EXHIBIT 99.1
EXECUTION COPY
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NYMAGIC, INC.
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SECURITIES PURCHASE AGREEMENT
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DATED AS OF JANUARY 31, 2003
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▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
NEW YORK, NEW YORK
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TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF UNITS..............................................................................1
1.01. The Units......................................................................................1
1.02. Purchase Price and Closing.....................................................................1
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................................1
2.01. Organization and Qualification.................................................................2
2.02. Authorized Capital Stock.......................................................................2
2.03. Issuance, Sale and Delivery of the Shares and the Options......................................3
2.04. Due Execution, Delivery and Performance of this Agreement......................................3
2.05. No Defaults....................................................................................4
2.06. No Actions.....................................................................................4
2.07. No Material Change.............................................................................4
2.08. Compliance.....................................................................................5
2.09. Taxes..........................................................................................5
2.10. Transfer Taxes.................................................................................5
2.11. Investment Company.............................................................................5
2.12. Compliance with Securities Laws................................................................5
2.13. Public Filings; Undisclosed Liabilities........................................................5
2.14. Reporting Company; Form S-3; New York Stock Exchange...........................................6
2.15. Governmental Permits, Etc......................................................................7
2.16. Brokers........................................................................................7
2.17. Regulatory Filings.............................................................................7
2.18. A.M. Best Rating...............................................................................7
2.19. Subsequent Events..............................................................................7
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS........................................................8
3.01. Organization and Standing of the Purchasers....................................................8
3.02. Authority; Enforceability......................................................................8
3.03. Acquisition for Investment.....................................................................8
4. CONDITIONS AT CLOSING...................................................................................9
4.01. Purchasers' Obligation.........................................................................9
5. COVENANTS OF THE COMPANY AND OTHER AGREEMENTS..........................................................10
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TABLE OF CONTENTS
(continued)
PAGE
5.01. Form D; Blue Sky Laws; Form 8-K...............................................................10
5.02. Reporting Status; Eligibility to Use Form S-3.................................................10
5.03. Listing.......................................................................................10
5.04. No Integration................................................................................11
5.05. The Option Shares.............................................................................11
5.06. Use of Proceeds...............................................................................11
5.07. Dealings with Affiliates......................................................................11
5.08. Appointment to Board of Directors.............................................................12
5.09. Observation Right.............................................................................12
5.10. [Intentionally Deleted].......................................................................12
5.11. Issuance of Certificates......................................................................12
5.12. Unrestricted Securities.......................................................................12
5.13. Sale of Company Securities....................................................................13
6. DEFINITIONS AND ACCOUNTING TERMS.......................................................................13
6.01. Certain Defined Terms.........................................................................13
6.02. Accounting Terms..............................................................................16
7. INDEMNIFICATION........................................................................................16
7.01. General Indemnity.............................................................................16
7.02. Indemnification Procedure.....................................................................16
8. MISCELLANEOUS..........................................................................................17
8.01. No Waiver; Cumulative Remedies................................................................17
8.02. Amendments, Waivers and Consents..............................................................17
8.03. Addresses for Notices.........................................................................18
8.04. Costs, Expenses and Taxes.....................................................................18
8.05. Binding Effect; Assignment....................................................................19
8.06. Survival of Representations and Warranties....................................................19
8.07. Prior Agreements..............................................................................19
8.08. Severability..................................................................................19
8.09. Confidentiality...............................................................................19
8.10. Governing Law.................................................................................20
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TABLE OF CONTENTS
(continued)
PAGE
8.11. Public Announcements..........................................................................20
8.12. Consent to Jurisdiction.......................................................................20
8.13. Waiver of Jury Trial..........................................................................20
8.14. Headings......................................................................................21
8.15. Counterparts..................................................................................21
8.16. Further Assurances............................................................................21
8.17. Specific Enforcement..........................................................................21
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SECURITIES PURCHASE AGREEMENT
Dated as of January 31, 2003
Each of the Purchasers Listed
on Schedule 1.01
Ladies and Gentlemen:
NYMAGIC, INC., a New York corporation (the "COMPANY"), hereby agrees
with each of you as follows:
1. PURCHASE AND SALE OF UNITS
1.01. THE UNITS. The Company has authorized the sale of (i) 400,000
shares of its authorized shares of Common Stock (the "SHARES") held in the
Company's treasury and (ii) options (the "OPTIONS") in the form of EXHIBIT A
hereto to purchase an additional 400,000 shares of Common Stock (such additional
400,000 shares of Common Stock in the aggregate issuable from time to time upon
exercise of the Options, collectively, the "OPTION SHARES") at a purchase price
of $21.00 per Unit, to the persons (individually, a "PURCHASER" and
collectively, the "PURCHASERS") and in the respective amounts set forth in
SCHEDULE 1.01 hereto.
