Exhibit 1.1
Dealer Manager Agreement
____________, 2002
X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxx Corporation, a Virginia corporation (the "Company"), plans to make
offers to exchange the outstanding 7.2% Notes due August 15, 2007 and 7.0% Notes
due May 15, 2008 (collectively, the "Terra Nova Notes"), of Xxxxxx International
Limited, formerly known as Terra Nova Insurance (UK) Holdings ("Terra Nova"), a
company organized under the laws of England and Wales, for newly issued 7.2%
Notes due August 15, 2007 and 7.0% Notes due May 15, 2008, respectively, of the
Company (collectively, the "Xxxxxx Notes") to be issued pursuant to indentures
(the "Xxxxxx Indentures") to be dated as of [ ], 2002, between the Company and
JPMorgan Chase Bank, as Trustee, and engage in a related solicitation of
consents from holders of Terra Nova Notes to proposed amendments (the "Proposed
Amendments") to each of (i) the Indenture among Terra Nova, as Issuer, Terra
Nova (Bermuda) Holdings Ltd., as Guarantor, and JPMorgan Chase Bank, formerly
The Chase Manhattan Bank, as Trustee, dated as of August 26, 1997, and (ii) the
Indenture among Terra Nova, as Issuer, Terra Nova (Bermuda) Holdings Ltd., as
Guarantor, and JPMorgan Chase Bank, formerly The Chase Manhattan Bank, as
Trustee, dated as of May 18, 1998, under which the Terra Nova Notes were issued
(collectively, the "Terra Nova Indentures") (such offers and solicitations of
consent, as they may be amended or supplemented from time to time, the "Exchange
Offers", and such consents received as from holders of Terra Nova Notes, the
"Consents"), upon the terms and subject to the conditions set forth in the
exchange offer and consent solicitation materials, including all exhibits
thereto, any documents incorporated by reference therein (collectively, the
"Initial Offering Material"), copies of which have been delivered to you,
including but not limited to:
(a) The Registration Statement (as defined in Section 3(a) hereof);
(b) The Prospectus (as defined in Section 3(a) hereof);
(c) The form of Letter of Transmittal and Consent (the "Letter of
Transmittal") to be used by holders to tender Terra Nova Notes and grant
consents pursuant to the Exchange Offers;
(d) The form of letter, dated the date hereof, from you to brokers,
securities dealers, commercial banks, trust companies and nominees;
(e) The form of press release, dated the date hereof, relating to the
Exchange Offers; and
(f) The form of letter, dated the date hereof, to holders of Terra Nova
Notes relating to the Exchange Offer.
1. Engagement. (a) The Company hereby engages you to act as its exclusive
----------
dealer manager and solicitation agent (the "Dealer Manager") in connection with
the Exchange Offers, and you hereby accept such engagement, upon the terms and
subject to the conditions set forth in this Agreement.
(b) As Dealer Manager, you agree, in accordance with your customary
practice, to perform those services in connection with the Exchange Offers as
are customarily performed by investment banks in connection with Exchange Offers
of like nature, including, without limitation, using reasonable efforts to
solicit tenders of the Terra Nova Notes and delivery of Consents pursuant to the
Exchange Offers and communicating generally regarding the Exchange Offer with
brokers, dealers, commercial banks and trust companies and other holders of the
Notes.
(c) The Company authorizes you to communicate with the exchange agent (the
"Exchange Agent") and any information agent engaged by or on behalf of the
Company with respect to matters relating to the Exchange Offers. The Company has
instructed or will instruct the Exchange Agent to advise you at least daily as
to the principal amount of Terra Nova Notes that have been tendered pursuant to
the Exchange Offers and the principal amount of the Terra Nova Notes with
respect to which Consents have been delivered pursuant to the Exchange Offers.
(d) The Company will cause you to be provided with lists or other records
in such form as you may reasonably request showing the names and addresses of,
and the principal amount of notes held by, the holders of the Terra Nova Notes
as of a recent date and will cause you to be advised from day to day during the
period of the Exchange Offers as to any transfers of Terra Nova Notes.
(e) The Company will furnish you, at its expense, with as many copies as
you may reasonably request of the Initial Offering Material, and any other
documents or materials permitted to be used by the Company or authorized by the
Company for use in connection with the Exchange Offers (including press
releases, advertisements and other communications, whether prior to or after the
execution of this Agreement), and any amendments or supplements to any of the
foregoing (the definitive forms of all of the foregoing documents and materials,
including all exhibits thereto and any documents incorporated by reference
therein being referred to collectively herein as the "Exchange Offer Material"),
and you are authorized to use copies of the Exchange Offer Material in
connection with the performance of your duties hereunder. You and the Company
agree to furnish no other written material to any holder of the Terra Nova Notes
in connection with the Exchange Offers unless you and the Company otherwise
agree. You further agree not to make any
2
statements inconsistent with the written materials to the holder's of Terra Nova
Notes. The Exchange Offer Materials have been or will be prepared and approved
by, and are the sole responsibility of, the Company.
