustee, will constitute a
valid and legally binding obligation of the Company in accordance with its
terms, subject to the Enforceability Exceptions and upon execution thereof the
Indenture and the Securities will constitute valid and legally binding
obligations of the Company in accordance with their terms, subject to the
Enforceability Exceptions.
(viii) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and when duly executed and
delivered by the other parties thereto, will constitute a valid and legally
binding agreement of the Company enforceable against the Company in accordance
with its terms, subject to the Enforceability Exceptions.
(ix) When the Exchange Securities have been duly
authorized, executed and delivered by the Company and when duly authenticated,
issued and delivered as contemplated by the Registration Rights Agreement, the
Exchange Securities will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company, as issuer,
enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the
Indenture, as supplemented.
(x) The Purchase Agreement has been duly authorized,
executed and delivered by the Company and, when duly executed and delivered by
the other parties thereto, will constitute a valid and legally binding agreement
of Funding and the Company enforceable against Funding and the Company in
accordance with its terms, subject to the Enforceability Exceptions, and except
that rights to indemnity and contribution thereunder may be limited by
applicable law and public policy.
(xi) Each Transaction Document conforms in all material
respects to the description thereof contained in the Offering Memorandum.
(xii) The execution and delivery by the Company and Funding
of, and the performance by the Company and Funding of their obligations under
the Transaction Documents will not contravene or violate (i) the certificate of
incorporation or by-laws of the Company or (ii) any order, judgment or decree of
any United States federal or New York State court or governmental agency or body
having jurisdiction over the Company and Funding or any of the Material
Subsidiaries or violate the provisions of any United States federal or New York
State statute, rule or regulation applicable to the Company and Funding or any
of the Material Subsidiaries.
(xiii) Based upon such counsel's review of New York State
and United States federal statutes, rules and regulations which in such
counsel's experience are normally applicable to transactions of the type
provided for in the Purchase Agreement (the "Requirements of Law"), but without
having made any special investigation concerning any other requirements of law,
no consent, approval, authorization, order, registration or qualification of or
with any United States
A-1-2
federal or New York State court or governmental agency or body is required in
connection with the execution and delivery by the Company or Funding of, and the
performance by the Company or Funding of their obligations under the Transaction
Documents.
(xiv) The statements in the Offering Memorandum under the
heading "Certain Federal Income Tax Considerations", to the extent that they
constitute summaries of matters of law or regulation or legal conclusions,
fairly summarize the matters described therein in all material respects.
(xv) Neither Funding nor the Company is, and after receipt
of payment for the Securities and the Assumption, neither will be, required to
be registered as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(xvi) Neither the issuance, sale and delivery of the
Securities, the Assumption nor the application of the proceeds thereof by
Funding and the Company as described in the Offering Memorandum will violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System or
any other regulation of such Board of Governors.
(xvii) Assuming the accuracy of the representations,
warranties and agreements of the Initial Purchasers contained in this Agreement,
it is not necessary, in connection with the issuance and sale of the Securities
to the Initial Purchasers and the offer, resale and delivery of the Securities
by the Initial Purchasers in the manner contemplated by this Agreement and the
Offering Memorandum, to register the Securities under the Securities Act or to
qualify the Indenture under the Trust Indenture Act.
Such counsel shall also state that they have participated in
conferences with Representative of the Company and with representatives of its
independent accountants and counsel at which conferences the contents of the
Preliminary Offering Memorandum and the Offering Memorandum and any amendment
and supplement thereto and related matters were discussed and, although such
counsel assume no responsibility for the accuracy, completeness or fairness of
the Offering Memorandum and any amendment or supplement thereto (except as
expressly provided above), nothing has come to the attention of such counsel to
cause such counsel to believe that the Offering Memorandum, as of its date,
contained any untrue statement of a material fact or omitted to state a material
fact or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or that any amendment
or supplement to the Offering Memorandum of its date and the Closing Date,
contained or contains any untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (other than, in each
case, the financial statements and other financial information contained
therein, as to which such counsel need express no belief).
In rendering such opinion, such counsel may rely as to matters
of fact on certificates of responsible officers of the Company and public
officials that are furnished to the Initial Purchasers.
A-1-3
The opinion of Shearman & Sterling described above shall be
rendered to the Initial Purchasers at the request of the Company and shall so
state therein.
A-1-4
EXHIBIT A-2
Opinion of Xxxxxxx X. Xxxxxxxx, Esq., Corporate Secretary for
Xxxx & Xxxxxxx Holding Inc., licensed to practice law in the States of New York
and New Jersey, to be delivered pursuant to Section 5(d) of the Purchase
Agreement.