1.02. PURCHASE PRICE AND CLOSING. The Company agrees to issue and sell
to the Purchasers and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchasers, severally, but not jointly, agree to purchase that number of the
Units set forth opposite their respective names in SCHEDULE 1.01. The aggregate
purchase price of the Units being acquired by each Purchaser is set forth
opposite such Purchaser's name in SCHEDULE 1.01. The closing of the purchase and
sale of the Units to be acquired by the Purchasers from the Company under this
Agreement (the "CLOSING") shall take place (including by means of courier,
facsimile and electronic transmissions) at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ &
Bockius LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on January
31, 2003 (the "CLOSING DATE"). At the Closing, the Company will deliver to each
Purchaser certificates for the number of (i) Shares and (ii) Options, in each
case, set forth opposite its name under the heading "Number of Common Shares"
and "Number of Options", as applicable, in SCHEDULE 1.01 registered, in each
case, on the books of the Company in such Purchaser's name (or its nominee),
against delivery of a transfer of funds to the account of the Company by wire
transfer, representing the cash consideration for the Units set forth opposite
such Purchaser's name under the heading "Aggregate Purchase Price" on SCHEDULE
1.01.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers, as of the
Closing Date, as follows:
2.01. ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New York and the Company is qualified to do business as a foreign corporation
in each jurisdiction in which qualification is required, except where failure to
so qualify could not reasonably be expected to have a Material Adverse Effect.
All of the Subsidiaries of the Company are listed on SCHEDULE 2.01(A). All of
the Insurance Subsidiaries of the Company are listed on SCHEDULE 2.01(B). Each
Subsidiary is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and is qualified to do business as a
foreign entity in each jurisdiction in which qualification is required, except
where failure to so qualify could not reasonably be expected to have a Material
Adverse Effect.
2.02. AUTHORIZED CAPITAL STOCK. As of the date hereof, the authorized
capital stock of the Company consists of 30,000,000 shares of Common Stock of
which 9,276,398 shares are issued and outstanding, 5,855,826 shares are held in
treasury and 618,700 shares are reserved for issuance under the Company's stock
option plans and for the issuance upon the exercise or conversion of warrants
and other convertible securities issued by the Company. All of such outstanding
shares of capital stock, which are outstanding or held in treasury, are duly
authorized, validly issued, fully paid and nonassessable and have been issued in
compliance with all state and federal securities laws and were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities. No shares of capital stock of the Company are
subject to preemptive rights or any other similar rights of the shareholders of
the Company or any liens or encumbrances imposed through the actions or failure
to act of the Company. Except as disclosed in the Company's publicly available
filings with the Commission filed before the date of this Agreement (the "PUBLIC
FILINGS") and except for the transactions contemplated hereby, (i) there are no
outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments
or rights of any character whatsoever that could require the Company to issue
additional shares of capital stock of the Company; (ii) there are no agreements
or arrangements (other than the Registration Rights Agreement) under which the
Company is or will be obligated to register the sale of any of its securities
under the Securities Act; (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders) that will be triggered by the issuance of
the Shares, the Options and, upon exercise, the Option Shares; and (iv) there
are no shareholders agreements, voting agreements or other similar agreements
with respect to the Common Stock. The Company has furnished to the Purchasers
true and correct copies of the Certificate of Incorporation as in effect on the
date hereof, the Bylaws as in effect on the date hereof and the terms of all
securities (other than employee stock options) convertible into or exercisable
for Common Stock of the Company and the material rights of the holders thereof
in respect thereto. The description of the Company's stock, stock bonus and
other stock plans or arrangements and the options or other rights granted and
exercised thereunder, set forth in the Public Filings accurately and fairly
presents in all material respects the information required to be shown with
respect to such plans, arrangements, options and rights. With respect to each
Subsidiary, (i) all the issued and outstanding shares of each Subsidiary's
capital stock have been duly authorized and validly issued, are fully paid and
nonassessable, have been issued in compliance with applicable federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and (ii) there
are no outstanding options to purchase, or any preemptive rights or other rights
to subscribe for or to
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purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of the Subsidiary's capital stock or any
such options, rights, convertible securities or obligations. All Subsidiaries
included on SCHEDULE 2.01(A) are one hundred percent (100%) owned, directly or
indirectly, by the Company.
