EXHIBIT 10.35
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ODYSSEY RE HOLDINGS CORP.
$100,000,000 7.49% SENIOR NOTES DUE NOVEMBER 30, 2006
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NOTE PURCHASE AGREEMENT
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DATED AS OF NOVEMBER 15, 2001
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TABLE OF CONTENTS
(NOT A PART OF THE AGREEMENT)
SECTION HEADING PAGE
---------------- ------------------------------------------------------------ ----
Section 1. Authorization of Notes...................................... 1
Section 2. Sale and Purchase of Notes.................................. 1
Section 3. Closing..................................................... 1
Section 4. Conditions to Closing....................................... 1
Section 4.1 Representations and Warranties.............................. 1
Section 4.2 Performance; No Default..................................... 1
Section 4.3 Compliance Certificates..................................... 2
Section 4.4 Opinions of Counsel......................................... 2
Section 4.5 Purchase Permitted by Applicable Law, Etc................... 2
Section 4.6 Related Transactions........................................ 2
Section 4.7 Payment of Special Counsel Fees............................. 2
Section 4.8 Private Placement Number.................................... 2
Section 4.9 Changes in Corporate Structure.............................. 2
Section 4.10 Funding Instructions........................................ 3
Section 4.11 Proceedings and Documents................................... 3
Section 5. Representations and Warranties of the Company............... 3
Section 5.1 Organization; Power and Authority........................... 3
Section 5.2 Authorization, Etc.......................................... 3
Section 5.3 Disclosure.................................................. 3
Section 5.4 Organization and Ownership of Shares of Subsidiaries; 4
Affiliates..................................................
Section 5.5 Financial Statements........................................ 4
Section 5.6 Compliance with Laws, Other Instruments, Etc................ 4
Section 5.7 Governmental Authorizations, Etc............................ 4
Section 5.8 Litigation; Observance of Agreements, Statutes and Orders... 4
Section 5.9 Taxes....................................................... 5
Section 5.10 Title to Property; Leases................................... 5
Section 5.11 Licenses, Permits, Etc...................................... 5
Section 5.12 Compliance with ERISA....................................... 5
Section 5.13 Private Offering by the Company............................. 6
Section 5.14 Use of Proceeds; Margin Regulations......................... 6
Section 5.15 Existing Indebtedness; Future Liens......................... 6
Section 5.16 Foreign Assets Control Regulations, Etc..................... 7
Section 5.17 Status under Certain Statutes............................... 7
Section 5.18 Environmental Matters....................................... 7
Section 5.19 Notes Rank Pari Passu....................................... 7
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SECTION HEADING PAGE
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Section 6. Representations of the Purchasers........................... 7
Section 6.1 Purchase for Investment..................................... 7
Section 6.2 Source of Funds............................................. 8
Section 7. Information as to Company................................... 8
Section 7.1 Financial and Business Information.......................... 8
Section 7.2 Officer's Certificate....................................... 10
Section 7.3 Inspection.................................................. 10
Section 8. Prepayment of the Notes..................................... 11
Section 8.1 Required Prepayments........................................ 11
Section 8.2 Optional Prepayments with Make-Whole Amount................. 11
Section 8.3 Prepayment of Notes upon Change in Control.................. 11
Section 8.4 Allocation of Partial Prepayments........................... 13
Section 8.5 Maturity; Surrender, Etc.................................... 13
Section 8.6 Purchase of Notes........................................... 13
Section 8.7 Make-Whole Amount........................................... 13
Section 9. Affirmative Covenants....................................... 14
Section 9.1 Compliance with Law......................................... 14
Section 9.2 Insurance................................................... 14
Section 9.3 Maintenance of Properties................................... 14
Section 9.4 Payment of Taxes and Claims................................. 15
Section 9.5 Existence, Etc.............................................. 15
Section 10. Negative Covenants.......................................... 15
Section 10.1 Limitation on Debt.......................................... 15
Section 10.2 Limitation on Priority Debt................................. 15
Section 10.3 Consolidated Net Worth...................................... 15
Section 10.4 Limitations or Liens........................................ 15
Section 10.5 Merger, Consolidation, Etc.................................. 17
Section 10.6 Sale of Assets, Etc......................................... 17
Section 10.7 Disposal of Ownership of a Subsidiary....................... 18
Section 10.8 Investments in Fairfax...................................... 18
Section 10.9 Nature of Business.......................................... 18
Section 10.10 Transactions with Affiliates................................ 18
Section 11. Events of Default........................................... 19
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SECTION HEADING PAGE
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Section 12. Remedies on Default, Etc.................................... 20
Section 12.1 Acceleration................................................ 20
Section 12.2 Other Remedies.............................................. 21
Section 12.3 Rescission.................................................. 21
Section 12.4 No Waivers or Election of Remedies, Expenses, Etc........... 21
Section 13. Registration; Exchange; Substitution of Notes............... 21
Section 13.1 Registration of Notes....................................... 21
Section 13.2 Transfer and Exchange of Notes.............................. 21
Section 13.3 Replacement of Notes........................................ 22
Section 14. Payments on Notes........................................... 22
Section 14.1 Place of Payment............................................ 22
Section 14.2 Home Office Payment......................................... 22
Section 15. Expenses, Etc............................................... 23
Section 15.1 Transaction Expenses........................................ 23
Section 15.2 Survival.................................................... 23
Section 16. Survival of Representations and Warranties; Entire 23
Agreement...................................................
Section 17. Amendment and Waiver........................................ 23
Section 17.1 Requirements................................................ 23
Section 17.2 Solicitation of Holders of Notes............................ 23
Section 17.3 Binding Effect, Etc......................................... 24
Section 17.4 Notes Held by Company, Etc.................................. 24
Section 18. Notices..................................................... 24
Section 19. Reproduction of Documents................................... 24
Section 20. Confidential Information.................................... 25
Section 21. Substitution of Purchaser................................... 25
Section 22. Miscellaneous............................................... 26
Section 22.1 Successors and Assigns...................................... 26
Section 22.2 Payments Due on Non-Business Days........................... 26
Section 22.3 Severability................................................ 26
Section 22.4 Construction................................................ 26
Section 22.5.. Counterparts................................................ 26
Section 22.6.. Governing Law............................................... 26
Signature....................................................................... 27
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ATTACHMENTS TO THE
NOTE PURCHASE AGREEMENT:
Schedule A Information Relating to Purchasers
Schedule B Defined Terms
Schedule 4.9 Changes in Corporate Structure
Schedule 5.3 Disclosure Materials
Schedule 5.4 Subsidiaries of the Company and Ownership of Subsidiary
Stock
Schedule 5.5 Financial Statements
Schedule 5.8 Certain Litigation
Schedule 5.11 Patents, Etc.
Schedule 5.14 Use of Proceeds
Schedule 5.15 Existing Debt; Future Liens
Exhibit 1 Form of 7.49% Senior Note due November 30, 2006
Exhibit Form of Opinion of Counsel for the Company
4.4(a)
Exhibit Form of Opinion of Xxxxxx X. Xxxxx, Esq., General Counsel to
4.4(b) the Company
Exhibit Form of Opinion of Special Counsel for the Travelers
4.4(c) Purchasers
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ODYSSEY RE HOLDINGS CORP.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
7.49% Senior Notes due November 30, 2006
Dated as of November 15, 2001
To the Purchasers listed in
the attached Schedule A:
Ladies and Gentlemen:
Odyssey Re Holdings Corp., a Delaware corporation (the "Company"), agrees
with the purchasers listed in the attached Schedule A (the "Purchasers") as
follows:
SECTION 1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $100,000,000 aggregate
principal amount of its 7.49% Senior Notes due November 30, 2006 (the "Notes,"
such term to include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement). The Notes shall be substantially in the form set
out in Exhibit 1, with such changes therefrom, if any, as may be approved by the
Purchasers and the Company. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
SECTION 2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to each Purchaser and each Purchaser will purchase from the
Company, at the Closing provided for in Section 3, Notes in the principal amount
specified opposite such Purchaser's name in Schedule A at the purchase price of
100% of the principal amount thereof. Each Purchaser's obligations hereunder are
several and not joint and no Purchaser shall have any obligation or liability to
any Person for the performance or nonperformance by any other Purchaser
hereunder.
SECTION 3. CLOSING.
The sale and purchase of the Notes to be purchased by the Purchasers shall
occur at the offices of Xxxxxxx and Xxxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, at 10:00 a.m., Chicago time, at a closing (the "Closing") on
December 4, 2001 or on such other Business Day thereafter on or prior to
December 7, 2001 as may be agreed upon by the Company and the Purchasers. At the
Closing, the Company will deliver to each Purchaser the Notes to be purchased by
such Purchaser in the form of a single Note (or such greater number of Notes in
denominations of at least $100,000 as such Purchaser may request) dated the date
of the Closing and registered in such Purchaser's name (or in the name of its
nominee), against delivery by such Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company. If at
the Closing the Company shall fail to tender such Notes to any Purchaser as
provided above in this Section 3, or any of the conditions specified in Section
4 shall not have been fulfilled to any Purchaser's satisfaction, such Purchaser
shall, at its election, be relieved of all further obligations under this
Agreement, without thereby waiving any rights such Purchaser may have by reason
of such failure or such nonfulfillment.
SECTION 4. CONDITIONS TO CLOSING.
Each Purchaser's obligation to purchase and pay for the Notes to be sold to
such Purchaser at the Closing is subject to the fulfillment to such Purchaser's
satisfaction, prior to or at the Closing, of the following conditions:
Section 4.1. Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be correct when made and
at the time of the Closing.
Section 4.2. Performance; No Default. The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it
prior to or at the Closing, and after giving effect to the issue and sale
of the Notes (and the application of the proceeds thereof as contemplated
by Schedule 5.14), no Default or Event of Default shall have occurred and
be continuing. Neither the Company nor any Subsidiary shall have entered
into any transaction since the date of the Memorandum that would have been
prohibited by Section 10 had such Section applied since such date.
Section 4.3. Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to
such Purchaser an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1, 4.2 and 4.9
have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to
such Purchaser a certificate certifying as to the resolutions attached
thereto and other corporate proceedings relating to the authorization,
execution and delivery of the Notes and this Agreement.
Section 4.4. Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the
date of the Closing (a) from Shearman & Sterling, counsel for the Company,
covering the matters set forth in Exhibit 4.4(a) and covering such other
matters incident to the transactions contemplated hereby as such Purchaser
or special counsel to the Travelers Purchasers may reasonably request (and
the Company hereby instructs its counsel to deliver such opinion to such
Purchaser), (b) from Xxxxxx X. Xxxxx, Esq., General Counsel to the Company,
covering the matters set forth in Exhibit 4.4(b) and covering such other
matters incident to the transactions contemplated hereby as such Purchaser
or special counsel to the Travelers Purchasers may reasonably request and
(c) in the case of Zenith Insurance Company and the Travelers Purchasers,
from Xxxxxxx and Xxxxxx, special counsel to the Travelers Purchasers, in
connection with such transactions, substantially in the form set forth in
Exhibit 4.4(c) and covering such other matters incident to such
transactions as such Travelers Purchaser may reasonably request.
Section 4.5. Purchase Permitted by Applicable Law, Etc. On the date
of the Closing, such Purchaser's purchase of Notes shall (a) be permitted
by the laws and regulations of each jurisdiction to which such Purchaser is
subject, without recourse to provisions (such as Section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular
investment, (b) not violate any applicable law or regulation (including,
without limitation, Regulation T, U or X of the Board of Governors of the
Federal Reserve System) and (c) not subject such Purchaser to any tax,
penalty or liability under or pursuant to any applicable law or regulation.
If requested by such Purchaser, such Purchaser shall have received an
Officer's Certificate certifying as to such matters of fact as such
Purchaser may reasonably specify to enable it to determine whether such
purchase is so permitted.
Section 4.6. Related Transactions. The Company shall have consummated
the sale of the entire principal amount of the Notes scheduled to be sold
on the date of the Closing pursuant to this Agreement.
Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the
Closing the fees, charges and disbursements of special counsel to the
Travelers Purchasers and original drafting counsel referred to in Section
4.4 to the extent reflected in a statement of such counsel rendered to the
Company no later than 12:00 noon Chicago time one Business Day prior to the
Closing.