(f) The Company shall cause to be delivered to each registered holder of
any Terra Nova Notes, to each participant in the Depository Trust Company
("DTC") appearing in the most recent available DTC securities position listing
as a holder of Terra Nova Notes and to each Non Objecting Beneficial Owner
("NOBO") appearing in the most recent available NOBO list as an owner of Terra
Nova Notes (each such registered holder, participant or owner, a "Registered or
Beneficial Owner"), as soon as practicable, copies of appropriate Exchange Offer
Material. Thereafter, to the extent practicable until the expiration of the
Exchange Offers, the Company shall use its reasonable best efforts to cause
copies of such material to be mailed to each person who becomes a Registered or
Beneficial Owner of Terra Nova Notes.
(g) Before making, using or distributing, or authorizing the use or
distribution of, any amendment or supplement to the Exchange Offer Material,
including any document relating to the Exchange Offers incorporated by reference
therein, the Company will furnish to you a copy of the proposed amendment or
supplement for review and will not use, distribute or authorize the use or
distribution of any such proposed amendment or supplement to which you
reasonably object.
(h) The Company shall prepare the Prospectus in a form approved by you and
timely file such Prospectus with the Commission following its preparation. The
Company shall not make any amendment or supplement to the Registration Statement
or Prospectus which shall be disapproved by you promptly after reasonable
notice. The Company shall advise you, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been filed or
becomes effective or when any supplement to the Prospectus or any amended
Prospectus has been filed and shall furnish you with copies thereof; the Company
agrees to file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (collectively, the
"Exchange Act") subsequent to the date of the Prospectus and for as long as the
delivery of a prospectus is required in connection with the offering or sale of
the Xxxxxx Notes; to advise you, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus, of the
suspension of the qualification of the Xxxxxx Notes for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or suspending any
such qualification, promptly to use its best efforts to obtain the withdrawal of
such order; provided that in connection therewith the company shall not be
required to qualify as a foreign corporation or to
3
file a general consent to service of process in any jurisdiction unless such
qualification or filing is required for the consummation of the transactions
contemplated by this letter agreement and in the Exchange Offer Material.
(i) Prior to and during the period of the Exchange Offers, the Company will
inform you as soon as practicable after it receives notice or becomes aware of
the happening of any event, or the discovery of any fact, which would require
the making of any change in any Exchange Offer Material then being used or would
affect the truth and correctness of any representation or warranty contained in
this Agreement if such representation or warranty were being made immediately
after the happening of such event or the discovery of such fact.
(j) The Company shall arrange for the Information Agent named in the
Prospectus to advise you as to such matters relating to the Exchange Offers as
you may reasonably request and to furnish you with any written reports
concerning any such information as you may reasonably request.
(k) The Company shall make generally available to its securityholders as
soon as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act) an earnings statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Act (including, at the
Company's option, Rule 158 thereunder).
(l) The Company shall advise you promptly of the occurrence of any event
which could cause the Company to withdraw, rescind or modify any or all of the
Exchange Offers and of any litigation or governmental action with respect to any
or all of the Exchange Offers.
(m) Neither the Company nor any entity controlled, directly or indirectly,
by the Company has taken, or shall take, directly or indirectly, any action
which is designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of Xxxxxx Notes in
connection with any or all of the Exchange Offers.
(n) In the event that not all of the conditions precedent required to be
satisfied or waived pursuant to Section 4 hereof on the date on which Terra Nova
Notes of any series are accepted for exchange (each, an "Acceptance Date") are
so satisfied or waived, the Company shall not accept any Terra Nova Notes for
exchange unless and until (i) a post-effective amendment to the Registration
Statement, disclosing in a form reasonably satisfactory to you, that X.X. Xxxxxx
Securities, Inc. ("JPMorgan") is no longer acting as Dealer Manager or
performing other services related to the Exchange Offers, has been filed by the
Company with the Commission and (ii) a period of at least 10 business days has
expired from the date of such filing.
4
(o) The Company acknowledges that (i) you are a full service securities
firm engaged in securities trading and brokerage activities, as well as
providing investment banking and financial advisory services and (ii) in the
ordinary course of your trading and brokerage activities, you or your affiliates
may at any time hold long or short positions, and may trade or otherwise effect
transactions for your or their own account or the account of customers, in debt
or equity securities of the Company, Terra Nova or any other company that may be
involved in the Exchange Offers.
(p) The Company acknowledges and agrees that you shall have no liability to
the Company, its affiliates or any other person for any losses, claims, damages,
liabilities and expenses (each a "Loss" and, collectively, the "Losses") arising
from any act or omission on the part of any broker or dealer in securities (a
"Dealer"), bank or trust company, or any other person, and neither you nor any
of your affiliates shall be liable for any Losses arising from your own acts or
omissions in performing your obligations as Dealer Manager or as a Dealer in
connection with the Exchange Offers, except for any such Losses that are finally
judicially determined to have resulted from your gross negligence or willful
misconduct. In soliciting or obtaining tenders of Terra Nova Notes or delivery
of Consents, no Dealer, bank or trust company is to be deemed to be acting as
your agent or the agent of the Company or any of its affiliates, and you shall
not be deemed the agent of any Dealer, bank or trust company or the agent or
fiduciary of the Company or any of its affiliates, equity holders, creditors or
of any other person. In soliciting or obtaining tenders of Notes or delivery of
Consents, you shall not be nor shall you be deemed for any purpose to act as a
partner or joint venturer of, or a member of a syndicate or group with, the
Company or any of its affiliates in connection with the Exchange Offers, any
purchase of Terra Nova Notes, any payment for or delivery of Consents, or
otherwise, and neither the Company nor any of its affiliates shall be deemed to
act as your agents. The Company shall have sole authority for the acceptance or
rejection of any and all tenders of Notes or deliveries of Consents.