2.03. ISSUANCE, SALE AND DELIVERY OF THE SHARES AND THE OPTIONS.
(a) The Shares have been duly authorized and, when issued, delivered
and paid for in the manner set forth in this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all pledges,
liens, restrictions, claims and encumbrances, and will conform in all material
respects to the description thereof set forth in the Public Filings. No
preemptive rights or other rights to subscribe for or purchase exist with
respect to the issuance and sale of the Shares by the Company pursuant to this
Agreement. The Board of Directors has approved the issuance from the treasury of
the Shares pursuant to the terms hereof. No further corporate authorization or
approval (including the approval of the Company's shareholders) is required
under the rules of the New York Stock Exchange with respect to the transactions
contemplated by this Agreement and the Related Agreements, including, without
limitation, the issuance of the Shares and the inclusion thereof of the Shares
for trading on the New York Stock Exchange.
(b) When issued, delivered and paid for in the manner set forth in
this Agreement, each Purchaser will acquire good and marketable title to the
Options, free and clear of all pledges, liens, restrictions, claims and
encumbrances. The Option Shares are duly authorized and reserved for issuance in
the Company's treasury. Upon exercise of the Options, in whole or, from time to
time, in part, and upon payment of the exercise price therefor, in accordance
with the terms of the Options, each Purchaser will acquire good and marketable
title to the Option Shares, free and clear from all pledges, liens,
restrictions, claims and encumbrances, will not be subject to any preemptive
rights or other similar rights of shareholders of the Company and, upon
issuance, the Option Shares will be validly issued, fully paid and
non-assessable and will conform in all material respects to the description of
the Common Stock set forth in the Public Filings. The Board of Directors has
approved the issuance of the Options and the Option Shares pursuant to the terms
hereof. No further corporate authorization or approval (including the approval
of the Company's shareholders) is required under the rules of the New York Stock
Exchange with respect to the transactions contemplated by this Agreement and the
Related Agreements, including, without limitation, the issuance of the Options
and the inclusion thereof of the Option Shares for trading on the New York Stock
Exchange.
2.04. DUE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT. The
Company has full legal right, corporate power and authority to enter into this
Agreement, each Related Agreement and perform the transactions contemplated
hereby and thereby. This Agreement and each Related Agreement has been duly
authorized, executed and delivered by the Company. The execution, delivery and
performance of this Agreement and each Related Agreement by the Company and the
consummation of the transactions herein contemplated will not violate any
provision of the organizational documents of the Company or any of its
Subsidiaries and will not result in the creation of any lien, charge, security
interest or encumbrance upon any assets of the Company or any of its
Subsidiaries pursuant to the terms or provisions of, and will not (i) conflict
with, result in the breach or violation of, or constitute, either by itself or
upon notice or
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the passage of time or both, a default under (A) any agreement, lease,
franchise, license, permit or other instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective properties may be bound or affected and in each case
which could have a Material Adverse Effect, or (B) any statute or any judgment,
decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company or
any of its Subsidiaries or any of their respective properties where such
conflict, breach, violation or default is likely to result in a Material Adverse
Effect. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the execution and delivery of this Agreement, each Related Agreement or the
consummation of the transactions contemplated by this Agreement and each Related
Agreement, except for compliance with the federal securities laws applicable to
the sale of the Units. Upon the execution and delivery of this Agreement and
each Related Agreement, and assuming the valid execution thereof by each
Purchaser, if applicable, this Agreement and each Related Agreement will
constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
2.05. NO DEFAULTS. Except as disclosed in the Public Filings and except
as to defaults, violations and breaches which individually or in the aggregate
could not have a Material Adverse Effect, neither the Company nor any of its
Subsidiaries is in violation or default of any provision of its certificate of
incorporation or bylaws, or, to the Company's Knowledge, in breach of or default
with respect to any provision of any agreement, judgment, decree, order, lease,
franchise, license, permit or other instrument to which it is a party or by
which it or any of its properties are bound; and, to the Company's Knowledge,
there does not exist any state of fact which, with notice or lapse of time or
both, would constitute an event of default on the part of the Company or any of
its Subsidiaries as defined in such documents, except such defaults which,
individually or in the aggregate, could not have a Material Adverse Effect.
2.06. NO ACTIONS. Except as disclosed in the Public Filings, there are
no legal or governmental actions, suits or proceedings pending or threatened in
writing to which the Company or any of its Subsidiaries is or may be a party or
of which property owned or leased by the Company or any of its Subsidiaries is
or may be the subject, or related to environmental or discrimination matters,
which actions, suits or proceedings, individually or in the aggregate, might
prevent the Company's execution, delivery and performance of this Agreement
and/or each Related Agreement.
2.07. NO MATERIAL CHANGE. Except as disclosed in the Public Filings,
since September 30, 2002 the Company and the Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice, and there has not occurred any event, condition, circumstance, change
or development (whether or not in the ordinary course of business) that,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect.