Section 4.8. Private Placement Number. A Private Placement number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.
Section 4.9. Changes in Corporate Structure. Except as specified in
Schedule 4.9, the Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not
have succeeded to all or any substantial part of the liabilities of any
other entity, at any time following the date of the most recent financial
statements referred to in Schedule 5.5.
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Section 4.10. Funding Instructions. At least three Business Days
prior to the date of the Closing, such Purchaser shall have received
written instructions executed by an authorized financial officer of the
Company directing the manner of the payment of funds and setting forth (a)
the name of the transferee bank, (b) such transferee bank's ABA number, (c)
the account name and number into which the purchase price for the Notes is
to be deposited and (d) the name and telephone number of the account
representative responsible for verifying receipt of such funds.
Section 4.11. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions
shall be satisfactory to such Purchaser and special counsel to the
Travelers Purchasers, and such Purchaser and special counsel to the
Travelers Purchasers shall have received all such counterpart originals or
certified or other copies of such documents as such Purchaser or special
counsel to the Travelers Purchasers may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which
such qualification is required by law, other than those jurisdictions as to
which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or
hold under lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes and to perform the provisions hereof
and thereof.
Section 5.2. Authorization, Etc. This Agreement and the Notes have
been duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery
thereof each Note will constitute, a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
Section 5.3. Disclosure. The Company, through its lead agent, Banc of
America Securities LLC, has delivered to each Purchaser a copy of a Private
Placement Memorandum, dated October 2001 and various enclosures related
thereto (collectively, the "Memorandum"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material
respects, the general nature of the business and principal properties of
the Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
delivered to the Purchasers by or on behalf of the Company in connection
with the transactions contemplated hereby and the financial statements
listed in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading in light of the circumstances
under which they were made. Except as disclosed in the Memorandum or as
expressly described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 5.5, since December 31, 2000, there has been
no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that,
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been
set forth herein or in the Memorandum or in the other documents,
certificates and other writings delivered to the Purchasers by or on behalf
of the Company specifically for use in connection with the transactions
contemplated hereby.
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Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (1) of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and
each other Subsidiary, (2) of the Company's Affiliates, other than
Subsidiaries, and (3) of the Company's directors and senior officers.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned
by the Company and its Subsidiaries have been validly issued, are fully
paid and nonassessable and are owned by the Company or another
Subsidiary free and clear of any Lien (except as otherwise disclosed in
Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Each such Subsidiary has the corporate or other power and authority to
own or hold under lease the properties it purports to own or hold under
lease and to transact the business it transacts and proposes to
transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate
law and insurance regulatory statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of
such Subsidiary.
Section 5.5. Financial Statements. The Company has delivered to each
Purchaser copies of the financial statements of the Company and its
Subsidiaries listed on Schedule 5.5. All of said financial statements
(including in each case the related schedules and notes) fairly present, in
all material respects, the consolidated financial position of the Company
and its Subsidiaries as of the respective dates specified in such Schedule
and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with
GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, Etc. The
execution, delivery and performance by the Company of this Agreement and
the Notes will not (a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any
property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter
or by-laws, or any other agreement or instrument to which the Company or
any Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary or (c) violate any
provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.
Section 5.7. Governmental Authorizations, Etc. No consent, approval
or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution,
delivery or performance by the Company of this Agreement or the Notes.
Section 5.8. Litigation; Observance of Agreements, Statutes and
Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any
property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or
4
before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which
it is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including, without
limitation, Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
Section 5.9. Taxes. The Company and its Subsidiaries have filed all
tax returns that are required to have been filed in any jurisdiction, and
have paid all taxes shown to be due and payable on such returns and all
other taxes and assessments levied upon them or their properties, assets,
income or franchises, to the extent such taxes and assessments have become
due and payable and before they have become delinquent, except for any
taxes and assessments (a) the amount of which is not, individually or in
the aggregate, Material or (b) the amount, applicability or validity of
which is currently being contested in good faith by appropriate proceedings
and with respect to which the Company or a Subsidiary, as the case may be,
has established adequate reserves in accordance with GAAP. The Company
knows of no basis for any other tax or assessment that could reasonably be
expected to have a Material Adverse Effect. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. The
Federal income tax liabilities of the Company and its Subsidiaries have
been determined by the Internal Revenue Service and paid for all fiscal
years up to and including the fiscal year ended December 31, 1997.
Section 5.10. Title to Property; Leases. The Company and its
Subsidiaries have good and sufficient title to their respective properties
that, individually or in the aggregate, are Material, including all such
properties reflected in the most recent audited balance sheet referred to
in Section 5.5 or purported to have been acquired by the Company or any
Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens
prohibited by this Agreement. All leases that, individually or in the
aggregate, are Material are valid and subsisting and are in full force and
effect in all material respects.
Section 5.11. Licenses, Permits, Etc. Except as disclosed in Schedule
5.11.
(a) the Company and its Subsidiaries own, possess or are licensed
to use all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks, trade names and domain names, or
rights thereto, that, individually or in the aggregate, are Material,
without known material conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service xxxx, trademark, trade name,
domain name or other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service xxxx,
trademark, trade name, domain name or other right owned or used by the
Company or any of its Subsidiaries.
Section 5.12. Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each employee benefit plan (as defined in Section 3(3) of
ERISA) in compliance with all applicable laws except for such instances
of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor
any ERISA Affiliate has incurred any liability pursuant to Title I or IV
of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans (as defined in Section 3(3) of ERISA), and no
event, transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such liability
by the Company or any ERISA Affiliate, or in the imposition of any Lien
on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to
5
Title I or IV of ERISA or to such penalty or excise tax provisions or to
Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such Plan's most
recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit liabilities
by more than $1,000,000 in the aggregate for all Plans.
The term "benefit liabilities" has the meaning specified in Section
4001 of ERISA and the terms "current value" and "present value" have the
meanings specified in Section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that could, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(d) The expected post-retirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by Section 4980B of the Code) of the Company and its
Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of Section 406(a) of ERISA or in connection
with which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D)
of the Code. The representation by the Company in the first sentence of
this Section 5.12(e) is made in reliance upon and subject to the
accuracy of each Purchaser's representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be
purchased by such Purchaser, and is made only as of the date each
Purchaser's representation in Section 6.2 is made.
Section 5.13. Private Offering by the Company. Neither the Company
nor anyone acting on its behalf has offered the Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from,
or otherwise approached or negotiated in respect thereof with, any Person
other than the Purchasers and not more than seventy-five (75) other
Institutional Investors of the type described in clause (c) of the
definition thereof, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf
has taken, or will take, any action that would subject the issuance or sale
of the Notes to the registration requirements of Section 5 of the
Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will
apply the proceeds of the sale of the Notes as set forth in Schedule 5.14.
No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for the purpose of buying or carrying any margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or
carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of Regulation T of
said Board (12 CFR 220). Margin stock does not constitute more than 0% of
the value of the consolidated assets of the Company and its Subsidiaries
and the Company does not have any present intention that margin stock will
constitute more than 0% of the value of such assets. As used in this
Section, the terms "margin stock" and "purpose of buying or carrying" shall
have the meanings assigned to them in said Regulation U.
Section 5.15. Existing Indebtedness; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Debt of the Company and its
Subsidiaries as of September 30, 2001, since which date there has been
no Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Debt of the Company or its
Subsidiaries. Neither the Company nor
6
any Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Debt of the
Company or such Subsidiary and no event or condition exists with respect
to any Debt of the Company or any Subsidiary that would permit (or that
with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to (b) Except as disclosed in Schedule 5.15,
neither the Company nor any Subsidiary has agreed or consented to cause
or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired,
to be subject to a Lien not permitted by Section 10.4.
Section 5.16. Foreign Assets Control Regulations, Etc. Neither the
sale of the Notes by the Company hereunder nor its use of the proceeds
thereof will violate the Anti-Terrorism Order, the Trading with the Enemy
Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto.
Section 5.17. Status under Certain Statutes. Neither the Company nor
any Subsidiary is required to be registered under the Investment Company
Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as
amended, the ICC Termination Act of 1995, as amended, or the Federal Power
Act, as amended.
Section 5.18. Environmental Matters. Neither the Company nor any
Subsidiary has knowledge of any claim or has received any notice of any
claim, and no proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them or
other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise
disclosed to the Purchasers in writing:
(a) neither the Company nor any Subsidiary has knowledge of any
facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them or has disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner
that could reasonably be expected to result in a Material Adverse
Effect; and (c) all buildings on all real properties now owned, leased
or operated by the Company or any of its Subsidiaries are in compliance
with applicable Environmental Laws, except where failure to comply could
not reasonably be expected to result in a Material Adverse Effect.
Section 5.19. Notes Rank Pari Passu. The obligations of the Company
under this Agreement and the Notes rank at least pari passu in right of
payment with all other Senior Debt (actual or contingent) of the Company,
including, without limitation, all Senior Debt of the Company described in
Schedule 5.15.
SECTION 6. REPRESENTATIONS OF THE PURCHASERS.
Section 6.1. Purchase for Investment. Each Purchaser represents that
it is an Institutional Accredited Investor. Each Purchaser further
represents that it is purchasing the Notes for its own account or for one
or more separate accounts maintained by such Purchaser or for the account
of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of such Purchaser's or
such pension or trust fund's property shall at all times be within such
Purchaser's or such pension or trust fund's control. Each Purchaser
understands that the Notes have not been registered under the Securities
Act or securities laws of any other applicable jurisdiction and may be
resold only if registered pursuant to the provisions of the Securities Act
or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the
Notes.
7
Section 6.2. Source of Funds. Each Purchaser represents that at least
one of the following statements is an accurate representation as to each
source of funds (a "Source") to be used by such Purchaser to pay the
purchase price of the Notes to be purchased by such Purchaser hereunder:
(a) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and there is no employee benefit plan,
treating as a single plan all plans maintained by the same employer or
employee organization, with respect to which the amount of the general
account reserves and liabilities for all contracts held by or on behalf
of such plan, exceeds 10% of the total reserves and liabilities of such
general account (exclusive of separate account liabilities) plus
surplus, as set forth in the NAIC Annual Statement filed with such
Purchaser's state of domicile; or
(b) the Source is either (1) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(2) a bank collective investment fund, within the meaning of the PTE
91-38 (issued July 12, 1991) and, except as such Purchaser has disclosed
to the Company in writing pursuant to this paragraph (b) prior to the
date of the Closing, no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially
owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are included
in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or
by an affiliate (within the meaning of Section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee organization and
managed by such QPAM, exceed 20% of the total client assets managed by
such QPAM, the applicable conditions of Part I of the QPAM Exemption are
satisfied, neither the QPAM nor a Person controlling or controlled by
the QPAM (applying the definition of "control" in Section V(e) of the
QPAM Exemption) owns a 5% or more interest in the Company and (1) the
identity of such QPAM and (2) the names of all employee benefit plans
whose assets are included in such investment fund have been disclosed to
the Company in writing pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to
this paragraph (e) prior to the date of the Closing; or
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA, and
the term "employee benefit plan" shall also include a "plan" as defined in
Section 4975(e)(i) of the Code.
SECTION 7. INFORMATION AS TO COMPANY.