(q) The Company acknowledges and agrees that (i) you have been retained
solely to provide the services set forth herein, and in rendering such services
you shall act as an independent contractor and any duties arising out of your
engagement hereunder shall be owed solely to the Company; (ii) you may perform
the services contemplated hereby in conjunction with your affiliates, and any of
your affiliates performing services hereunder shall be entitled to the benefits
and be subject to the terms of this Agreement; and (iii) you are not an advisor
as to legal, tax, accounting or regulatory matters in any jurisdiction, and the
Company must consult with its own advisors concerning such matters and will be
responsible for making its own independent investigation and appraisal of the
transactions contemplated hereby, and you shall have no responsibility or
liability to the Company with respect thereto.
2. Compensation and Expenses. (a) The Company agrees to pay you, as
---------------------------
compensation for your services as Dealer Manager in connection with the Exchange
Offers, a fee equal to $3.75 per $1,000 principal amount of Terra Nova Notes
tendered and accepted for purchase in the Exchange Offers.
5
(b) The Company further agrees to pay directly or reimburse you, as the
case may be, for (i) all expenses incurred by you relating to the preparation,
printing, filing, mailing or other distribution of all Exchange Offer Materials,
including but not limited to the Registration Statement and the Prospectus, or
other Materials (including all exhibits, amendments and supplements thereto),
(ii) all fees and expenses incident to the appointment of the Exchange Agent and
any information agent including the fees and expenses of the Exchange Agent and
the Information Agent, (iii) all advertising charges, approved by the Company,
in connection with the Exchange Offer Materials, including those of any public
relations firm or other person or entity rendering services in connection
therewith, (iv) all fees, if any, payable to Dealers (including you) and banks
and trust companies as reimbursement for their customary mailing and handling
fees and expenses incurred in forwarding the Exchange Offer Materials Materials
to their customers, (v) incident to the preparation, issuance, execution and
delivery of the Xxxxxx Notes to be delivered in connection with the Exchange
Offers (vi) incurred in connection with the registration or qualification of the
Xxxxxx Notes under the laws of such jurisdictions as you may reasonably
designate, (vii) constituting applicable transfer taxes payable in connection
with the Exchange Offers and the transactions contemplated thereby, and (viii)
all other fees and expenses incurred by you in connection with the Exchange
Offer Materials or otherwise in connection with the performance of your services
hereunder (including all reasonable fees and disbursements of your Legal Counsel
up to $75,000), except that all fees and expenses incurred under Sections (vi),
(vii) and (viii) hereof (other than fees and disbursements of your legal
counsel) must be approved by the Company. The Company shall perform its
obligations set forth in this Section 2(b) whether or not the Exchange Offers
are commenced or completed.
3. Representations, Warranties and Agreements of the Company. The Company
---------------------------------------------------------
represents, warrants and agrees that:
(a) A registration statement on Form S-4 (Registration No. 333-86242) (the
"Initial Registration Statement") in respect of the Xxxxxx Notes has been filed
with the Commission; the Initial Registration Statement and any post-effective
amendment thereto, each in the form heretofore delivered to you, have been
declared effective by the Commission in such form; other than (i) the documents
incorporated by reference in the prospectus included therein (which have
heretofore been delivered to you), (ii) the exhibits to such registration
statement and such documents and (iii) any prospectuses filed pursuant to Rule
424(b) under the Act (which have heretofore been delivered to you), no other
documents with respect to such registration statement or documents incorporated
by reference therein has heretofore been filed with the Commission; and no stop
order suspending the effectiveness of the Initial Registration Statement or any
post-effective amendment thereto has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act, is herein called a "Preliminary Prospectus"); the
various parts of the Initial Registration Statement, including all exhibits (but
excluding the Form T-1), annexes and schedules thereto
6
and including (i) the information contained in a form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance with
Section 2(b) hereof and (ii) the documents incorporated by reference into the
prospectus contained in the Initial Registration Statement at the time such part
of the registration statement became effective, each as amended at the time such
part of the registration statement became effective, is herein collectively
called the "Registration Statement"; such final prospectus, in the form included
in the Registration Statement at the time it became effective or first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the "Prospectus";
and any reference herein to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to the relevant item or items of Form S-4 under the Act, as of
the date of such Preliminary Prospectus or Prospectus, as the case may be; and
any reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any document filed after
the date of such Preliminary Prospectus or Prospectus, as the case may be, under
the Exchange Act, and incorporated by reference into such Preliminary Prospectus
or Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is incorporated by
reference into the Registration Statement;
(b) The documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; and any further
documents so filed and incorporated by reference in the Prospectus or any
further amendment or supplement thereto, when such documents become effective or
are filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder, and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
(c) The Registration Statement conforms, and the Prospectus, any further
amendments or supplements to the Registration Statement or the Prospectus, the
Exchange Offer Material and any Other Material will conform, in all material
respects to the requirements of the Act, the Exchange Act and the Trust