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2.08. COMPLIANCE. Neither the Company nor any of its Subsidiaries has
been advised that it is not conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting its business, except where failure to be so in compliance could not
have a Material Adverse Effect.
2.09. TAXES. To the Company's Knowledge, each of the Company and its
Subsidiaries has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon,
and neither the Company nor any of its Subsidiaries has been advised in writing
of any tax deficiency which has been asserted or threatened against it which
could have a Material Adverse Effect.
2.10. TRANSFER TAXES. On the Closing Date, all stock transfer or other
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Units to be sold to each Purchaser hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been complied with.
2.11. INVESTMENT COMPANY. Neither the Company nor any Subsidiary is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for an investment company, within the meaning of the Investment
Company Act of 1940, as amended.
2.12. COMPLIANCE WITH SECURITIES LAWS. Neither the Company nor any
Person acting on behalf of the Company has conducted any "general solicitation,"
as described in Rule 502(c) under Regulation D promulgated under the Securities
Act ("REGULATION D"), with respect to any of the Units being offered hereby.
Neither the Company, nor any of its Affiliates, nor any Person acting on their
behalf, has directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would prevent
the parties hereto from consummating the transactions contemplated hereby
pursuant to an exemption from registration under the Securities Act pursuant to
the provisions of Regulation D. The transactions contemplated by this Agreement
and the Options are exempt from the registration requirements of the Securities
Act, assuming the accuracy of the representations and warranties herein of each
Purchaser to the extent relevant for such determination. The issuance of the
Units to each Purchaser will not be integrated with any other issuance of the
Company's securities (past, current or future) which requires shareholder
approval under the rules of the New York Stock Exchange or which would result in
a violation of the Securities Act.
2.13. PUBLIC FILINGS; UNDISCLOSED LIABILITIES. Since December 31, 2001,
the Company has filed all required reports, schedules, forms, proxy,
registration and other statements and other documents with the Commission. As of
the date of this Agreement, the last Public Filing filed by the Company was a
Report on Form 8-K, dated November 14, 2002. As of their respective filing
dates, the Public Filings complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission promulgated thereunder applicable to
the Public Filings. As of their respective filing dates, none of the Public
Filings contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except to the extent such statements have been modified or
superseded by a later Public Filing filed and publicly available prior to the
Closing Date, the circumstances or bases for which
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modifications or supersessions have not and will not individually or in the
aggregate result in any material liability or obligation on behalf of the
Company under the Securities Act, the Exchange Act, the rules promulgated under
the Securities Act or the Exchange Act, or any federal, state or local
anti-fraud, blue-sky, securities or similar laws. The Company does not have
pending before the Commission any request for confidential treatment of
information and to the Company's Knowledge no such request is contemplated by
the Company prior to the time the Registration Statement which is contemplated
by the Registration Rights Agreement is first ordered effective by the
Commission and there is not pending nor, to the Company's Knowledge, is there
contemplated, nor has there been any, investigation by the Commission involving
the Company or any current or former director or officer of the Company. The
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing. The consolidated financial statements
of the Company included in the Public Filings (as amended or supplemented by any
later filed Public Filings filed and publicly available prior to December 31,
2002), comply as to form in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the Commission) applied on a
consistent basis during the periods involved (except as may be indicated in
notes thereto) and fairly present the consolidated financial position of the
Company and the Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
Except as set forth in the Public Filings, neither the Company nor any
Subsidiary has any obligation or liability of any nature whatsoever (direct or
indirect, matured or unmatured, absolute, accrued, contingent or otherwise)
either (i) required by GAAP to be set forth on a consolidated balance sheet of
the Company and the Subsidiaries or in the notes thereto or (ii) which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, other than liabilities and obligations reflected or
reserved against in the consolidated financial statements of the Company and its
consolidated subsidiaries included in the Company's quarterly report on Form
10-Q for the quarter ended September 30, 2002, or incurred since the date of the
balance sheet included in such financial statements in the ordinary course of
business which are not individually or collectively material to the Company and
the Subsidiaries taken as a whole.