Section 7.1. Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:
(a) Quarterly Statements. Within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
8
(2) consolidated statements of operations and comprehensive
income, changes in stockholders' equity and cash flows of the Company
and its Subsidiaries for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending with
such quarter, setting forth in each case in comparative form the
figures for the corresponding periods in the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP applicable
to quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on
and their results of operations and cash flows, subject to changes
resulting from year-end adjustments, provided that delivery within
the time period specified above of copies of the Company's Quarterly
Report on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission shall
be deemed to satisfy the requirements of this Section 7.1(a);
(b) Annual Statements. Within 105 days after the end of each
fiscal year of the Company, duplicate copies of,
(1) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(2) consolidated statements of operations and comprehensive
income, changes in stockholders' equity and cash flows of the Company
and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an opinion thereon of
independent certified public accountants of recognized national
standing, which opinion shall state that such financial statements
present fairly, in all material respects, the consolidated financial
position of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with
GAAP, and that the examination of such accountants in connection with
such financial statements has been made in accordance with generally
accepted auditing standards, and that such audit provides a
reasonable basis for such opinion in the circumstances, provided that
the delivery within the time period specified above of the Company's
Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to stockholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this
Section 7.1(b);
(c) SEC and Other Reports. Promptly upon their becoming available,
one copy of (1) each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to public securities
holders generally and (2) each regular or periodic report, each
registration statement that has become effective (without exhibits
except as expressly requested by such holder), and each final prospectus
and all amendments thereto filed by the Company or any Subsidiary with
the Securities and Exchange Commission and of all press releases and
other statements made available generally by the Company or any
Subsidiary to the public concerning developments that are Material;
(d) Notice of Default or Event of Default. Promptly, and in any
event within five Business Days after a Responsible Officer becoming
aware of the existence of any Default or Event of Default or that any
Person has given any notice or taken any action with respect to a
claimed default hereunder or that any Person has given any notice or
taken any action with respect to a claimed default of the type referred
to in Section 11(f), a written notice specifying the nature and period
of existence thereof and what action the Company is taking or proposes
to take with respect thereto;
(e) ERISA Matters. Promptly, and in any event within five Business
Days after a Responsible Officer becoming aware of any of the following,
a written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with
respect thereto:
9
(1) with respect to any Plan, any reportable event, as defined
in Section 4043(c) of ERISA, for which notice thereof has not been
waived pursuant to the applicable regulations if such reportable
event could reasonably be expected to have a Material Adverse Effect,
it being agreed that an event required to be reported pursuant to
Department of Labor Regulation Section 4043.25, 4043.26 or 4043.33
shall, in any event, be subject to the notice requirement of this
Section 7.1(e)(1); or
(2) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan; or
(3) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse
Effect;
(f) Notices from Governmental Authority. Promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect; and
(g) Requested Information. With reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to time may be
reasonably requested by any such holder of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance. The information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through Section 10.8
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Section, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Event of Default. Statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or
her supervision, a review of the transactions and conditions of the
Company and its Subsidiaries from the beginning of the quarterly or
annual period covered by the statements then being furnished to the date
of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes
a Default or an Event of Default or, if any such condition or event
existed or exists (including, without limitation, any such event or
condition resulting from the failure of the Company or any Subsidiary to
comply with any Environmental Law), specifying the nature and period of
existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
Section 7.3. Inspection. The Company shall permit the representatives
of each holder of Notes that is an Institutional Investor:
(a) No Default. If no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the
10
Company, to discuss the affairs, finances and accounts of the Company
and its Subsidiaries with the Company's officers, and (with the consent
of the Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) Default. If a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be
requested.
SECTION 8. PREPAYMENT OF THE NOTES.
Section 8.1. Required Prepayments.
(a) The Notes shall not be subject to any required prepayment prior
to the final maturity thereof.
(b) On the maturity date of the Notes, the Company will pay the
then outstanding principal amount of Notes together with interest
accrued thereon.
Section 8.2. Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all,
or from time to time any part of, the Notes, in an amount not less than
$1,000,000 of the aggregate principal amount of the Notes then outstanding
in the case of a partial prepayment, at 100% of the principal amount so
prepaid, plus the Make-Whole Amount, if any, determined for the prepayment
date with respect to such principal amount. The Company will give each
holder of Notes written notice of each optional prepayment under this
Section 8.2 not less than 30 days and not more than 60 days prior to the
date fixed for such prepayment. Each such notice shall specify such date,
the aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.4), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and
shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to
such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of
such Make-Whole Amount as of the specified prepayment date.
Section 8.3. Prepayment of Notes upon Change in Control.
(a) Notice of Change in Control. The Company will, within 15
Business Days after any Responsible Officer has knowledge of the
occurrence of any Change in Control or Control Event, give written
notice of such Change in Control or Control Event to each holder of
Notes unless notice in respect of such Change in Control (or Change in
Control contemplated by such Control Event) shall have been given
pursuant to paragraph (b) of this Section 8.3. If a Change in Control
has occurred, such notice shall contain and constitute an offer to
prepay Notes as described in paragraph (c) of this Section 8.3 and shall
be accompanied by the certificate described in paragraph (g) of this
Section 8.3.
(b) Condition to Company Action. The Company will not take any
action that consummates or finalizes a Change in Control unless (1) at
least 30 days prior to such action it shall have given to each holder of
Notes written notice containing and constituting an offer to prepay
Notes as described in paragraph (c) of this Section 8.3, accompanied by
the certificate described in paragraph (g) of this Section 8.3, and (2)
contemporaneously with such action, it prepays all Notes required to be
prepaid in accordance with this Section 8.3.
(c) Offer to Prepay Notes. The offer to prepay Notes contemplated
by paragraphs (a) and (b) of this Section 8.3 shall be an offer to
prepay, in accordance with and subject to this
11
Section 8.3, all, but not less than all, the Notes held by each holder
(in this case only, "holder" in respect of any Note registered in the
name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on a date specified in such offer (the "Proposed
Prepayment Date"). If such Proposed Prepayment Date is in connection
with an offer contemplated by paragraph (a) of this Section 8.3, such
date shall be not less than 30 days and not more than 60 days after the
date of such offer (if the Proposed Prepayment Date shall not be
specified in such offer, the Proposed Prepayment Date shall be the
thirtieth day after the date of such offer). If such Proposed Prepayment
Date is in connection with an offer contemplated by paragraph (b) of
this Section 8.3, such date shall be the proposed date of the Change in
Control.
(d) Acceptance/Rejection. A holder of Notes may accept or reject
the offer to prepay Notes made pursuant to this Section 8.3 by causing a
notice of such acceptance or rejection to be delivered to the Company
within 15 Business Days after receipt of the notice specified in
paragraph (a) or paragraph (b) above; provided that if such Proposed
Prepayment Date shall be deferred pursuant to paragraph (f) of this
Section 8.3 for more than 10 Business Days, then any acceptance of an
offer may be rescinded by a holder by written notice delivered to the
Company not less than three days prior to any deferred prepayment date.
A failure by a holder of Notes to respond to an offer to prepay made
pursuant to this Section 8.3 shall be deemed to constitute a rejection
of such offer by such holder.
(e) Prepayment. Prepayment of the Notes to be prepaid pursuant to
this Section 8.3 shall be at 100% of the principal amount of such Notes,
together with interest on such Notes accrued to the date of prepayment
but without any premium. The prepayment shall be made on the Proposed
Prepayment Date except as provided in paragraph (f) of this Section 8.3.
(f) Deferral Pending Change in Control. The obligation of the
Company to prepay Notes pursuant to the offers required by paragraph (b)
and accepted in accordance with paragraph (d) of this Section 8.3 is
subject to the occurrence of the Change in Control in respect of which
such offers and acceptances shall have been made. In the event that such
Change in Control does not occur on the Proposed Prepayment Date in
respect thereof, the prepayment shall be deferred until, and shall be
made on the date on which, such Change in Controls occurs. The Company
shall keep each holder of Notes reasonably and timely informed of (1)
any such deferral of the date of prepayment, (2) the date on which such
Change in Control and the prepayment are expected to occur and (3) any
determination by the Company that efforts to effect such Change in
Control have ceased or been abandoned (in which case the offers and
acceptances made pursuant to this Section 8.3 in respect of such Change
in Control shall be deemed rescinded).
(g) Officer's Certificate. Each offer to prepay the Notes pursuant
to this Section 8.3 shall be accompanied by a certificate, executed by a
Senior Financial Officer of the Company and dated the date of such
offer, specifying: (1) the Proposed Prepayment Date; (2) that such offer
is made pursuant to this Section 8.3; (3) the principal amount of each
Note offered to be prepaid; (4) the interest that would be due on each
Note offered to be prepaid, accrued to the Proposed Prepayment Date; (5)
that the conditions of this Section 8.3 have been fulfilled; and (6) in
reasonable detail, the nature and date or proposed date of the Change in
Control.
(h) Change in Control Defined. "Change in Control" shall be deemed
to have occurred if any Person or Persons acting in concert (other than
Fairfax), together with Affiliates thereof, shall in the aggregate,
directly or indirectly, control or own (beneficially or otherwise) more
than 50% of the issued and outstanding common stock of the Company.
(i) Control Event Defined. "Control Event" shall mean:
(1) the execution by the Company or any of its Subsidiaries or
Affiliates of any agreement or letter of intent with respect to any
proposed transaction or event or series of transactions or events
which, individually or in the aggregate, may reasonably be expected
to result in a Change in Control,
12
(2) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Change in
Control, or
(3) the making of any written offer by any person (as such term
is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as
in effect on the date of the Closing) or related persons constituting
a group (as such term is used in Section 13(d) and Section 14(d)(2)
of the Exchange Act as in effect on the date of the Closing) to the
holders of the common stock of the Company, which offer, if accepted
by the requisite number of holders, would result in a Change in
Control.
Section 8.4. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to Section 8.2, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes
at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
Section 8.5. Maturity; Surrender, Etc. In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to
be prepaid shall mature and become due and payable on the date fixed for
such prepayment, together with interest on such principal amount accrued to
such date and the applicable Make-Whole Amount, if any. From and after such
date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount, if any,
as aforesaid, interest on such principal amount shall cease to accrue. Any
Note paid or prepaid in full shall be surrendered to the Company and
cancelled and shall not be reissued, and no Note shall be issued in lieu of
any prepaid principal amount of any Note.
Section 8.6. Purchase of Notes. The Company will not, and will not
permit any Subsidiary to, purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Notes except upon the
payment or prepayment of the Notes in accordance with the terms of this
Agreement and the Notes. The Company will promptly cancel all Notes
acquired by it or any Subsidiary pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes
may be issued in substitution or exchange for any such Notes.
Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called Principal,
provided that the Make-Whole Amount may in no event be less than zero. For
the purposes of determining the Make-Whole Amount, the following terms have
the following meanings:
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"Discounted Value" shall mean, with respect to the Called Principal
of any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity implied by (a)
the yields reported, as of 10:00 a.m. (
New York,
New York time) on the
second Business Day preceding the Settlement Date with respect to such
Called Principal, on the display designated as "Page PX1" on the
Bloomberg Financial Services Screen (or such other display as may
replace Page PX1 on the Bloomberg Financial Services Screen) for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date, or (b) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called
13
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied
yield will be determined, if necessary, by (1) converting U.S. Treasury
xxxx quotations to bond-equivalent yields in accordance with accepted
financial practice and (2) interpolating linearly between (i) the
actively traded U.S. Treasury security with the maturity closest to and
greater than the Remaining Average Life and (ii) the actively traded
U.S. Treasury security with the maturity closest to and less than the
Remaining Average Life.
"Remaining Average Life" shall mean, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (a) such Called Principal into (b) the sum of
the products obtained by multiplying (1) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (2)
the number of years (calculated to the nearest one-twelfth year) that
will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled
Payment.
"Remaining Scheduled Payments" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on such
Settlement Date pursuant to Section 8.2 or 12.1.
"Settlement Date" shall mean, with respect to the Called Principal
of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
SECTION 9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 9.1. Compliance with Law. The Company will, and will cause
each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject,
including, without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and
other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such
laws, ordinances or governmental rules or regulations or failures to obtain
or maintain in effect such licenses, certificates, permits, franchises and
other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.2. Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain, with insurers reasonably determined by the
Company in good faith to be financially sound and reputable, insurance with
respect to their respective properties and businesses against such
casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in
the case of entities of established reputations engaged in the same or a
similar business and similarly situated.
Section 9.3. Maintenance of Properties. The Company will, and will
cause each of its Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working
order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at
all times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of
its properties if such discontinuance is desirable in the conduct of its
business and the Company has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
14
Section 9.4. Payment of Taxes and Claims. The Company will, and will
cause each of its Subsidiaries to, file all tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be
due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their properties,
assets, income or franchises, to the extent such taxes and assessments have
become due and payable and before they have become delinquent and all
claims for which sums have become due and payable that have or might become
a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or
assessment or claims if (a) the amount, applicability or validity thereof
is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or such Subsidiary
has established adequate reserves therefor in accordance with GAAP on the
books of the Company or such Subsidiary or (b) the nonpayment of all such
taxes and assessments in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
Section 9.5. Corporate Existence, Etc. The Company will at all times
preserve and keep in full force and effect its corporate existence. Subject
to Sections 10.5, 10.6 and 10.7, the Company will at all times preserve and
keep in full force and effect the corporate existence of each of its
Subsidiaries (unless merged into the Company or a Subsidiary) and all
rights and franchises of the Company and its Subsidiaries unless, in the
good faith judgment of the Company, the termination of or failure to
preserve and keep in full force and effect such corporate existence, right
or franchise could not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
Section 10.1. Limitation on Debt.