Indenture Act of 1939, as amended, and the rules and regulations promulgated
thereunder (the "Trust Indenture Act"), as applicable, and do not and will not,
as of the applicable effective date as to the Registration Statement and any
amendment thereto, as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto and as of the date of first use as to any other
Exchange Offer Material or Other Material, contain an untrue statement of a
material fact or omit to
7
state a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) Neither the Company nor any of its subsidiaries which meets the
definition of a significant subsidiary as defined in Regulation S-X (a
"Significant Subsidiary") has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus,
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the Prospectus,
there has not been any increase in long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations or
prospects of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus;
(e) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Virginia,
with power and authority (corporate and other) to own, lease and operate its
properties and conduct its business in all material respects as described in the
Prospectus; and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which its owns or leases properties, or conducts any business,
so as to require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified would not, individually
or in the aggregate have a material adverse effect on the business, properties,
management, financial position, results of operations or prospects of the
Company and its subsidiaries taken as a whole (a "Material Adverse Effect"); and
each subsidiary of the Company listed on Schedule A hereto has been duly
organized, is validly existing and in good standing (if applicable) under the
laws of its any such jurisdiction of organization;
(f) The Company has the corporate power and authority to take, and has
taken, all necessary corporate action to authorize (i) the making and
consummation of the Exchange Offers, (ii) the payment for Consents by the
Company pursuant to the Solicitation, (iii) the execution and delivery of the
Indentures (as defined below) and the performance under the Indentures and (iv)
the execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby; and the Company has taken
or will take all necessary corporate action to authorize any amendments or
supplements to, or modification of, the Exchange Offers and the Exchange Offer
Materials;
(g) This Agreement has been duly executed and delivered by the Company and
constitutes a valid and legally binding agreement of the Company enforceable
against the Company in accordance with its terms, except as
8
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability (collectively, the "Enforceability
Exceptions"); the supplemental indentures, effecting the Proposed Amendments
(the "Supplemental Indentures") when duly executed and delivered in accordance
with their terms by each of the parties thereto, will constitute valid and
legally binding agreements of Terra Nova enforceable against Terra Nova in
accordance with their terms, subject to the Enforceability Exceptions; and on
the Closing Date, the Indentures as supplemented by the Supplemental Indentures
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 Securities and Exchange Commission (the "Commission")
applicable to an indenture that is qualified thereunder;
(h) The Xxxxxx Notes have been duly authorized and, when issued and
delivered in exchange for the Terra Nova Notes pursuant to this Agreement and
the Exchange Offer Materials, will have been duly executed, authenticated,
issued and delivered and will constitute valid and legally binding obligations
of the Company entitled to the benefits provided by the Xxxxxx Indentures, under
which they are to be issued; the Xxxxxx Indentures have been duly authorized,
executed and delivered by the Company and the Trustee, have been duly qualified
under the Trust Indenture Act and constitute valid and legally binding
instruments, enforceable in accordance with their terms, except as the
enforceability thereof may be subject to the Enforceability Exceptions;
(i) The making and consummation of the Exchange Offers, the issuance of the
Xxxxxx Notes by the Company pursuant to the Exchange Offers and payment for
Consents by the Company pursuant to the Solicitation, the execution and delivery
of the Supplemental Indentures and the performance under the Indentures as
supplemented thereby, the execution and delivery of the Xxxxxx Indentures and
the execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby do not and will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation of
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, except in each case, for such conflicts, breaches, violations or
defaults as could not reasonably be expected, individually or in the aggregate,
to have Material Adverse Effect, nor will such action result in any violation of
(i) the provisions of the Articles of Incorporation or By-laws of the Company or
(ii) any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its properties,
except, in the case of clause (ii), for such violations as could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect;
9
(j) Except as may have been previously obtained, no consent, approval,
authorization, approval, order, registration, qualification or other action of,
or filing with or notice to, the Commission or any other federal, state, local
or foreign governmental or regulatory authority or any court is required in
connection with the execution, delivery and performance by the Company of this
Agreement, the Supplemental Indentures, the Xxxxxx Indentures, the making or
consummation of the Exchange Offer or the consummation of the other transactions
contemplated by this Agreement or the Exchange Offer Materials;
(k) The Company will have, at the time it becomes obligated to pay for
Consents pursuant to the Exchange Offers, sufficient funds to enable the Company
to pay, and the Company hereby agrees that it will pay promptly, in accordance
with the terms and conditions of the Exchange Offers and this Agreement, the
consideration (and related costs) for Consents that the Company has offered, and
that the Company may be required, to pay for pursuant to the Exchange Offers,
and the fees and expenses payable hereunder;
(l) The Company will advise you promptly of (i) the occurrence of any event