2.14. REPORTING COMPANY; FORM S-3; NEW YORK STOCK EXCHANGE. The Company
is subject to the reporting requirements of the Exchange Act, has one class of
securities registered under Section 12 of the Exchange Act, and has filed all
reports required thereby. The Company is eligible to register the Shares for
resale by each Purchaser on a registration statement on Form S-3 under the
Securities Act. There exist no facts or circumstances (including, without
limitation, any required approvals or waivers or any circumstances that may
delay or prevent the obtaining of accountant's consents) that reasonably could
be expected to prohibit or delay the preparation and filing of the Registration
Statement. No shareholder of the Company has any right (which has not been
waived or has not expired by reason of lapse of time following notification of
the Company's intent to file the Registration Statement) to require the Company
to register the sale of any shares owned by such shareholder under the
Securities Act in the Registration Statement. The Common Stock, the Shares and
the Option Shares are listed on the New York Stock Exchange, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common
Stock, the Shares and the Option Shares from the New York Stock
6
Exchange, nor has the Company received any notification that the Commission or
the New York Stock Exchange is contemplating terminating such registration or
listing.
2.15. GOVERNMENTAL PERMITS, ETC. To the Company's Knowledge, each of
the Company and its Subsidiaries has all necessary franchises, licenses,
certificates and other authorizations from any foreign, federal, state or local
government or governmental agency, department or body that are currently
necessary for the operation of the business of the Company and its Subsidiaries
as currently conducted, except where the failure to possess currently such
franchises, licenses, certificates and other authorizations could not reasonably
be expected to have a Material Adverse Effect, and the Company and Subsidiaries
have not received any notice of proceedings relating to the revocation or
modification of any such permit or any circumstance which would lead the Company
to believe that such proceedings are reasonably likely which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
could reasonably be expected to have a Material Adverse Effect.
2.16. BROKERS. No broker, finder, investment banker or other Person
is entitled to receive any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement and the Related
Agreements based upon arrangements made by or on behalf of the Company.
2.17. REGULATORY FILINGS. Except as set forth in the Public Filings or
that could not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect, the Company and each Subsidiary has filed or
otherwise provided all reports, data, other information and applications
required to be filed with or otherwise provided to the office of the
Superintendent of the New York State Insurance Department, and all other
federal, state or local governmental authorities with jurisdiction over the
Company and each Subsidiary and all required regulatory approvals in respect
thereof are in full force and effect on the date hereof. All such regulatory
filings were in compliance with applicable law when filed and no deficiencies
have been asserted by such governmental authority with respect to any such
regulatory filings that have not been satisfied.
2.18. A.M. BEST RATING. Each Insurance Subsidiary is currently rated
A-Excellent by A.M. Best Company, Inc. ("A.M. BEST") and neither the Company nor
any Insurance Subsidiary has received any communication from A.M. Best that A.M.
Best intends to lower or remove such rating.
2.19. SUBSEQUENT EVENTS. Since September 30, 2002,
(a) All material Contracts to which the Company or any Subsidiary is
a party or by which the Company or any Subsidiary or any of their respective
assets may be bound have been filed with the Commission (and are publicly
available), are described in the Public Filings or have been made available to
the Purchasers and, in each case, are in full force and effect.
(b) There has not been (i) any change by the Company in its
accounting methods, principles or practices, (ii) any revaluation by the Company
of any of its or any Subsidiary's material assets that could, individually or in
the aggregate, result in a Material Adverse Effect, (iii) any entry outside the
ordinary course of business by the Company or any
7
Subsidiary into any commitments or transactions material, individually or in the
aggregate, to the Company and the Subsidiaries taken as a whole, (iv) any
declaration, setting aside or payment of any dividends or distributions in
respect of the shares of Common Stock or any redemption, purchase or other
acquisition of any of the Company's securities, (v) any grant or issuance of any
Equity Securities of the Company or any Subsidiary or (vi) any increase in,
establishment of or amendment of any Employment, Consulting or Severance
Agreement, bonus, insurance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan or agreement or
arrangement, or any other increase in the compensation payable or to become
payable to any present or former directors, officers or employees of the Company
or any Subsidiary, except in the ordinary course of business consistent with
past practice.
(c) No transaction has occurred between or among the Company, any of
the Subsidiaries, officers or directors or any of their respective affiliates
that will be required to be described under applicable securities laws in future
Public Filings and that have not otherwise been disclosed to the Purchasers.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers, severally, but not jointly, hereby represents
and warrants to the Company, as of the Closing Date, as follows:
3.01. ORGANIZATION AND STANDING OF THE PURCHASERS. Each of the
Purchasers that is not an individual (an "ENTITY PURCHASER") is a corporation,
partnership or limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization.
3.02. AUTHORITY; ENFORCEABILITY. Each of the Entity Purchasers has all
requisite corporate, partnership or limited liability company power and
authority to enter into this Agreement and each Related Agreement to which it is
a party and to carry out its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and each Related Agreement
to which it is a party by each of the Entity Purchasers have been duly and
validly authorized by all requisite corporate, partnership or limited liability
company proceedings, as the case may be, on the part of each of the Purchasers.