(a) The Company will not, at any time, permit Consolidated Debt to
exceed 40% of Consolidated Total Capitalization.
(b) The Company will not, at any time, permit Consolidated Short
Term Debt to exceed 20% of Consolidated Total Capitalization.
Section 10.2. Limitation on Priority Debt. The Company will not, and
will not permit any Subsidiary to, create, assume or incur or in any manner
be or become liable in respect of any Priority Debt, unless at the time of
issuance thereof and after giving effect thereto and to the application of
the proceeds thereof, Priority Debt shall not exceed 10% of Consolidated
Total Capitalization.
Section 10.3. Consolidated Net Worth. The Company will not, at any
time, permit Consolidated Net Worth to be less than the sum of (a)
$720,000,000, plus (b) an aggregate amount equal to 35% of its Consolidated
Net Income (but, in each case, only if a positive number) for each
completed fiscal year beginning with the fiscal year ending on December 31,
2001.
Section 10.4. Limitation on Liens. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly create, incur,
assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset (including,
without limitation, any document or instrument in respect of goods or
accounts receivable) of the Company or any such Subsidiary, whether now
owned or held or hereafter acquired, or any income or profits therefrom, or
assign or otherwise convey any right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental charges or
levies which are not yet due and payable or the payment of which is not
at the time required by Section 9.4;
(b) statutory Liens of landlords, undetermined or inchoate Liens
and other Liens imposed by law such as Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred
in the ordinary course of business for sums not yet due and payable or
the payment of which is not at the time required by Section 9.4;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (1) in connection with
workers' compensation, unemployment insurance, other
15
types of social security or retirement benefits and insurance regulatory
requirements, (2) to secure (or to obtain letters of credit that secure)
the performance of tenders, statutory obligations, surety bonds, appeal
bonds, bids, leases (other than Capital Leases), performance bonds,
purchase, construction or sales contracts and other similar obligations
or (3) to secure payments of claims under polices of reinsurance
underwritten by any Subsidiary or letters of credit or reinsurance
trusts established to secure such Subsidiaries obligations to make such
payments, in each case, not incurred or made in connection with the
borrowing of money, the obtaining of advances or credit or the payment
of the deferred purchase price of property;
(d) any attachment or judgment Lien, unless the judgment it secures
shall not, within 60 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such stay;
(e) Liens on property or assets of a Subsidiary securing Debt owing
to the Company or to any of its Wholly-Owned Subsidiaries;
(f) Liens existing on the date of the Closing and described in
Schedule 5.15;
(g) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances or
minor survey exceptions, in each case incidental to, and not interfering
with, the ordinary conduct of the business of the Company or any of its
Subsidiaries, provided that such Liens do not, in the aggregate,
materially detract from the value of such property;
(h) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of
the purchase price or cost of construction, of property (or any
improvement thereon) acquired or constructed by the Company or a
Subsidiary after the date of the Closing, provided that
(1) any such Lien shall extend solely to the item or items of
such property (or improvement thereon) so acquired or constructed
and, if required by the terms of the instrument originally creating
such Lien, other property (or improvement thereon) which is an
improvement to or is acquired for specific use in connection with
such acquired or constructed property (or improvement thereon) or
which is real property being improved by such acquired or constructed
property (or improvement thereon),
(2) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the lesser of (i) the cost
to the Company or such Subsidiary of the property (or improvement
thereon) so acquired or constructed and (ii) the Fair Market Value
(as determined in good faith by one or more officers of the Company
to whom authority to enter into the related transaction has been
delegated to by the board of directors of the Company) of such
property (or improvement thereon) at the time of such acquisition or
construction,
(3) any such Lien shall be created contemporaneously with, or
within 180 days after, the acquisition or construction of such
property, and
(4) the aggregate principal amount of all Debt secured by such
Liens shall be permitted by the limitation set forth in Section 10.1;
(i) any Lien existing on property of a Person immediately prior to
its being consolidated with or merged into the Company or a Subsidiary
or its becoming a Subsidiary, or any Lien existing on any property
acquired by the Company or any Subsidiary at the time such property is
so acquired (whether or not the Debt secured thereby shall have been
assumed), provided that (1) no such Lien shall have been created or
assumed in contemplation of such consolidation or merger or such
Person's becoming a Subsidiary or such acquisition of property, (2) each
such Lien shall extend solely to the item or items of property so
acquired and, if required by the terms of the instrument originally
creating such Lien, other property which is an improvement to or is
acquired for specific use in connection with such acquired property and
(3) the aggregate amount of all Debt secured by such Liens shall be
permitted by the limitation set forth in Section 10.1;
16
(j) any Lien renewing, extending or refunding any Lien permitted by
paragraphs (f), (h) or (i) of this Section 10.4, provided that (1) the
principal amount of Debt secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the maturity thereof
reduced, (2) such Lien is not extended to any other property and (3)
immediately after such extension, renewal or refunding no Default or
Event of Default would exist; and
(k) other Liens not otherwise permitted by paragraphs (a) through
(j), inclusive, of this Section 10.4, provided that the Priority Debt
secured thereby shall be permitted by the limitation set forth in
Section 10.2 at the time that the Lien securing such Priority Debt is
created.
Any Person that becomes a Subsidiary after the date of the Closing
shall, for all purposes of this Section 10.4, be deemed to have created or
incurred, at the time it becomes a Subsidiary, all outstanding Liens of
such Person immediately after it becomes a Subsidiary, and any Person
extending, renewing or refunding any Debt secured by any Lien shall be
deemed to have incurred such Lien at the time of such extension, renewal or
refunding.
Section 10.5. Merger, Consolidation, Etc. The Company will not, and
will not permit any of its Subsidiaries to, consolidate with or merge with
any other Person or convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to any Person
(except that a Subsidiary of the Company may (x) consolidate with or merge
with, or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to, the Company or a
Wholly-Owned Subsidiary of the Company and (y) convey, transfer or lease
all of its assets in compliance with the provisions of Section 10.6 or
10.7), provided that the foregoing restriction does not apply to the
consolidation or merger of the Company with, or the conveyance, transfer or
lease of substantially all of the assets of the Company in a single
transaction or series of transactions to, any Person so long as:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the
case may be (the "Successor Corporation"), shall be a solvent
corporation organized and existing under the laws of the United States
or any State thereof (including the District of Columbia),
(b) if the Company is not the Successor Corporation, (1) the
Successor Corporation shall have executed and delivered to each holder
of the Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the
Notes (pursuant to such agreements and instruments as shall be
reasonably satisfactory to the Required Holders) and (2) the Successor
Corporation shall have caused to be delivered to each holder of any
Notes an opinion of nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the Required Holders, to
the effect that all agreements or instruments effecting such assumption
are enforceable in accordance with their terms and comply with the terms
hereof;
(c) immediately after giving effect to such transaction, no Default
or Event of Default would exist.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or any
Successor Corporation from its liability under this Agreement or the Notes.
Section 10.6. Sale of Assets, Etc. Except as permitted under Section
10.5 and Section 10.7, the Company will not, and will not permit any of its
Subsidiaries to, make any Asset Disposition unless:
(a) in the good faith opinion of the Company, the Asset Disposition
is in exchange for consideration having a Fair Market Value at least
equal to that of the property exchanged and is in the best interest of
the Company or such Subsidiary;
(b) immediately after giving effect to the Asset Disposition, no
Default or Event of Default would exist; and
17
(c) immediately after giving effect to the Asset Disposition, the
Disposition Value of all property that was the subject of any Asset
Disposition occurring in the then current fiscal year of the Company
would not exceed 10% of Consolidated Total Assets as of the end of the
then most recently ended fiscal year of the Company.
If the Net Proceeds Amount for any Transfer is applied to (1) a Debt
Prepayment Application, (2) a Property Reinvestment Application or (3) to
make payment of claims under policies of reinsurance underwritten by any
Subsidiary, in each case within 180 days after such Transfer, then such
Transfer, only for the purpose of determining compliance with subsection
(c) of this Section 10.6 as of a date on or after the Net Proceeds Amount
is so applied, shall be deemed not to be an Asset Disposition.
Section 10.7. Disposal of Ownership of a Subsidiary. The Company will
not, and will not permit any of its Subsidiaries to, sell or otherwise
dispose of any shares of Subsidiary Stock, nor will the Company permit any
such Subsidiary to issue, sell or otherwise dispose of any shares of its
own Subsidiary Stock, provided that the foregoing restrictions do not apply
to:
(a) the issue of directors' qualifying shares by any such
Subsidiary;
(b) any such Transfer of Subsidiary Stock constituting a Transfer
described in clause (a) of the definition of "Asset Disposition"; and
(c) the Transfer of the Subsidiary Stock of a Subsidiary of the
Company owned by the Company and its other Subsidiaries, provided such
Transfer satisfies the requirements of Section 10.6 hereof.
Section 10.8. Investments in Fairfax. The Company will not, and will
not permit any of the Subsidiaries to, make or authorize any Investments in
Fairfax or any Affiliate of Fairfax (other than the Company or any
Subsidiary of the Company), unless immediately after giving effect to such
action, (a) the aggregate value of all then outstanding Investments of the
Company and its Subsidiaries in Fairfax made or authorized on or after the
date of the Closing (valued immediately after such action) would not exceed
$25,000,000, (b) the aggregate value of all then outstanding Investments of
the Company and its Subsidiaries in any such Affiliate of Fairfax made or
authorized on or after the date of the Closing (valued immediately after
such action) would not exceed $25,000,000, provided that for purposes of
this clause (b), the purchase by Odyssey Reinsurance Corporation of
1,000,000 shares of Zenith National Insurance Corp. for an amount not
exceeding $25,000,000 pursuant to the stock purchase agreement dated as of
November 21, 2001 between Odyssey Reinsurance Corporation and Zenith
National Insurance Corp. shall be deemed to have been made and authorized
prior to the date of the Closing and (c) no Default or Event of Default
would exist.
Each Person which becomes a Subsidiary of the Company after the date
of the Closing will be deemed to have made, on the date such Person becomes
a Subsidiary of the Company, all Investments of such Person in Fairfax and
any Affiliates of Fairfax in existence on such date. The Company and each
Subsidiary will be deemed to have made, on the date any Person becomes an
Affiliate of Fairfax after the date of the Closing, all Investments of the
Company or such Subsidiary in such Person in existence on such date.
Investments in any Person that ceases to be a Subsidiary of the Company
after the date of the Closing (but remains an Affiliate of Fairfax and in
which the Company or another Subsidiary continues to maintain an
Investment) will be deemed to have been made on the date on which such
Person ceases to be a Subsidiary of the Company.
Section 10.9. Nature of Business. The Company will not, and will not
permit any of its Subsidiaries to, engage in any business if, as a result,
the general nature of the business in which the Company and its
Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the business in which the
Company and its Subsidiaries, taken as a whole, are engaged on the date of
the Closing as described in the Memorandum.
Section 10.10. Transactions with Affiliates. The Company will not,
and will not permit any Subsidiary to, enter into directly or indirectly
any Material transaction or Material group of related transactions
(including, without limitation, the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary),
18
except in the ordinary course and pursuant to the reasonable requirements
of the Company's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate. Notwithstanding the foregoing but subject to the other terms of
this Agreement, (a) the Company or any Subsidiary may enter into any
transaction with an Affiliate that is expressly provided for by the
Investment Management Agreements and the Investment Administration
Agreements and (b) the Company may, at any time, prepay the Fairfax Debt so
long as immediately prior to such prepayment and after giving effect
thereto, no Default or Event of Default shall exist.