that could reasonably be expected to cause the Company to withdraw, rescind or
terminate the Exchange Offer or would permit the Company to exercise any right
not to purchase Notes tendered pursuant to the Offer or to pay for any Consents
delivered pursuant to the Solicitation, (ii) the occurrence of any event, or the
discovery of any fact, the occurrence or existence of which would require the
making of any change in any of the Exchange Offer Materials then being used or
would cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect, (iii) any proposal by the Company
or requirement to make, amend or supplement any Exchange Offer Materials or any
filing in connection with the Exchange Offer pursuant to the Exchange Act or any
other applicable law, rule or regulation, (iv) the issuance by any governmental
or regulatory authority of any comment or order or the taking of any other
action concerning the Exchange Offer (and, if in writing, the Company will
furnish you with a copy thereof), (v) any material developments in connection
with the Exchange Offer, including, without limitation, the commencement of any
lawsuit concerning the Exchange Offer and (vi) any other information relating to
the Exchange Offer, the Exchange Offer Materials or this Agreement that you may
from time to time reasonably request;
(m) Neither the Company nor any of its subsidiaries is (i) in violation of
its charter, Articles of Incorporation, By-laws or similar organizational
documents, or (ii) in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be bound,
except, in the case of clause (ii) above, where such violation or default could
not reasonably be expected to have a Material Adverse Effect;
10
(n) Other than as set forth in the Registration Statement or Prospectus,
there are no legal or governmental or regulatory investigations, actions, suits
or proceedings pending to which the Company or any of its subsidiaries is a
party or to which any property of the Company or any of its subsidiaries is or
may be the subject, which, individually or in the aggregate if determined
adversely to the Company or any of its subsidiaries, would have a Material
Adverse Effect; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(o) The statements set forth in the Prospectus as amended or supplemented
under the caption "Description of the Xxxxxx Notes", insofar as they purport to
constitute a summary of the terms of the Company Notes, and under the captions
"Description of Differences between the Terra Nova Notes and the Xxxxxx Notes",
"The Proposed Amendments", "Description of the Xxxxxx Notes" and "Material U.S.
Federal Income Tax Consequences", insofar as they purport to constitute a
summary of the provisions of the laws and documents referred to therein, are
accurate in all material respects;
(p) KPMG Peat Marwick, who have certified certain financial statements of
the Company and its subsidiaries and PriceWaterhouseCoopers whose reports appear
or are incorporated by reference in the Registration Statement who have
certified certain financial statements of Terra Nova, are each independent
public accountants with respect to the Company and Terra Nova, respectively, and
its subsidiaries as required by the Securities Act; and
(q) The Company is not and, after giving effect to the Exchange offers,
will not be an "investment company", or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
4. Conditions to Obligations of the Dealer Manager. Your obligation to act
-----------------------------------------------
as Dealer Manager hereunder shall at all times be subject, in your discretion,
to the condition that all representations and warranties and other statements of
the Company herein are as of the date of this Agreement, and at all times during
the Exchange Offers (including on each Acceptance Date), true and correct, the
condition that the Company shall have performed in all material respects all of
its obligations hereunder theretofore to be performed, and the following
additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests
11
for additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) On the Commencement Date and each Acceptance Date, Xxxxxxxx & Xxxxxxxx,
your counsel, shall have furnished to you, as Dealer Manager, such opinion or
opinions, dated the respective date of delivery thereof, with respect to the
matters covered in paragraphs (iii), (iv) and the last paragraph of subsection
(c) below as well as such other related matters as you may reasonably request,
and such counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) On the Commencement Date and each Acceptance Date, XxXxxxx Xxxxx LLP,
counsel to the Company, shall have furnished to you their written opinion, dated
the respective date of delivery thereof, in form and substance satisfactory to
you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia, with power and corporate authority to
own its properties and conduct its business as described in the
Prospectus as amended or supplemented;
(ii) The making and consummation of the Exchange Offers have
been duly authorized by the Company; and each of this Agreement
and the Xxxxxx Indentures have been duly authorized, executed and
delivered by the Company and constitutes a valid and legally
binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as the enforceability
thereof may be subject to the Enforceability Exceptions;
(iii) The making and consummation of the Exchange Offers, the
issue and sale of the Xxxxxx Notes and the compliance by the
Company with all of the provisions of the Company Notes, the
Company Indenture and this Agreement and the consummation of the
transactions contemplated herein will not result in any violation
of the Articles of Incorporation of the Company;
(iv) the Xxxxxx Indentures have been duly qualified under
the Trust Indenture Act;
(v) The Xxxxxx Notes have been duly authorized, and when
duly executed, authenticated in accordance with the Xxxxxx
Indentures and delivered as contemplated in this Agreement and
the Exchange Offer Material, will constitute valid and legally
binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as enforceability
may be limited by Enforceability Exceptions; and the Xxxxxx
Indentures conform, and when the Xxxxxx Notes have been duly
executed, authenticated, issued and delivered pursuant to the
Xxxxxx Indentures they
12
will conform, in all material respects to the
descriptions thereof in the Prospectus as amended or
supplemented;
(vi) The making and consummation of the Exchange Offers, the