This Agreement and each Related Agreement to which it is a party when executed
and delivered by each of the Purchasers is a valid and binding obligation of
such Purchaser, enforceable against it in accordance with its terms, except that
(a) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, rehabilitation, liquidation, conservatorship, receivership or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
3.03. ACQUISITION FOR INVESTMENT. Each of the Purchasers is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
Each of the Purchasers is acquiring the Units solely for its own account for the
purpose of investment and not with a view to or for sale
8
in connection with any distribution thereof, and it has no present intention or
plan to effect any distribution of the Units, the Shares, the Options or the
Option Shares. Each of the Purchasers represents that it has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment in the Units and that it is able to bear the
economic risk associated with such investment and can afford the complete loss
of such investment. The Purchasers acknowledge that the offer and sale of the
Shares, the Options and the Option Shares have not been registered under the
Securities Act.
4. CONDITIONS AT CLOSING
4.01. PURCHASERS' OBLIGATION. The obligation of each Purchaser to close
the transactions contemplated by this Agreement and each Related Agreement is
subject to the satisfaction on or prior to the date of the Closing of the
following conditions:
(a) The opinions of Mayer, Brown, ▇▇▇▇ & Maw, counsel to the Company
and ▇▇▇▇ ▇. ▇▇▇▇, the Company's General Counsel, each dated the Closing Date,
addressed to the Purchasers, substantially in the form and to the effect of
EXHIBIT B hereto.
(b) (i) Copies, as of a recent date, of the certificate of
incorporation, including all amendments thereto, of the Company and each of the
Subsidiaries certified by the Secretary of State or other appropriate official
of the jurisdiction of organization, (ii) certificates, as of a recent date,
from the Secretary of State of New York to the effect that the Company is in
good standing or subsisting in such jurisdiction, listing all charter documents
of the Company on file and attesting to its payment of all franchise or similar
taxes, and (iii) a certificate, as of a recent date, from the Secretary of State
or other appropriate official in each jurisdiction in which each of the
Subsidiaries is organized to the effect such Subsidiary is in good standing in
such jurisdiction.
(c) Fully executed copy of the Registration Rights Agreement, dated
the Closing Date, which shall be in full force and effect.
(d) Duly executed certificates representing the Shares and the
Options, dated the Closing Date, being purchased by each Purchaser.
(e) Fully executed copy of the Shareholder Purchase Agreement, dated
the Closing Date, in form and substance satisfactory to the Purchasers which
shall be in full force and effect.
(f) Duly executed certificates representing the shares of Common Stock
and options to purchase Common Stock being purchased by each Purchaser from the
Shareholder.
(g) A duly executed certificate of the secretary of the Company, dated
as of the Closing Date, certifying (i) that true and complete copies of the
Company's Certificate of Incorporation and Bylaws, as in effect on the Closing
Date, are attached to such certificate as exhibits thereto; and (ii) the
genuineness of the resolutions of the Board of Directors adopting the terms and
conditions of this Agreement, the Related Agreements and the transactions
contemplated thereby.
9
5. COVENANTS OF THE COMPANY AND OTHER AGREEMENTS
5.01. FORM D; BLUE SKY LAWS; FORM 8-K. The Company will file a Notice
of Sale of Securities on Form D with respect to the Units, if required under
Regulation D, and to provide a copy thereof to each Purchaser promptly after
such filing. The Company will take such action as it reasonably determines to be
necessary to qualify the Shares, the Options and the Option Shares for sale to
the Purchasers under this Agreement under applicable securities (or "blue sky")
laws of the states of the United States (or to obtain an exemption from such
qualification), and will provide evidence of any such action so taken to the
Purchasers on or prior to the date of the Closing. The Company will file with
the Commission a Current Report on Form 8-K disclosing this Agreement and the
transactions contemplated hereby within three (3) business days after the
Closing Date.
5.02. REPORTING STATUS; ELIGIBILITY TO USE FORM S-3. Throughout the
Registration Period (as defined in the Registration Rights Agreement), the
Company will timely file all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission under the reporting
requirements of the Exchange Act, and the Company will not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination. The Company will use its reasonable best efforts to continue to
meet, the "registrant eligibility" requirements for a secondary offering set
forth in the general instructions to Form S-3 to enable the registration of the
Registrable Securities as defined in the Registration Rights Agreement.