SECTION 11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any
term contained in Sections 10.1 through 10.8, inclusive, and such default
is not remedied within five Business Days after the occurrence of such
default; or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b)
and (c) of this Section 11) and such default is not remedied within 30 days
after the earlier of (1) a Responsible Officer obtaining actual knowledge
of such default and (2) the Company receiving written notice of such
default from any holder of a Note (any such written notice to be identified
as a "notice of default" and to refer specifically to this paragraph (d) of
Section 11); or
(e) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any
writing furnished in connection with the transactions contemplated hereby
proves to have been false or incorrect in any material respect on the date
as of which made; or
(f) (1) the Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium
or make-whole amount or interest on any Debt that is outstanding in an
aggregate principal amount at least equal to 5% of Consolidated Net Worth
beyond any period of grace provided with respect thereto, or (2) the
Company or any Subsidiary is in default in the performance of or compliance
with any term of any evidence of any Debt in an aggregate outstanding
principal amount at least equal to 5% of Consolidated Net Worth or of any
mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such
Debt has become, or has been declared (or one or more Persons are entitled
to declare such Debt to be), due and payable before its stated maturity or
before its regularly scheduled dates of payment or (3) as a consequence of
the occurrence or continuation of any event or condition (other than the
passage of time or the right of the holder of Debt to convert such Debt
into equity interests), (i) the Company or any Subsidiary has become
obligated to purchase or repay Debt before its regular maturity or before
its regularly scheduled dates of payment in an aggregate outstanding
principal amount at least equal to 5% of Consolidated Net Worth or (ii) one
or more Persons have the right to require the Company or any Subsidiary so
to purchase or repay such Debt; or
(g) the Company or any Significant Subsidiary (1) is generally not
paying, or admits in writing its inability to pay, its debts as they become
due, (2) files, or consents by answer or otherwise to the filing against it
of, a petition for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of
any jurisdiction, (3) makes an assignment for the benefit of its creditors,
(4) consents to
19
the appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part
of its property, (5) is adjudicated as insolvent or to be liquidated or (6)
takes corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its
Significant Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Company or any of its Significant Subsidiaries, or any such petition
shall be filed against the Company or any of its Significant Subsidiaries
and such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money aggregating
in excess of 5% of Consolidated Net Worth are rendered against one or more
of the Company and its Subsidiaries and which judgments are not, within 60
days after entry thereof, bonded, discharged or stayed pending appeal, or
are not discharged within 60 days after the expiration of such stay; or
(j) if (1) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under Section 412 of the Code, (2) a notice of intent to
terminate any Plan shall have been filed with the PBGC or the PBGC shall
have instituted proceedings under ERISA Section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified
the Company or any ERISA Affiliate that a Plan will become a subject of any
such proceedings, (3) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under all
Plans, determined in accordance with Title IV of ERISA, shall exceed 5% of
Consolidated Net Worth, (4) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (5) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan or (6) the Company or any ERISA
Affiliate establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits (other than COBRA) in a manner
that would increase the liability of the Company or any ERISA Affiliate
thereunder; and any such event or events described in clauses (1) through
(6) above, either individually or together with any other such event or
events, could reasonably be expected to have a Material Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective meanings assigned
to such terms in Section 3 of ERISA.
SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 12.1. Acceleration.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (1) of paragraph (g) or described in clause (6) of
paragraph (g) by virtue of the fact that such clause encompasses clause
(1) of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
the Required Holders may at any time at their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of
Notes at the time outstanding affected by such Event of Default may at
any time, at its or their option, by notice or notices to the Company,
declare all the Notes held by it or them to be immediately due and
payable.
Upon any Note's becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature
and the entire unpaid principal amount of such
20
Note, plus (1) all accrued and unpaid interest thereon and (2) the
Make-Whole Amount, if any, determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The
Company acknowledges, and the parties hereto agree, that each holder of
a Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for),
and that the provision for payment of a Make-Whole Amount by the Company
in the event that the Notes are prepaid or are accelerated as a result
of an Event of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.
Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have
become or have been declared immediately due and payable under Section
12.1, the holder of any Note at the time outstanding may proceed to protect
and enforce the rights of such holder by an action at law, suit in equity
or other appropriate proceeding, whether for the specific performance of
any agreement contained herein or in any Note, or for an injunction against
a violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or otherwise.
Section 12.3. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
Required Holders, by written notice to the Company, may rescind and annul
any such declaration and its consequences if (a) the Company has paid all
overdue interest on the Notes, all principal of and Make-Whole Amount, if
any, on any Notes that are due and payable and are unpaid other than by
reason of such declaration, and all interest on such overdue principal and
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
any overdue interest in respect of the Notes, at the Default Rate, (b) all
Events of Default and Defaults, other than non-payment of amounts that have
become due solely by reason of such declaration, have been cured or have
been waived pursuant to Section 17 and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes.
No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right
consequent thereon.
Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred by this Agreement or by any Note upon any holder
thereof shall be exclusive of any other right, power or remedy referred to
herein or therein or now or hereafter available at law, in equity, by
statute or otherwise. Without limiting the obligations of the Company under
Section 15, the Company will pay to the holder of each Note on demand such
further amount as shall be sufficient to cover all costs and expenses of
such holder incurred in any enforcement or collection under this Section
12, including, without limitation, reasonable attorneys' fees, expenses and
disbursements.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration
of transfers of Notes. The name and address of each holder of one or more
Notes, each transfer thereof and the name and address of each transferee of
one or more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by
any notice or knowledge to the contrary. The Company shall give to any
holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or its attorney duly
authorized in writing and accompanied by the
21
address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company's expense (except as
provided below), one or more new Notes (as requested by the holder thereof)
in exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be
substantially in the form of Exhibit 1. Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require payment of a
sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than $100,000, provided that if necessary to enable
the registration of transfer by a holder of its entire holding of Notes,
one Note may be in a denomination of less than $100,000. Any transferee, by
its acceptance of a Note registered in its name (or the name of its
nominee), shall be deemed to have made the representation set forth in
Section 6.2.
Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note (which evidence shall be, in
the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note
is, or is a nominee for, a Purchaser or another holder of a Note with a
minimum net worth of at least $50,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
SECTION 14. PAYMENTS ON NOTES.
Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable
on the Notes shall be made in
New York,
New York at the principal office of
the Company in such jurisdiction. The Company may at any time, by notice to
each holder of a Note, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the Company
in such jurisdiction or the principal office of a bank or trust company in
such jurisdiction.
Section 14.2. Home Office Payment. So long as any Purchaser or its
nominee shall be the holder of any Note, and notwithstanding anything
contained in Section 14.1 or in such Note to the contrary, the Company will
pay all sums becoming due on such Note for principal, Make-Whole Amount, if
any, and interest by the method and at the address specified for such
purpose below such Purchaser's name in Schedule A, or by such other method
or at such other address as such Purchaser shall have from time to time
specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently
with or reasonably promptly after payment or prepayment in full of any
Note, such Purchaser shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 14.1. Prior to any sale or other disposition of any
Note held by any Purchaser or it's nominee such Purchaser will, at its
election, either endorse thereon the amount of principal paid thereon and
the last date to which interest has been paid thereon or surrender such
Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any
Note purchased by any Purchaser under this Agreement and that has made the
same agreement relating to such Note as such Purchaser has made in this
Section 14.2.
22
SECTION 15. EXPENSES, ETC.
Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay (a) reasonable
attorneys' fees of Xxxxxx Xxxxxx & Xxxxx, original drafting counsel, and
(b) all costs and expenses (including reasonable attorneys' fees of a
special counsel and, if reasonably required, local or other counsel)
incurred by the Purchasers or any other holder of a Note in connection with
such transactions and in connection with any amendments, waivers or
consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (i) the costs and expenses incurred in enforcing or defending
(or determining whether or how to enforce or defend) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement or the Notes, or by reason of being a holder of any Note, and
(ii) the costs and expenses, including reasonable financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or
any Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay,
and will save the Purchasers and each other holder of a Note harmless from,
all claims in respect of any fees, costs or expenses, if any, of brokers
and finders (other than, with respect to any Purchaser or other holder of
the Notes, those retained by such Purchaser or other holder).
Section 15.2. Survival. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement or the
Notes, and the termination of this Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or
transfer by any Purchaser of any Note or portion thereof or interest
therein and the payment of any Note, and may be relied upon by any
subsequent holder of a Note, regardless of any investigation made at any
time by or on behalf of any Purchaser or any other holder of a Note. All
statements contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant to this Agreement shall be deemed
representations and warranties of the Company under this Agreement. Subject
to the preceding sentence, this Agreement and the Notes embody the entire
agreement and understanding between the Purchasers and the Company and
supersede all prior agreements and understandings relating to the subject
matter hereof.
SECTION 17. AMENDMENT AND WAIVER.
Section 17.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be
waived (either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except that (a) no
amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or
21 hereof, or any defined term (as it is used therein), will be effective
as to any holder unless consented to by such holder in writing, and (b) no
such amendment or waiver may, without the written consent of the holder of
each Note at the time outstanding affected thereby, (1) subject to the
provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or
of the Make-Whole Amount on, the Notes, (2) change the percentage of the
principal amount of the Notes the holders of which are required to consent
to any such amendment or waiver or (3) amend any of Sections 8, 11(a),
11(b), 12, 17 or 20.
Section 17.2. Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a
decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the Notes. The
Company will deliver executed or true and correct copies of each
amendment, waiver or consent effected pursuant to the provisions of this
Section 17 to each holder of outstanding Notes
23
promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the entering
into by any holder of Notes or any waiver or amendment of any of the
terms and provisions hereof unless such remuneration is concurrently
paid, or security is concurrently granted, on the same terms, ratably to
each holder of Notes then outstanding even if such holder did not
consent to such waiver or amendment.
Section 17.3. Binding Effect, Etc. Any amendment or waiver consented
to as provided in this Section 17 applies equally to all holders of Notes
and is binding upon them and upon each future holder of any Note and upon
the Company without regard to whether such Note has been marked to indicate
such amendment or waiver. No such amendment or waiver will extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.
Section 17.4. Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented
to any amendment, waiver or consent to be given under this Agreement or the
Notes, or have directed the taking of any action provided herein or in the
Notes to be taken upon the direction of the holders of a specified
percentage of the aggregate principal amount of Notes then outstanding,
Notes directly or indirectly owned by the Company or any of its Affiliates,
including, without limitation, Fairfax Inc. and Zenith Insurance Company,
shall be deemed not to be outstanding.
SECTION 18. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telefacsimile if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or (b) by registered or certified mail with return receipt requested
(postage prepaid) or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(1) if to any Purchaser or its nominee, to such Purchaser or its
nominee at the address specified for such communications in Schedule A, or
at such other address as such Purchaser or its nominee shall have specified
to the Company in writing,
(2) if to any other holder of any Note, to such holder at such address
as such other holder shall have specified to the Company in writing, or
(3) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Xxxxxx X. Xxxxx, or at such other
address as the Company shall have specified to the holder of each Note in
writing.
Notices under this Section 18 will be deemed given only when actually
received.
SECTION 19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by the Purchasers at the Closing (except the
Notes themselves) and (c) financial statements, certificates and other
information previously or hereafter furnished to any holder of the Notes, may be
reproduced by such holders by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such holders may
destroy any original document so reproduced. The Company agrees and stipulates
that, to the extent permitted by applicable law, any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction
24
was made by any holder of the Notes in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
SECTION 20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Purchaser as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Purchaser prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such Purchaser
or any Person acting on such Purchaser's behalf, (c) otherwise becomes known to
such Purchaser other than through disclosure by the Company or any Subsidiary or
(d) constitutes financial statements delivered to such Purchaser under Section
7.1 that are otherwise publicly available. Each Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser in good faith to protect confidential information of
third parties delivered to such Purchaser, provided that such Purchaser may
deliver or disclose Confidential Information to (1) its directors, trustees,
officers, employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by such Purchaser's Notes), (2) such Purchaser's financial advisors
and other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20, (3)
any other holder of any Note, (4) any Institutional Investor to which such
Purchaser sells or offers to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this Section
20), (5) any Person from which such Purchaser offers to purchase any security of
the Company (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (6)
any Federal or state regulatory authority having jurisdiction over such
Purchaser, (7) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that requires
access to information about such Purchaser's investment portfolio or (8) any
other Person to which such delivery or disclosure may be necessary or
appropriate (i) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser, (ii) in response to any subpoena or other legal
process, (iii) in connection with any litigation to which such Purchaser is a
party or (iv) if an Event of Default has occurred and is continuing, to the
extent such Purchaser may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Purchaser's Notes and this Agreement. Each holder
of a Note, by its acceptance of a Note, will be deemed to have agreed to be
bound by and to be entitled to the benefits of this Section 20 as though it were
a party to this Agreement. On reasonable request by the Company in connection
with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder (other
than a holder that is a party to this Agreement or its nominee), such holder
will enter into an agreement with the Company embodying the provisions of this
Section 20.