issue and sale of the Xxxxxx Notes and the compliance by the
Company with all of the provisions of the Xxxxxx Notes, the
Xxxxxx Indentures and this Agreement and the consummation of the
transactions contemplated herein will not conflict with or result
in a breach or violation of any of the terms of, or constitute a
default or result in the acceleration of any obligations under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument that is included as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December
31, 2001, nor will such actions result in any violation of any
statute, rule or regulation or any order known to us of any court
or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties,
except for any such conflict, breach, violation, default or
acceleration which would not, individually or in the aggregate,
have a Material Adverse Effect and could not reasonably be
expected to adversely affect the Company's ability to perform its
obligations hereunder or under the Exchange Offer Material, the
Xxxxxx Notes or the Xxxxxx Indenture (it being understood that
for purposes of this opinion, such counsel shall not be required
to pass upon compliance with respect to antifraud or similar
provisions of any law, rule or regulation);
(vii) Except as contemplated herein, no consent, approval,
authorization, order, registration or qualification of or with
any court or governmental agency or body which, to the best of
such counsel's knowledge, has jurisdiction over the Company or
any of its subsidiaries or any of their properties is required
under the laws of the State of Virginia for the consummation of
the Exchange Offers, the consummation by the Company of the
transactions contemplated by this Agreement or the Xxxxxx
Indentures, except for such consents, approvals, authorizations,
registrations or qualifications as (i) have been obtained
(including registration under the Act) or (ii) may be required
under state securities or Blue Sky laws in connection with the
distribution of the Company Notes pursuant to the Exchange
Offers;
(viii) the statements set forth in the Prospectus as amended
or supplemented under the caption "Description of the Xxxxxx
Notes", insofar as they purport to constitute a summary of the
terms of the Company Notes, and under the captions "Description
of Differences between the Terra Nova Notes and the Xxxxxx
Notes", "The Proposed Amendments", "Description of the Xxxxxx
Notes" and "Material U.S. Federal Income Tax Consequences",
insofar as they purport to constitute a summary of the provisions
of the laws and documents referred to therein, are accurate in
all material respects;
(ix) The Company is not, and after giving effect to the
offering and sale of the Xxxxxx Notes and the consummation of the
Exchange Offers, will not be, an "investment company", as such
term is defined in the Investment Company Act; and
13
(x) The Registration Statement, Prospectus, any further
amendments and supplements to the Registration Statement or the
Prospectus made by the Company prior to the date of such opinion
(other than the financial statements and schedules, the notes
thereto and the auditors' report thereon and other financial and
accounting data included or incorporated by reference therein, or
omitted therefrom, as to which such counsel need express no
opinion), when they became effective or were filed with the
Commission, as the case may be, appeared on their face to comply
as to form in all material respects with the requirements of the
Act and the Trust Indenture Act, as applicable.
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of independent public accountants for the Company and with
representatives of and counsel for the Dealer Managers, at which the contents of
the Registration Statement and the Prospectus as amended or supplemented and
related matters were discussed, and although such counsel did not independently
verify such information and is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement, the Prospectus as amended or
supplemented (except for those referred to in the opinion in subsection [(ix)]
of this Section 4(c)) or the Exchange Offer Material, on the basis of the
foregoing, no facts have come to such counsel's attention that would lead such
counsel to believe (i) that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to the date
of such opinion (other than the financial statements and schedules, the notes
thereto and the auditors' report thereon and other financial and accounting data
included or incorporated by reference therein, or omitted therefrom, or the
exhibits thereto, as to which such counsel need express no opinion) contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) that, as of its date, or the Date of the opinions, the Prospectus as
amended or supplemented or any further amendment or supplement thereto made by
the Company prior to the date of such opinion (other than the financial
statements and schedules, the notes thereto and the auditors' report thereon and
other financial and accounting data included or incorporated by reference
therein, or omitted therefrom, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading or (iii) that, as of its date, any
other Exchange Offer Material (when read together with the Prospectus) contained
an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(d) On the date hereof and the Acceptance Date, KPMG Peat Marwick, LLC
shall have furnished to you a letter, dated the respective date of delivery
thereof, substantially in the form of a typical accountant's "comfort letter"
and reasonably acceptable to you;
14
(e) Neither the Company nor any of its subsidiaries which meets the
definition of a significant subsidiary as defined in Regulation S-X (a
"Significant Subsidiary") has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus,
any material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the Prospectus,
there has not been any increase in long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus.
(f) On each of the date hereof and the Acceptance Date, the Company shall
have furnished or caused to be furnished to you a certificate or certificates of
officers of the Company satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as of such date, as
to the performance by the Company of all of its obligations hereunder to be
performed at or prior to such date, as to the matters set forth in subsections
(a) and (f) of this Section 4 and as to such other matters as you may reasonably
request.