Notwithstanding the foregoing, (a) in the case of any consolidation or merger of
the Company with or into any other corporation or Person, or any other corporate
reorganization, in which the Company shall not be the continuing or surviving
entity of such consolidation, merger or reorganization, or any sale of all or
substantially all of the assets of the Company (any such transaction being
hereinafter referred to as a "REORGANIZATION"), in which, in each case, the
consideration to be paid to the Purchasers upon the consummation or effective
date of such Reorganization (the "EFFECTIVE DATE") is all cash for all of the
securities of the Company beneficially owned by all of the Purchasers then, in
each case, upon the Effective Date the obligations under this Section 5.02 shall
terminate, (b) in the case of any Reorganization in which the consideration to
be paid to all of the Purchasers upon the Effective Date is securities of a
Person other than the Company for all of the securities of the Company
beneficially owned by all of such Purchasers and such securities are listed on a
national securities exchange or the NASDAQ National Market, then upon the
Effective Date the obligations under this Section 5.02 shall NOT terminate;
PROVIDED that the obligations under this Section 5.02 shall terminate with
respect to securities of the Company if all of such Purchasers do not
beneficially own any securities of the Company as a result of such
Reorganization or (c) in the case of any proposed Reorganization in which the
consideration to be paid to all of the Purchasers upon the Effective Date is
securities of a Person for all of the securities of the Company beneficially
owned by such Purchasers and such securities are NOT listed on a national
securities exchange or the NASDAQ National Market, then the Company shall obtain
the PRIOR written consent of the Purchasers who beneficially own a
majority-in-interest of the Units (determined on an as-exercised basis) prior to
effecting such Reorganization.
5.03. LISTING. The Company will use its best efforts to obtain and,
so long as any Purchaser beneficially owns any of the Shares, the Options and
the Option Shares and the shares
10
of Common Stock, options and the shares of Common Stock underlying options to
purchase Common Stock purchased from the Shareholder, maintain the listing and
trading of its Common Stock (including the Shares and the Option Shares) on the
New York Stock Exchange and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the New
York Stock Exchange. Notwithstanding the foregoing, (a) in the case of any
Reorganization in which the consideration to be paid to the Purchasers upon the
Effective Date is all cash for all of the securities of the Company beneficially
owned by all of the Purchasers, then upon the Effective Date the obligations
under this Section 5.03 shall terminate, (b) in the case of any Reorganization
in which the consideration to be paid to all of the Purchasers upon the
Effective Date is securities of a Person other than the Company for all of the
securities of the Company beneficially owned by all of such Purchasers and such
securities are listed on a national securities exchange or the NASDAQ National
Market, then upon the Effective Date the obligations under this Section 5.03
shall NOT terminate; PROVIDED that the obligations to list and maintain such
listing of securities of the Company shall terminate if all of such Purchasers
do not beneficially own any securities of the Company as a result of such
Reorganization or (c) in the case of any proposed Reorganization in which the
consideration to be paid to all of the Purchasers upon the Effective Date is
securities of a Person for all of the securities of the Company beneficially
owned by all of such Purchasers and such securities are NOT listed on a national
securities exchange or the NASDAQ National Market, then the Company shall obtain
the PRIOR written consent of the Purchasers who beneficially own a
majority-in-interest of the Units (determined on an as-exercised basis) prior to
effecting such Reorganization. Until a Purchaser transfers, assigns or sells all
of the Shares, the Options and the Option Shares and the shares of Common Stock,
options and the shares of Common Stock underlying options to purchase Common
Stock purchased from the Shareholder beneficially owned by it, the Company will
promptly provide to each Purchaser copies of any notices it receives regarding
the continued eligibility of the Shares and the Option Shares for listing on the
New York Stock Exchange.
5.04. NO INTEGRATION. The Company will not make any offers or sales of
any security under circumstances that would cause the offering of the Shares,
the Options and the Option Shares to be integrated with any other offering of
securities by the Company (i) for the purpose of any shareholder approval
provision applicable to the Company or its securities or (ii) for purposes of
any registration requirement under the Securities Act.
5.05. THE OPTION SHARES. The Company has authorized and has reserved
and covenants to continue to reserve, free of preemptive rights and other
similar contractual rights of shareholders, a sufficient number of authorized
shares of Common Stock held in its treasury to satisfy the exercise of the
Options.
5.06. USE OF PROCEEDS. The Company shall use the net cash proceeds from
the issuance and sale of the Units for general corporate purposes.
5.07. DEALINGS WITH AFFILIATES. Except for transactions between or
among the Company and any of the Subsidiaries, the Company will not enter into,
or permit any Subsidiary to enter into, any transaction(s) (including, without
limitation, any loans or extensions of credit, release of guarantee, management
contract or royalty agreements, deferred or contingent compensation agreement,
consulting or other agreement) with any Affiliate, except transactions in the
ordinary
11
course of business and at prices and on terms not less favorable to the Company
or such Subsidiary than could be obtained on an arms-length basis from unrelated
third parties or otherwise approved by the disinterested and independent members
of the Board of Directors.