SECTION 21. SUBSTITUTION OF PURCHASER.
Each Purchaser shall have the right to substitute any one of its Affiliates
as the purchaser of the Notes that such Purchaser has agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both such Purchaser and such Affiliate, shall contain such Affiliate's agreement
to be bound by this Agreement and shall contain a confirmation by such Affiliate
of the accuracy with respect to it of the representations set forth in Section
6. Upon receipt of such notice, wherever the word "Purchaser" is used in this
Agreement (other than in this Section 21), such word shall be deemed to refer to
such Affiliate in lieu of such Purchaser. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter transfers to
such Purchaser all of the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, wherever the word "Purchaser" is used in
this Agreement (other than in
25
this Section 21), such word shall no longer be deemed to refer to such
Affiliate, but shall refer to such Purchaser, and such Purchaser shall have all
the rights of an original holder of the Notes under this Agreement.
SECTION 22. MISCELLANEOUS.
Section 22.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective successors
and assigns (including, without limitation, any subsequent holder of a
Note) whether so expressed or not.
Section 22.2. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or Make-Whole Amount, if any, or interest on any Note that is
due on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business
Day.
Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall (to the
full extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 22.4. Construction.
(a) Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein
refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such Person.
(b) Where the character or amount of any asset or liability or item
of income or expense is required to be determined or any consolidation
or other accounting computation is required to be made by the Company
for the purposes of this Agreement, the same shall be done by the
Company in accordance with GAAP, to the extent applicable, except where
such principles are inconsistent with the requirements of this
Agreement.
Section 22.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed
by all, of the parties hereto.
Section 22.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State of
New York excluding choice-of-law
principles of the law of such State that would require the application of
the laws of a jurisdiction other than such State.
* * * * *
26
The execution hereof by the Purchasers shall constitute a contract among
the Company and the Purchasers for the uses and purposes hereinabove set forth.
Very truly yours,
Odyssey Re Holdings Corp.
By /s/ XXXXXX X. XXXXX
-------------------------------------------
Xxxxxx X. Xxxxx
Its SVP
The foregoing is hereby agreed to as of the date thereof.
The Travelers Insurance Company
By /s/ XXXXXXX X. XXXXXXXX
-------------------------------------------
Its Assistant Investment Officer
First Trenton Indemnity Company
By /s/ XXXXXXX X. XXXXXXXX
-------------------------------------------
Its Assistant Investment Officer
Premier Insurance Company of Massachusetts
By /s/ XXXXXXX X. XXXXXXXX
-------------------------------------------
Its Assistant Investment Officer
First Floridian Auto and Home Insurance Company
By /s/ XXXXXXX X. XXXXXXXX
-------------------------------------------
Its Assistant Investment Officer
Zenith Insurance Company
By /s/ XXXXXXX X. XXX
-------------------------------------------
Its Chairman and President
Fairfax Inc.
By /s/ XXXX XXXXXX
-------------------------------------------
Its Vice President
27
INFORMATION RELATING TO PURCHASERS
Principal Amount of
Notes to Be Purchased
$19,000,000
Name and Address of Purchaser
THE TRAVELERS INSURANCE COMPANY
c/o Citigroup Investments Inc.
000 Xxxxxxxx Xxxxxx
P.O. Box 150449
Hartford, CT 06115-0449
Attention: Cashier's Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"
Odyssey Re Holdings Corp., 7.49% Senior Notes due November 30, 2006, PPN 67612W
A* 9, principal, premium or interest") to:
Chase Manhattan Bank, N.A.
New York, NY
ABA Number 000-000-000
REF: Travelers Private Placement Account
Account No.: 000-0-000000
Notices
All notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: TRAL & CO
Taxpayer I.D. Number: 00-0000000 (a Connecticut corporation)
Schedule A
(to
Note Purchase Agreement)
Principal Amount of
Notes to Be Purchased
$16,000,000
Name and Address of Purchaser
THE TRAVELERS INSURANCE COMPANY
(as to Separate Account STFMG)
c/o Citigroup Investments Inc.
000 Xxxxxxxx Xxxxxx
P.O. Box 150449
Hartford, CT 06115-0449
Attention: Cashier's Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"
Odyssey Re Holdings Corp., 7.49% Senior Notes due November 30, 2006, PPN 67612W
A* 9, principal, premium or interest") to:
All payments by wire transfer to:
Chase Manhattan Bank, N.A.
New York, NY
ABA Number 000-000-000
Account No.: 000-0-000000
Notices
All notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: The Travelers Insurance
Company
Separate Account SMGA
Taxpayer I.D. Number: 00-0000000 (a Connecticut corporation)
A-1
Principal Amount of
Notes to Be Purchased
$3,000,000
Name and Address of Purchaser
FIRST TRENTON INDEMNITY COMPANY
c/o Citigroup Investments Inc.
000 Xxxxxxxx Xxxxxx
X.X. Xxx 000000
Xxxxxxxx, XX 00000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"
Odyssey Re Holdings Corp., 7.49% Senior Notes due November 30, 2006, PPN 67612W
A* 9, principal, premium or interest") to:
Chase Manhattan Bank, N.A.
New York, NY
ABA Number 000-000-000
Account No.: 000-0-000000
Notices
All notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: First Trenton Indemnity
Company
Taxpayer I.D. Number: 00-0000000
A-2
Principal Amount of
Notes to Be Purchased
$1,000,000
Name and Address of Purchaser
PREMIER INSURANCE COMPANY OF MASSACHUSETTS
c/o Citigroup Investments Inc.
000 Xxxxxxxx Xxxxxx
P.O. Box 150449
Hartford, CT 06115-0449
Attention: Cashier's Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"
Odyssey Re Holdings Corp., 7.49% Senior Notes due November 30, 2006, PPN 67612W
A* 9, principal, premium or interest") to:
Chase Manhattan Bank, N.A.
New York, NY
ABA Number 000-000-000
Account No.: 000-0-000000
Notices
All notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Premier Insurance Company
of Massachusetts
Taxpayer I.D. Number: 00-0000000
A-3
Principal Amount of
Notes to Be Purchased
$1,000,000
Name and Address of Purchaser
FIRST FLORIDIAN AUTO AND HOME INSURANCE COMPANY
c/o Citigroup Investments Inc.
000 Xxxxxxxx Xxxxxx
P.O. Box 150449
Hartford, CT 06115-0449
Attention: Cashier's Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"
Odyssey Re Holdings Corp., 7.49% Senior Notes due November 30, 2006, PPN 67612W
A* 9, principal, premium or interest") to:
Chase Manhattan Bank, N.A.
New York, NY
ABA Number 000-000-000
Account No.: 000-0-000000
Notices
All notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: First Floridian Auto and
Home Insurance Company
Taxpayer I.D. Number: 00-0000000
A-4
Principal Amount of
Notes to Be Purchased
$25,000,000
Name and Address of Purchaser
ZENITH INSURANCE COMPANY
00000 Xxxxxx Xx.
Xxxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxx, Chairman & President
Facsimile: 818/713-0177
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"
Odyssey Re Holdings Corp., 7.49% Senior Notes due November 30, 2006, PPN 67612W
A* 9, principal, premium or interest") to:
Zenith Insurance Company
Account Number 001-327372
City National Bank
000 Xxxxx Xxxxxxx Xx., Xxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
ABA# 000000000
Notices
All notices and communications to be addressed as first provided above,
except notices with respect to payment and written confirmation of each such
payment, to be addressed:
Zenith Insurance Company
Investment Accounting
00000 Xxxxxx Xx.
Xxxxxxxx Xxxxx, XX 00000
Attn: Xxxxxxx XxXxxx
Telephone: 818/000-0000
Facsimile: 818/703-0091
Name of Nominee in which Notes are to be issued: Zenith Insurance Company
Taxpayer I.D. Number: 00-0000000
A-5
Principal Amount of
Notes to Be Purchased
$35,000,000
Name and Address of Purchaser
FAIRFAX INC.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Facsimile: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Odyssey Re Holdings Corp., 7.49% Senior Notes due November 30, 2006, PPN 67612W
A* 9, principal, premium or interest") to:
Bank: Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx XX Xxx 000
Xxxxxxx, Xxxxxxxx 00000
ABA#: 000-000-000
A/C Name: Fairfax Inc
A/C Number: 387-3940
Contact: Xxxxx Xxxx (312-461-1517) at the Xxxxxx Bank
Notices
All notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: Fairfax Inc.
Taxpayer I.D. Number: 00-0000000
A-6
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
"Affiliate" shall mean at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of such
first Person or any other Person of which such first Person beneficially owns or
holds, in the aggregate, directly or indirectly, 10% or more of any class of
voting or equity interests. As used in this definition, "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"Anti-Terrorism Order" shall mean Executive Order No. 13,224 66 Fed Reg.
49,079 (2001) issued by the President of the United States of America (Executive
Order Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism).
"Asset Disposition" shall mean any Transfer except:
(a) any
(1) Transfer from a Subsidiary to the Company or a Wholly-Owned
Subsidiary; and
(2) Transfer from the Company to a Wholly-Owned Subsidiary;
so long as immediately before and immediately after the consummation of
any such Transfer and after giving effect thereto, no Default or Event
of Default shall exist; and
(b) any Transfer made in the ordinary course of business and involving
only property that is either (1) inventory held for sale or (2) equipment,
fixtures, supplies or materials no longer required in the operation of the
business of the Company or any of its Subsidiaries or that is obsolete or
(3) securities in the investment portfolios of the Company or its
Subsidiaries.
"Business Day" shall mean (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York,
New York are required or authorized to be closed, and (b) for the purposes of
any other provision of this Agreement, any day other than a Saturday, a Sunday
or a day on which commercial banks in Hartford, Connecticut or New York, New
York are required or authorized to be closed.
Schedule B
(to
Note Purchase Agreement)
"Capital Lease" shall mean a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Change in Control" is defined in Section 8.3(h).
"Closing" is defined in Section 3.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"Company" shall mean Odyssey Re Holdings Corp., a Delaware corporation and
any Successor Corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Debt" shall mean, as of any date of determination, the total
of all Debt of the Company and its Subsidiaries outstanding on such date, after
eliminating all offsetting debits and credits between the Company and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.
"Consolidated Net Income" shall mean, with reference to any period, the net
income (or loss) of the Company and its Subsidiaries for such period (taken as a
cumulative whole), as determined in accordance with GAAP, after eliminating all
offsetting debits and credits between the Company and its Subsidiaries and all
other items required to be eliminated in the course of the preparation of
consolidated financial statements of the Company and its Subsidiaries in
accordance with GAAP.
For purposes of determining "Consolidated Net Income," there shall be
excluded from any calculation thereof the amount of any unrealized gains and
losses of the Company and its Subsidiaries arising from the Company's compliance
with Financial Accounting Standards Board Statement No. 115.
"Consolidated Net Worth" shall mean, as of any date of determination
thereof,
(a) the sum of (1) the par value (or value stated on the books of the
corporation) of the capital stock (but excluding treasury stock and capital
stock subscribed and unissued) of the Company and its Subsidiaries plus (2)
the amount of the paid-in capital and retained earnings of the Company and
its Subsidiaries, in each case as such amounts would be shown on a
consolidated balance sheet of the Company and its Subsidiaries as of such
time prepared in accordance with GAAP, minus
(b) to the extent included in clause (a), all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Subsidiaries.
For purposes of determining "Consolidated Net Worth," there shall be
excluded from any calculation thereof the amount of any unrealized gains and
losses included in the retained earnings of the Company and its Subsidiaries
arising from the Company's compliance with Financial Accounting Standards Board
Statement No. 115.