5. Indemnification and Contribution. In consideration of the engagement
--------------------------------
hereunder, the Company agrees to the indemnification and contribution provisions
set forth in Annex A hereto, which provisions are incorporated by reference
herein and constitute a part hereof.
6. Termination. This Agreement shall terminate upon the earlier to occur of
-----------
(i) the consummation, termination or withdrawal of each of the Exchange Offers
and (ii) the date one year from the date hereof, and may be terminated by either
the Company or you at any time, with or without cause, effective upon receipt by
the other party of written notice to that effect.
7. Survival. The provisions of Sections 2(b), 3, 5 (including Annex A
--------
hereto), 10 and 11 hereof shall remain operative and in full force and effect
regardless of (i) any failure by the Company to commence, or the withdrawal,
termination or consummation of, the Offer or the Solicitation, (ii) any
investigation made by or on behalf of any party hereto, (iii) any termination of
this Agreement and (iv) the consummation of the Exchange Offers. The Company
agrees, if at any time during a period of six months after any termination of
this Agreement, the Company acquires any of the Terra Nova Notes in a tender
offer on exchange offer, the Company shall pay to JPMorgan a cash fee equal to
the amount that would have been payable to JPMorgan pursuant to Section 3 had
the Agreement not been terminated.
15
9. Notices. All notices and other communications required or permitted to
-------
be given under this Agreement shall be in writing and shall be given (and shall
be deemed to have been given upon receipt) by delivery in person, by telecopy,
by telex or by registered or certified mail (postage prepaid, return receipt
requested): (i) if to you, at X.X. Xxxxxx Securities Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Telecopy No.: (000) 000-0000, Attention: Transaction
Execution Group; and (ii) if to the Company, at 0000 Xxxxxxxxx Xxxxxxx, Xxxx
Xxxxx, Xxxxxxxx, 00000, Telecopy No.: 000-000-0000, Attention: General Counsel.
10. Governing Law; Waiver of Jury Trial. This Agreement shall be governed
-----------------------------------
by and construed in accordance with the laws of the State of New York. The
Company and you irrevocably agree to waive trial by jury in any action,
proceeding, claim or counterclaim brought by or on behalf of either party
related to or arising out of this Agreement or the performance of services
hereunder.
11. Miscellaneous. This Agreement contains the entire agreement between the
-------------
parties relating to the subject matter hereof and supersedes all oral statements
and prior writings with respect thereto. This Agreement may not be amended or
modified except by a writing executed by each of the parties hereto. Section
headings herein are for convenience only and are not a part of this Agreement.
This Agreement is solely for the benefit of the Company and you, and no other
person (except for indemnified persons to the extent set forth in Annex A
hereto) shall acquire or have any rights under or by virtue of this Agreement.
This Agreement may not be assigned by either party hereto without the other
party's prior written consent. Neither party hereto shall be responsible or have
any liability to any other party for any indirect, special or consequential
damages arising out of or in connection with this Agreement or the transactions
contemplated hereby, even if advised of the possibility thereof. This Agreement
may be executed in counterparts, each of which will be deemed an original, but
all of which taken together will constitute one and the same instrument.
16
Please indicate your willingness to act as Dealer Manager and your
acceptance of the foregoing provisions by signing in the space provided below
for that purpose and returning to us a copy of this Agreement so signed,
whereupon this Agreement and your acceptance shall constitute a binding
agreement between us.
Very truly yours,
XXXXXX CORPORATION
By:______________________
Name:
Title:
Accepted as of the
date first above written:
X.X. XXXXXX SECURITIES INC.
By:______________________
Name:
Title:
17
EXHIBIT A
The Company agrees to indemnify and hold harmless the Dealer Manager, its
affiliates and their respective officers, directors, employees, agents and
controlling persons (each an "Indemnified Person") from and against any and all
------------------
losses, claims, damages and liabilities, joint or several, to which any such
Indemnified Person may become subject arising out of or based upon (A) any
untrue statement or alleged untrue statement of a material fact contained in the
Offer and Exchange Offer Materials, or the 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, (B)
any breach by the Company of any representation or warranty or failure to comply
with any of the agreements set forth in the Dealer Manager Agreement to which
this Annex A is attached (the "Agreement"), (C) any withdrawal, termination,
rescission or modification of the Exchange Offer, or any failure to purchase
Notes properly tendered pursuant to the Exchange Offer or to pay for Consents
properly delivered pursuant to the Solicitation or (D) the transactions
contemplated by the Agreement or the engagement of, and services performed by,
the Dealer Manager hereunder, or any claim, litigation, investigation or
proceedings relating to the foregoing ("Proceedings") regardless of whether any
of such ----------- Indemnified Persons is a party thereto, and to reimburse
such Indemnified Persons for any reasonable legal or other out-of-pocket
expenses as they are incurred in connection with investigating, responding to or
defending any of the foregoing, provided that the (i) indemnification in clause
(D) above will not, -------- as to any Indemnified Person, apply to losses,
claims, damages, liabilities or expenses to the extent that they are finally
judicially determined to have resulted from the gross negligence or willful
misconduct of such Indemnified Person and (ii) the foregoing indemnifications
shall not apply to the fees and expenses contemplated by Section 2 other than as
a result of the failure to pay such fees and expenses or any payment of such
fees in accordance to the terms and conditions of Section 2.