(i) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in the State
of New Jersey and in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except for such
jurisdictions (other than the State of New Jersey) where the failure to
so qualify or to be in good standing would not, individually or in the
aggregate, have a Material Adverse Effect.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Offering Memorandum and to enter into and perform its
obligations under this Agreement and the other Transaction Documents.
(iii) Each Material Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and, to the best
knowledge of such counsel, is duly qualified as a foreign corporation
to transact business and is 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 for
such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, have a Material
Adverse Effect.
(iv) All of the issued and outstanding capital stock of
each Material Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and is owned by the Company, directly
or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim.
(v) To the best knowledge of such counsel, except as
described in the Preliminary Offering Memorandum and the Offering
Memorandum, there are no legal or governmental actions, suits or
proceedings pending or threatened (i) against or affecting the Company
or any of its subsidiaries, (ii) which has as the subject thereof any
officer or director of, or property owned by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination
matters, where in any such case (A) such action, suit or proceeding
could reasonably be expected to be determined adversely to the Company
or such subsidiary and (B) any such action, suit or proceeding, if so
determined adversely, would reasonably be expected to have a Material
Adverse Effect or would reasonably be expected to adversely affect the
consummation of the transactions contemplated by this Agreement.
A-2-1
(vi) Each of United States Fire Insurance Company, The
North River Insurance Company, Xxxx and Xxxxxxx Insurance Company, Xxxx
& Xxxxxxx Indemnity Company, Xxxx & Xxxxxxx Underwriters Co. of Ohio,
Xxxx & Xxxxxxx Specialty Insurance Company and Seneca Insurance
Company, Inc. (each an "Insurance Subsidiary" and collectively, the
"Insurance Subsidiaries") is duly licensed to conduct an insurance
under the insurance statutes of each jurisdiction in which the conduct
of its business requires such licensing, except for such jurisdictions
in which the failure of the Insurance Subsidiaries to be so licensed
would not, individually or in the aggregate, have a Material Adverse
Effect. Each of the Company and its subsidiaries that is so required
has filed all reports, information statements and other documents with
the insurance regulatory authorities of its jurisdiction of
incorporation and domicile as are required to be filed pursuant to the
insurance statutes of such jurisdictions, including the statutes
relating to companies which control insurance companies, and the rules,
regulations and interpretations of the insurance regulatory authorities
thereunder (the "Insurance Laws"), and has duly paid all taxes
(including franchise taxes and similar fees) it is required to have
paid under the Insurance Laws, except where the failure to file such
statements or reports or pay such taxes would not, individually or in
the aggregate, have a Material Adverse Effect. Each of the Company and
its subsidiaries maintains its books and records in accordance with the
Insurance Laws, except where the failure to so maintain its books and
records would not reasonably be expected to have a Material Adverse
Effect. Each of the Insurance Subsidiaries has all other necessary
authorizations, approvals, orders, consents, certificates, permits,
registrations and qualifications of and from all insurance regulatory
authorities necessary to conduct their respective businesses as
described in the Preliminary Offering Memorandum or Offering
Memorandum, except where the failure to have such authorizations,
approvals, orders, consents, certificates, permits, registrations or
qualifications would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and each of its Insurance
Subsidiaries has not received any notification from any insurance
regulatory authority to the effect that any additional authorization,
approval, order, consent, certificate, permit, registration or
qualification is needed to be obtained by the Company or any of its
Insurance Subsidiaries in any case where it could be reasonably
expected that (x) the Company or any of its Insurance Subsidiaries
would be required either to obtain such additional authorization,
approval, order, consent, certificate, permit, registration or
qualification or to cease or otherwise limit the writing of certain
business and (y) the failure to obtain such additional authorization,
approval, order, consent, certificate, permit, registration or
qualification or the limiting of the writing of such business would
have a Material Adverse Effect; and no insurance regulatory authority
having jurisdiction over the Company or any of its Insurance
Subsidiaries has issued any order or decree impairing, restricting or
prohibiting (i) the payment of dividends by any of the Insurance
Subsidiaries to its parent, other than those restrictions applicable to
insurance companies generally, or (ii) the continuation of the business
of the Company or any of the Insurance Subsidiaries in all material
respects as presently conducted. The Company and its subsidiaries
possess all licenses,
A-2-2
certificates, permits and other authorizations issued by, and have made
all declarations and filings with, the appropriate federal, state,
local or foreign governmental or regulatory authorities that are
necessary for the ownership or lease of their respective properties or
the conduct of their respective businesses as described in the
Preliminary Offering Memorandum and the Offering Memorandum, except
where the failure to possess or make the same would not, individually
or in the aggregate, have a Material Adverse Effect; and except as
described in the Preliminary Offering Memorandum and the Offering
Memorandum, neither the Company nor any of its subsidiaries has
received notice of any revocation or modification of any such license,
certificate, permit or authorization or has any reason to believe that
any such license, certificate, permit or authorization will not be
renewed in the ordinary course. Each of the Company and its
subsidiaries is in compliance with the requirements of the Insurance
Laws of its jurisdiction of incorporation and the Insurance Laws of
other jurisdictions which are applicable to the Company or such
subsidiary, except where the failure to so comply would not, singly or
in the aggregate, reasonably be expected to have a Material Adverse
Effect. Except as disclosed in the Preliminary Offering Memorandum or
Offering Memorandum, the Company and each of the Insurance Subsidiaries
has received approvals of acquisition of control and/or affiliate
transactions in each jurisdiction where such approvals are required.