"Consolidated Short Term Debt" shall mean, as of any date of determination,
the total of all Short-Term Debt of the Company and its Subsidiaries outstanding
on such date, after eliminating all offsetting debits and credits between the
Company and its Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Company and its Subsidiaries in accordance with GAAP.
"Consolidated Total Assets" shall mean, as of any date of determination,
the total assets of the Company and its Subsidiaries that would be shown as
assets on a consolidated balance sheet of the Company and its Subsidiaries as of
such time prepared in accordance with GAAP, after eliminating all amounts
properly attributable to minority interests, if any, in the stock and surplus of
Subsidiaries.
"Consolidated Total Capitalization" shall mean, as of any date of
determination thereof, the sum of (a) Consolidated Net Worth and (b)
Consolidated Debt.
"Control Event" is defined in Section 8.3(i).
B-1
"Debt" shall mean, with respect to any Person, without duplication,
(a) its liabilities for borrowed money and its redemption obligations
in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under
any conditional sale or other title retention agreement with respect to any
such property);
(c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
"Debt Prepayment Application" shall mean, with respect to any Transfer of
property, the application by the Company or its Subsidiaries of cash in an
amount equal to the Net Proceeds Amount with respect to such Transfer to pay
Senior Debt of the Company or any Subsidiary (other than Senior Debt owing to
the Company, any of its Subsidiaries or any Affiliate and Senior Debt in respect
of any revolving credit or similar credit facility providing the Company or any
of its Subsidiaries with the right to obtain loans or other extensions of credit
from time to time, except to the extent that in connection with such payment of
Senior Debt the availability of credit under such credit facility is permanently
reduced by an amount not less than the amount of such proceeds applied to the
payment of such Senior Debt).
"Default" shall mean an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" shall mean that rate of interest that is the greater of (1)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (2) 2% over the rate of interest publicly announced by
Bank of America in New York, New York as its "reference" rate.
"Disposition Value" shall mean with respect to any property
(a) in the case of property that does not constitute Subsidiary Stock,
the book value thereof, valued at the time of such disposition in good
faith by the Company, and
(b) in the case of property that constitutes Subsidiary Stock, an
amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that the
book value of such Subsidiary Stock represents of the book value of all of
the outstanding capital stock of such Subsidiary (assuming, in making such
calculations, that all securities convertible into such capital stock are
so converted and giving full effect to all transactions that would occur or
be required in connection with such conversion) determined at the time of
the disposition thereof, in good faith by the Company.
"Environmental Laws" shall mean any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
B-2
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean, as of any date of determination thereof and
with respect to any property, the sale value of such property that would be
realized in an arm's-length sale at such time between an informed and willing
buyer and an informed and willing seller (neither being under a compulsion to
buy or sell).
"Fairfax" shall mean Fairfax Financial Holdings Limited, a Canadian
corporation, and any Person that succeeds to all, or substantially all, of the
assets and business of Fairfax Financial Holdings Limited.
"Fairfax Debt" shall mean that certain $200,000,000 Floating Rate Term Note
dated June 19, 2001 issued by the Company and held by Fairfax Inc.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States of America.
"Governmental Authority" shall mean
(a) the government of
(1) the United States of America or any State or other political
subdivision thereof, or
(2) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts jurisdiction
over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
"Guaranty" shall mean, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including, without limitation, obligations incurred
through an agreement, contingent or otherwise, by such Person:
(a) to purchase such Debt or obligation or any property constituting
security therefor;
(b) to advance or supply funds (1) for the purchase or payment of such
Debt or obligation, or (2) to maintain any working capital or other balance
sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of
such Debt or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Debt or obligation
of the ability of any other Person to make payment of the Debt or
obligation; or
(d) otherwise to assure the owner of such Debt or obligation against
loss in respect thereof.
In any computation of the Debt or other liabilities of the obligor under
any Guaranty, the Debt or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Material" shall mean any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required by, or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage or filtration of which is
or shall be restricted, prohibited or penalized by, any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
B-3
"holder" shall mean, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"Institutional Accredited Investor" shall mean an "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Institutional Investor" shall mean (a) any original purchaser of a Note,
(b) any holder of a Note holding more than $2,000,000 in aggregate principal
amount of the Notes then outstanding and (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.
"Investment" shall mean any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries (a) in any Person, whether
by acquisition of shares, Debt or other obligation or security, or by loan,
Guaranty, advance, capital contribution or otherwise or (b) in any property;
provided, however, that "Investments" shall not include obligations of the
Company or any of its Subsidiaries under reinsurance contracts entered into in
the ordinary course of business with Affiliates of Fairfax.
"Investment Administration Agreements" shall mean those separate and
several Investment Administration Agreements dated as of April 13, 1999, May 11,
2001 and May 11, 2001, between Fairfax and TIG Reinsurance Company, Odyssey
Reinsurance Corporation and Xxxxxx Insurance Company, respectively, in each
case, as in effect on the date of the Closing.
"Investment Management Agreements" shall mean those separate and several
Investment Management Agreements dated as of April 13, 1999, May 11, 2001 and
May 11, 2001, between Xxxxxxx Watsa Investment Counsel, Ltd. and TIG Reinsurance
Company, Odyssey Reinsurance Corporation and Xxxxxx Insurance Company,
respectively, in each case, as in effect on the date of the Closing.
"Lien" shall mean, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.7.
"Material" shall mean material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries, taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the Notes or (c) the
validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" shall mean any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
"Net Proceeds Amount" shall mean, with respect to any Transfer of any
Property by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the Fair
Market Value of such consideration at the time of the consummation of such
Transfer) received by such Person in respect of such Transfer, minus
(b) all ordinary and reasonable out-of-pocket costs and expenses
actually incurred by such Person in connection with such Transfer.
"Notes" is defined in Section 1.
B-4
"Officer's Certificate" shall mean a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Person" shall mean an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" shall mean an "employee benefit plan" subject to Title IV of ERISA
or Section 412 of the Code that is or, within the preceding five years, has been
established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the Company or
any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate
could reasonably be expected to have any liability.
"Preferred Stock" shall mean any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"Priority Debt" shall mean, without duplication, the sum of (a) all Debt of
the Company secured by Liens, other than Liens permitted by paragraphs (a)
through (j), inclusive, of Section 10.4 and (b) all Debt of Subsidiaries
(excluding (1) Debt owing to the Company or a Wholly-Owned Subsidiary and (2)
Debt of any Person that is outstanding on the date such Person becomes a
Subsidiary as long as such Debt is not incurred in contemplation of such Person
becoming a Subsidiary).
"Property Reinvestment Application" shall mean, with respect to any
Transfer of property, the application of an amount equal to the Net Proceeds
Amount with respect to such Transfer to the acquisition by the Company or any
Subsidiary of operating assets of the Company or any Subsidiary to be used in
the principal business of such Person.
"property" or "properties" shall mean, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, xxxxxx
or inchoate.
"Proposed Prepayment Date" is defined in Section 8.3(c).
"PTE" is defined in Section 6.2(a).
"Purchasers" is defined in the Preamble.
"QPAM Exemption" shall mean Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Required Holders" shall mean, at any time, the holders of more than 50% in
aggregate principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates, including, without
limitation, Fairfax Inc. and Zenith Insurance Company).
"Responsible Officer" shall mean any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Senior Debt" shall mean any Debt of the Company of any Subsidiary that is
not in any manner subordinated in right of payment to the Notes or any other
Debt of such Person.
"Senior Financial Officer" shall mean the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"Short Term Debt" shall mean, with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures on demand or on or prior to November 30, 2006. For
purposes of determining "Short Term Debt," there shall be included that portion
of
B-5
any Debt, not otherwise constituting Short Term Debt, that matures on or prior
to November 30, 2006 (whether by sinking fund or other required prepayment).
"Significant Subsidiary" shall mean, at any time, any Subsidiary (a) the
assets of which exceed 5% of Consolidated Total Assets or (b) the revenues of
which account for more than 5% of the consolidated total revenues of the Company
and its Subsidiaries determined in accordance with GAAP.
"Source" is defined in Section 6.2.
"Subsidiary" shall mean, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Stock" shall mean, with respect to any Person, the stock (or
any options or warrants to purchase stock or other securities exchangeable for
or convertible into stock) of any Subsidiary of such Person.
"Successor Corporation" is defined in Section 10.5(a).
"Transfer" shall mean, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock. For purposes of determining the
application of the Net Proceeds Amount in respect of any Transfer, the Company
may designate any Transfer as one or more separate Transfers each yielding a
separate Net Proceeds Amount. In any such case, (a) the Disposition Value of any
property subject to each such separate Transfer and (b) the amount of
Consolidated Total Assets attributable to any property subject to each such
separate Transfer shall be determined by ratably allocating the aggregate
Disposition Value of, and the aggregate Consolidated Total Assets attributable
to, all property subject to all such separate Transfers to each such separate
Transfer on a proportionate basis.
"Travelers Purchasers" shall mean the Purchasers, other than Zenith
Insurance Company and Fairfax Inc.
"Wholly-Owned Subsidiary" shall mean any Subsidiary 100% of all of the
equity interests (except directors' qualifying shares) and voting interests of
which are owned by any one or more of the Company and the Company's other
Wholly-Owned Subsidiaries.
B-6
CHANGES IN CORPORATE STATUS
None.
Schedule 4.9
(to
Note Purchase Agreement)
DISCLOSURE MATERIALS
None.
Schedule 5.3
(to
Note Purchase Agreement)
SCHEDULE 5.4
SUBSIDIARIES AND AFFILIATES OF THE COMPANY
Please see attached chart. Subsidiaries are marked with an "S".
Fairfax Financial Holdings Limited ("Fairfax") owns approximately 40.8% of
the outstanding common shares of The Hub Group Limited ("Hub"). A subsidiary of
Fairfax has recently entered into an agreement to purchase additional shares of
common stock of Zenith National Insurance Corp. ("Zenith"). Following the
completion of the transaction, Fairfax will indirectly own approximately 42.1%
of the outstanding shares of common stock of Zenith. Fairfax disclaims that it
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of Hub or Zenith.
[GRAPHIC OMITTED]
DIRECTORS AND SENIOR OFFICERS
NAME POSITION
---- --------
V. XXXX XXXXX........................ Chairman of the Board of Directors
XXXXX X. XXXX........................ Vice Chairman of the Board of Directors
XXXXXX X. XXXXXXX.................... President, Chief Executive Officer and Director
XXXXXXX X. XXXXX..................... Executive Vice President
XXXXXXX X. XXXXXXX................... Executive Vice President and Chief Financial Officer
XXXXXXX X. XXXXXXX, XX............... Senior Vice President and Controller
XXXXXX X. XXXXX...................... Senior Vice President, General Counsel and Corporate
Secretary
XXXXXXX X. XXXXXXX................... Director
XXXXXXX X. XXXXXXXXX................. Director
XXXXXXX XXXXXX....................... Director
XXXX X. XXXXXX....................... Director
XXXXXXXX XXXXX....................... Director
Schedule 5.4
(to
Note Purchase Agreement)
SCHEDULE 5.5
FINANCIAL STATEMENTS
The following financial statements are included in the Company's Form 10-Q
for the six months ended June 30, 2001 or the Company's common stock prospectus
dated June 13, 2001 each attached to the confidential private placement
memorandum dated October 2001 delivered to each Purchaser.
ODYSSEY RE HOLDINGS CORP.
Consolidated financial statements as of June 30, 2001 (unaudited) and
December 31, 2000 (audited) and for periods ended June 30, 2001 and 2000
Unaudited pro forma combined consolidated financial statements as of March
31, 2001 and for periods ended March 31, 2001 and December 31, 0000
XXXXXXX XXXXXXX REINSURANCE CORPORATION
Consolidated financial statements as of December 31, 1999 and 2000 and for
the years ended December 31, 1998, 1999 and 2000
Unaudited consolidated financial statements as of March 31, 2001 and for
the three months ended March 31, 2000 and 2001
TIG REINSURANCE COMPANY
Consolidated financial statements as of December 31, 1998 and for the year
ended December 31, 1998
Unaudited consolidated financial statements as of April 13, 1999 and for
the period ended April 13, 1999
Schedule 5.5
(to
Note Purchase Agreement)
CERTAIN LITIGATION
None.