If for any reason the foregoing indemnification is unavailable to any
Indemnified Person or insufficient to hold it harmless, then the Company shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect not only the relative benefits received by the Company on
the one hand and such Indemnified Person on the other hand but also the relative
fault of the Company on the one hand, and such Indemnified Person, on the other
hand, as well as any relevant equitable considerations. It is hereby agreed that
the relative benefits to the Company on the one hand and all Indemnified Persons
on the other hand shall be deemed to be in the same proportion as (i) the
aggregate principal amount of the Notes outstanding bears to (ii) the fee paid
or proposed to be paid to the Dealer Manager pursuant to Section 2(a) of the
Agreement. The relative fault of the Company on the one hand and the Indemnified
Person on the other relating to an untrue or alleged untrue statement of
material fact or the omission or alleged omission to state a material fact shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the
18
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Indemnified Person and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
Promptly after receipt by an Indemnified Person of notice of the
commencement of any Proceedings, such Indemnified Person will, if a claim is to
be made hereunder against the Company in respect thereof, notify the Company in
writing of the commencement thereof; provided that (i) the omission so to notify
--------
the Company will not relieve it from any liability which it may have hereunder
except to the extent it has been materially prejudiced by such failure and (ii)
the omission so to notify the Company will not relieve it from any liability
which it may have to an Indemnified Person otherwise than on account of this
indemnity agreement. In case any such Proceedings are brought against any
Indemnified Person and it notifies the Company of the commencement thereof, the
Company will be entitled to participate therein and, to the extent that it may
elect by written notice delivered to such Indemnified Person, to assume the
defense thereof, with counsel reasonably satisfactory to such Indemnified
Person, provided that if the defendants in any such Proceedings include both
--------
such Indemnified Person and the Company and such Indemnified Person shall have
concluded that there may be legal defenses available to it which are different
from or additional to those available to the Company, such Indemnified Person
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such Proceedings on behalf of
such Indemnified Person. Upon receipt of notice from the Company to such
Indemnified Person of its election so to assume the defense of such Proceedings
and approval by such Indemnified Person of counsel, the Company shall not be
liable to such Indemnified Person for expenses incurred by such Indemnified
Person in connection with the defense thereof (other than reasonable costs of
investigation) unless (i) such Indemnified Person shall have employed separate
counsel in connection with the assertion of legal defenses in accordance with
the proviso to the immediately preceding sentence (it being understood, however,
that the Company shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel), approved by JPMorgan Securities
Inc., representing the Indemnified Persons who are parties to such Proceedings),
(ii) the Company shall not have employed counsel reasonably satisfactory to such
Indemnified Person to represent such Indemnified Person within a reasonable time
after notice of commencement of the Proceedings or (iii) the Company has
authorized in writing the employment of counsel for such Indemnified Person.
The Company shall not be liable for any settlement of any Proceedings
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment for the plaintiff in any such Proceedings, the Company agrees to
indemnify and hold harmless each Indemnified Person from and against any and all
losses, claims, damages, liabilities and expenses by reason of such settlement
or judgment in accordance with the provisions of this Annex A. Notwithstanding
the immediately preceding sentence, if at any time an Indemnified Person shall
have requested the
19
Company to reimburse such Indemnified Person for legal or other expenses in
connection with investigating, responding to or defending any Proceedings as
contemplated by this Annex A, the Company shall be liable for any settlement of
any Proceedings effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Company of such request for
reimbursement and (ii) the Company shall not have reimbursed such Indemnified
Person in accordance with such request prior to the date of such settlement. The
Company shall not, without the prior written consent of an Indemnified Person
(which consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened Proceedings in respect of which indemnity could have been
sought hereunder by such Indemnified Person unless (i) such settlement includes
an unconditional release of such Indemnified Person in form and substance
satisfactory to such Indemnified Person from all liability on claims that are
the subject matter of such Proceedings and (ii) 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.
The indemnity, reimbursement and contribution obligations of the Company
under this Annex A shall be in addition to any liability which the Company may
otherwise have to an Indemnified Party and shall be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Company and any Indemnified Person.
Capitalized terms used but not defined in this Annex A have the meanings
assigned to such terms in the Agreement.
20
Schedule A
Subsidiary
----------
Essex Insurance Company
Xxxxxx Insurance Company
Xxxxxx American Insurance Company
Xxxxx/Evanston Group, Inc.
Evanston Insurance Company
Gryphon Holding Inc.
Associated International Insurance Company
Terra Nova (Bermuda) Holdings Ltd.
Xxxxxx International Limited
Terra Nova Insurance Company Limited
Xxxxxx Capital Ltd.
Terra Nova (Bermuda) Insurance Company Ltd.