(vii) The descriptions in the Offering Memorandum of
insurance statutes and regulations are accurate in all material
respects and fairly summarize in all material respects the information
required to be shown and such counsel does not know of any insurance
statutes or regulations required to be described in the Offering
Memorandum that are not described as required.
(viii) To the best knowledge of such counsel, neither the
Company nor any subsidiary is in violation of its certificate of
incorporation or by-laws or any law, administrative regulation or
administrative or court decree applicable to the Company or any
subsidiary or is in Default in the performance or observance of any
obligation, agreement, covenant or condition contained in any material
Existing Instrument, except in each such case for such violations or
Defaults as would not, individually or in the aggregate, have a
Material Adverse Effect.
Such counsel shall also state that she has participated in
conferences with representatives of the Company and with representatives of its
independent accountants and counsel at which conferences the contents of the
Preliminary Offering Memorandum and the Offering Memorandum and any amendment
and supplement thereto and related matters were discussed and, although such
counsel assume no responsibility for the accuracy, completeness or fairness of
the Preliminary Offering Memorandum and the Offering Memorandum and any
amendment or supplement thereto (except as expressly provided above), nothing
has come to the attention of such counsel to cause such counsel to believe that
the Preliminary Offering Memorandum, as of its date, contained any untrue
statement of a material fact or omitted to state
A-2-3
a material fact or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or that the Offering
Memorandum or any amendment or supplement thereto, as of its date and the
Closing Date, contained or contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading (other
than, in each case, the financial statements and other financial information
contained therein, as to which such counsel need express no belief).
In rendering such opinion, such counsel may rely as to matters
of fact on certificates of responsible officers of the Company and public
officials that are furnished to the Initial Purchasers.
The opinion described above shall be rendered to the Initial
Purchasers at the request of the Company and shall so state therein.
X-0-0
XXXXXXX X-0
[Form of Opinion of Counsel for Funding]
Opinion of Potter Xxxxxxxx & Xxxxxxx LLP, counsel for Funding,
to be delivered pursuant to Section 5(c) of the Purchase Agreement.
(i) Funding has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
(ii) Funding has power and authority to execute and
deliver each of the Transaction Documents to which it is a party and to
perform its obligations thereunder; and Funding has duly authorized the
execution and delivery of each of the Transaction Documents to which it
is a party and the consummation of the transactions contemplated
thereby.
(iii) The Indenture has been duly authorized, executed and
delivered by Funding.
(iv) The Securities have been duly authorized, executed
and delivered by Funding.
(v) The Escrow Agreement has been duly authorized,
executed and delivered by Funding.
(vi) The Purchase Agreement has been duly authorized,
executed and delivered by Funding.
(vii) The execution and delivery by Funding of, and the
performance by Funding of its obligations under, the Transaction
Documents will not contravene or violate the certificate of
incorporation or by-laws of Funding.
(viii) To the extent (x) the UCC of Delaware governs the
perfection of a security interest in the Collateral (as defined in
Section 6 of the Escrow Agreement), as to which we express no opinion,
and (y) a security interest in the Collateral can be perfected by
filing a financing statement in the State of Delaware under the UCC of
Delaware, the Funding Financing Statement is in appropriate form, has
been duly filed and results in the perfection of a security interest in
Funding's rights in that portion of the Collateral described in the
Funding Financing Statement.
(ix) The Funding UCC Search sets forth the proper filing
office and the proper debtor necessary to identify those persons who
under the UCC of Delaware
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have on file financing statements naming Funding, as debtor, covering
the Collateral as of [date as close to closing date as reasonably
practicable]. The Funding UCC Search identifies no person other than
the Trustee who has filed with the Secretary of State a financing
statement naming Funding as debtor and describing any portion of the
Collateral prior to such time.
(x) The Securities Account Control Agreement (a)
constitutes the legal, valid and binding obligation of Funding, the
Trustee and the Securities Intermediary, enforceable against each of
them in accordance with its terms and (b) insofar as the UCC of
Delaware is applicable, is sufficient to vest control (within the
meaning of the UCC of Delaware) in the Trustee.
A-2-2
EXHIBIT B
[Form of Registration Rights Agreement]
B-1