Schedule 5.8
(to
Note Purchase Agreement)
PATENTS, ETC.
None.
Schedule 5.11
(to
Note Purchase Agreement)
USE OF PROCEEDS
The proceeds from the sale of the Notes will be used to repay
existing Debt of the Company and for general corporate purposes.
Schedule 5.14
(to Note Purchase Agreement)
SCHEDULE 5.15
EXISTING DEBT; FUTURE LIENS
Odyssey Re Holdings Corp.
$200,000,000 of three-year term notes issued to subsidiaries of Fairfax
Financial Holdings Limited.
Schedule 5.15
(to Note Purchase Agreement)
FORM OF NOTE
ODYSSEY RE HOLDINGS CORP.
7.49% SENIOR NOTE DUE NOVEMBER 30, 2006
No. R- Date
$ PPN 67612W A*9
For Value Received, the undersigned, Odyssey Re Holdings Corp. (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to , or registered
assigns, the principal sum of Dollars (or so much thereof as shall not
have been prepaid) on November 30, 2006, with interest (computed on the basis of
a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 7.49% per annum from the date hereof, payable semiannually, on the last
day of May and November in each year, commencing with the May 31 or November 30
next succeeding the date hereof, until the principal hereof shall have become
due and payable and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreement referred to below), payable semiannually as aforesaid (or, at
the option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (1) 9.49% or (2) 2% over the rate of
interest publicly announced by Bank of America from time to time in New York,
New York as its "reference" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company in New York, New York or at such
other place as the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to that certain Note Purchase Agreement dated as of November 15,
2001 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
This Note is subject to optional prepayment, in whole or from time to time
in part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs
and is continuing, the principal of this Note may be declared or otherwise
become due and payable in the manner, at the price (including any applicable
Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
E-1
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of New York
excluding choice of law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
ODYSSEY RE HOLDINGS CORP
By
--------------------------------------
Its
------------------------------------
Exhibit 1
(to Note Purchase Agreement)
E-2
FORM OF OPINION OF COUNSEL
FOR THE COMPANY
(000) 000-0000
December 4, 2001
To: The Purchasers listed on
Schedule A to the Note Purchase Agreement
(as defined below)
ODYSSEY RE HOLDINGS CORP.
7.49% SENIOR NOTES DUE 2006
Ladies and Gentlemen:
We are acting as counsel to Odyssey Re Holdings Corp., a Delaware
corporation (the "Company"), in connection with the purchase, subject to the
terms and conditions set forth in the note purchase agreement dated as of
November 15, 2001 (the "Note Purchase Agreement") among the Company and each of
the purchasers listed on Schedule A thereto (the "Purchasers"), by the
Purchasers of U.S.$100,000,000 aggregate principal amount of the Company's 7.49%
Senior Notes due November 30, 2006 (the "Notes"). This opinion is being
delivered to you in accordance with Section 4.4(a) of the Note Purchase
Agreement. All capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Note Purchase Agreement.
In such capacity, we have examined (a) a signed copy of the Note Purchase
Agreement; (b) copies of the signed Notes; and (c) a copy of the Private
Placement Memorandum dated October 2001.
We have also examined the originals, or copies identified to our
satisfaction, of such corporate records of the Company, certificates of public
officials, officers of the Company and other persons and such other documents,
agreements and instruments, as we have deemed necessary as a basis for the
opinions hereinafter expressed. In our examinations, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity with the originals of all documents submitted to
us as copies.
Exhibit 4.4(a)
(to Note Purchase Agreement)
Our opinions expressed below are limited to the laws of the State of New
York, the General Corporation Law of the State of Delaware and the federal laws
of the United States, and we do not express any opinion herein concerning any
other law.
Based upon the foregoing, and having regard for such legal considerations
as we deem relevant, we are of the opinion that:
(i) The Note Purchase Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms.
(ii) The Notes have been duly authorized, executed and delivered by
the Company and constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
(iii) Based upon our review of New York State and United States
federal statutes, rules and regulations which in our experience are
normally applicable to transactions of the type provided for in the Note
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 federal or New York State court or governmental agency or
body is required in connection with the execution and delivery by the
Company of, and the performance by the Company of its obligations under,
the Note Purchase Agreement and the Notes.
(iv) Assuming the accuracy of the representations of the Company and
of the Purchasers in the Note Purchase Agreement and of Banc of America
Securities LLC in its agent's certificate dated the date hereof, no
registration of the offer and sale of Notes to the Purchasers under the
Securities Act of 1933, as amended, and no qualification of a trust
indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended, is required in connection with the offer, sale and delivery of the
Notes under the circumstances contemplated by the Note Purchase Agreement.
(v) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Note Purchase Agreement and
the Notes will not contravene or violate 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 or any of its Subsidiaries or
violate the provisions of any United States federal or New York State
statute, rule or regulation applicable to the Company or any of its
Subsidiaries. This opinion is based on our review of the Requirements of
Law and those orders, judgments and decrees specifically identified to us
by the Company as being those to which it or its Subsidiaries are subject,
but without our having made any special investigation concerning any other
requirements of law.
(vi) The issuance of the Notes and the use of proceeds thereof as
contemplated by the Note Purchase Agreement will not result in any
violation of Regulations T, U or X of the Board of Governors of the Federal
Reserve System (12 C.F.R., Chapter II, as amended).
(vii) The Company is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
The opinions set forth in sub paragraphs (i) and (ii) above are subject to
the qualification that enforcement is (x) subject to the effect of any
applicable bankruptcy, insolvency (including, without limitation, all laws
relating to preferences or fraudulent transfers), reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and to
possible judicial action giving effect to governmental actions or foreign laws
affecting creditors' rights and (y) subject to the effect of general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether enforcement
is considered in a proceeding in equity or at law).
These opinions are intended solely for your benefit and are not to be made
available to, or relied upon by, any other person or entity (other than
permitted transferees of the Notes) without our prior written consent, provided
that you may make this opinion available to (i) your independent auditors and
attorneys, (ii) any
E-4.4(a)-2
state or federal authority or independent insurance board or body having
regulatory jurisdiction over you, (iii) any person pursuant to order or legal
process of any court or governmental agency, (iv) any person in connection with
any legal action to which you are a party arising out of or in respect of the
Note Purchase Agreement or the Notes, and (v) any proposed purchasers or
subsequent holders of the Notes.
Very truly yours,
E-4.4(a)-3
FORM OF OPINION OF THE GENERAL COUNSEL
TO THE COMPANY
December 4, 2001
To: The Purchasers listed on
Schedule A to the Note Purchase Agreement
(as defined below)
ODYSSEY RE HOLDINGS CORP.
7.49% SENIOR NOTES DUE 2006
Ladies and Gentlemen:
I, Xxxxxx X. Xxxxx, Senior Vice President, General Counsel and Corporate
Secretary for Odyssey Re Holdings Corp., a Delaware corporation (the "Company"),
licensed to practice law in the State of New York, have agreed to provide an
in-house legal opinion in connection with the purchase, subject to the terms and
conditions set forth in the note purchase agreement dated as of November 15,
2001 (the "Note Purchase Agreement") between the Company and each of the
purchasers listed on Schedule A thereto (the "Purchasers"), by the Purchasers of
U.S.$100,000,000 principal amount of the Company's 7.49% Senior Notes due
November 30, 2006 (the "Notes"). This opinion is being delivered to you in
accordance with Section 4.4(b) of the Note Purchase Agreement. All capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Note Purchase Agreement.
In such capacity I have examined (a) a signed copy of the Note Purchase
Agreement; (b) copies of the signed Notes; and (c) a copy of the Private
Placement Memorandum dated October 2001.
I have also examined the originals, or copies identified to my
satisfaction, of such corporate records of the Company and its subsidiaries,
certificates of public officials, officers of the Company and other persons, and
such other documents, agreements and instruments, as I have deemed necessary as
a basis for the opinions hereinafter expressed. In my examination, I have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to me as originals and the conformity with the originals of all
documents submitted to me as copies.
The opinions set forth below are limited to the laws of the State of New
York, the General Corporation Law of the State of Delaware and the federal laws
of the United States, and I do not express any opinion herein concerning any
other laws.
Based upon the foregoing, I am of the opinion that
Exhibit 4.4(b)
(to Note Purchase Agreement)
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware and has
the corporate power and authority under such laws to enter into and perform
its obligations under the Note Purchase Agreement and the Notes and has the
corporate power and authority to conduct the activities in which it is now
engaged and is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business transacted
by it makes such licensing or qualification necessary other than those
jurisdictions as to which the failure to be so licensed, qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(ii) Each Subsidiary is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is duly licensed or qualified and is in
good standing as a foreign corporation or other legal entity in each
jurisdiction in which the character of the properties owned or leased by it
or the nature of the business transacted by it makes such licensing or
qualification necessary other than those jurisdictions as to which the
failure to be so licensed, qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect and all of the issued and outstanding shares of capital
stock or other equity interests of each such Subsidiary have been duly
issued, are fully paid and non-assessable and are owned by the Company, by
one or more Subsidiaries, or by the Company and one or more Subsidiaries.
(iii) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Note Purchase
Agreement and issuance and sale of the Notes will not conflict with or
result in any breach of any of the provisions of or constitute a default
under or result in the creation or imposition of any Lien upon any of the
property of the Company pursuant to the provisions of the Amended and
Restated Certificate of Incorporation or By-laws of the Company or any
agreement or other instrument known to me to which the Company is a party
or by which the Company may be bound.
This opinion letter speaks only as of the date hereof. I do not assume, and
I expressly disclaim, any responsibility to advise any of you of any change of
law or fact that may occur after the date of this opinion letter even though
such change may affect the legal analysis, a legal conclusion or any other
matter set forth in or relating to the opinion letter.
These opinions are intended solely for your benefit and are not to be made
available to, or relied upon by, any other person or entity (other than
permitted transferees of the Notes) without my prior written consent, provided
that you may make this opinion available to (i) your independent auditors and
attorneys, (ii) any state or federal authority or independent insurance board or
body having regulatory jurisdiction over you, (iii) any person pursuant to order
or legal process of any court or governmental agency, (iv) any person in
connection with any legal action to which you are a party arising out of or in
respect of the Note Purchase Agreement or the Notes, and (v) any proposed
purchasers or subsequent holders of the Notes.
Very truly yours,
E-4.4(b)-2
FORM OF OPINION OF SPECIAL COUNSEL
TO THE TRAVELERS PURCHASERS
The closing opinion of Xxxxxxx and Xxxxxx, special counsel to the Travelers
Purchasers, called for by Section 4.4(c) of the Note Purchase Agreement, shall
be dated the date of the Closing and addressed to Zenith Insurance Company and
each Travelers Purchaser, shall be satisfactory in form and substance to each
Travelers Purchaser and shall be to the effect that:
1. The Company is a corporation, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and the
corporate authority to execute and deliver the Note Purchase Agreement and
to issue the Notes.
2. The Note Purchase Agreement has been duly authorized by all
necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding contract of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, and the Notes being delivered on the
date hereof have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance and similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
4. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement do not, under
existing law, require the registration of the Notes under the Securities
Act or the qualification of an indenture under the Trust Indenture Act of
1939, as amended.
The opinion of Xxxxxxx and Xxxxxx shall also state that the opinions of
Shearman and Sterling and Xxxxxx X. Xxxxx, Esq. are satisfactory in scope and
form to Xxxxxxx and Xxxxxx and that, in their opinion, Zenith Insurance Company
and each Travelers Purchaser is justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Xxxxxxx and Xxxxxx
may rely, as to matters referred to in paragraph 1, solely upon an examination
of the Certificate of Incorporation certified by, and a certificate of good
standing of the Company from, the Secretary of State of the State of Delaware,
the By-laws of the Company and the general business corporation law of the State
of Delaware. The opinion of Xxxxxxx and Xxxxxx is limited to the laws of the
State of New York, the general business corporation law of the State of Delaware
and the Federal laws of the United States.
With respect to matters of fact upon which such opinion is based, Xxxxxxx
and Xxxxxx may rely on appropriate certificates of public officials and officers
of the Company and upon representations of the Company and the Purchasers
delivered in connection with the issuance and sale of the Notes.
E-4.4(b)-3