5.08. APPOINTMENT TO BOARD OF DIRECTORS. So long as Conning Capital
Partners VI, L.P. ("CONNING") and its affiliates beneficially own an aggregate
of 50% of the Shares and the Option Shares purchased hereunder and the shares of
Common Stock and the shares of Common Stock underlying the options to purchase
Common Stock purchased from the Shareholder pursuant to the Shareholder Purchase
Agreement, the Company hereby agrees to take all action within its power to
cause one (1) individual designated by Conning (the "CONNING DESIGNEE") to be
nominated, appointed and elected to the Board of Directors and appointed to the
following committees of the Board of Directors: (i) Underwriting, (ii) Human
Resources and (iii) Audit.
5.09. OBSERVATION RIGHT. So long as Conning is entitled to designate
the Conning Designee, the Purchasers shall have the right to designate one (1)
individual (the "OBSERVER") to attend any meeting of the Board of Directors;
PROVIDED, HOWEVER, at the reasonable request of the Chairman of the Board of
Directors, Conning shall remove the individual serving as the Observer and
designate another individual to be the Observer. The Observer shall not have the
right to vote on any matter presented to the Board of Directors but the Observer
may participate in discussions thereon. The Observer shall be entitled to
receive all written materials and other information given to the directors in
connection with such meetings at the same time such materials and information
are given to the directors and the Observers shall execute and deliver to the
Company a confidentiality agreement in the form and substance satisfactory to
the Company.
5.10. [INTENTIONALLY DELETED].
5.11. ISSUANCE OF CERTIFICATES. The Purchasers acknowledge that each
certificate representing the Shares, the Options and the Option Shares shall be
stamped or otherwise imprinted with a legend substantially in the following
form:
"THE OFFER AND SALE OF THE SECURITIES EVIDENCED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION
REQUIREMENTS THEREOF OR PURSUANT TO AN
EXEMPTION THEREFROM."
The Company will not give to its transfer agent of the Common Stock (the
"TRANSFER AGENT") any instruction with respect to the Shares and the Option
Shares other than as described in this Section 5.
5.12. UNRESTRICTED SECURITIES. If (i) the Shares, the Options or the
Option Shares represented by a certificate have been sold pursuant to an
effective registration statement filed under the Securities Act, (ii) a holder
of the Shares, the Options or the Option Shares provides the Company and the
Transfer Agent, as applicable, with an opinion of counsel reasonably
12
satisfactory to the Company to the effect that a public sale or transfer of any
of such securities may be made without registration under the Securities Act and
such sale either has occurred or may occur without restriction on the timing or
manner of such sale or transfer or (iii) the Shares, the Options or the Option
Shares represented by a certificate can be sold without restriction as to the
number of securities sold under Rule 144(k) promulgated under the Securities
Act, the Company will permit the transfer of the Shares, the Options or the
Option Shares, as the case may be, and the Transfer Agent or the Company, as
applicable, will issue one or more certificates, free from any restrictive
legend, in such name and in such denominations as specified by such holder.
5.13. SALE OF COMPANY SECURITIES. So long as Conning has exercised its
rights to designate the Conning Designee, Conning will and will use its
reasonable best efforts to cause its affiliates to abide by the Company's
policies relating to sales and purchases of securities of the Company by members
of the Board of Directors and the executive officers of the Company.
6. DEFINITIONS AND ACCOUNTING TERMS
6.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
"AFFILIATE" shall mean any officer or director of the Company or any
Subsidiary or holder of five percent (5%) or more of any class of capital stock
of the Company or any Subsidiary, or any member of their respective immediate
families or any corporation or other entity directly or indirectly controlled by
one or more of such officers, directors or 5% shareholders or members of their
immediate families.
"AGREEMENT" shall mean this Securities Purchase Agreement, including
all amendments, modifications or supplements thereto.
"A.M. BEST" shall have the meaning assigned to such term in Section
2.18.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Company,
as constituted from time to time.
"BYLAWS" shall mean the Bylaws of the Company, including all
amendments, modifications or supplements thereto.
"CERTIFICATE OF INCORPORATION" shall mean the Certificate of
Incorporation of the Company.
"CLOSING" shall have the meaning assigned to such term in Section 1.02.
"CLOSING DATE" shall have the meaning assigned to such term in Section
1.02.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act or Exchange Act.
13
"COMMON STOCK" shall mean (a) the Company's Common Stock, par value
$1.00 per share, (b) any other capital stock of any class or classes (however
designated) of the Company, authorized on or after the date hereof, the holders
of which shall have the right, without limitation as to amount, either to all or
to a share of the balance of current dividends and liquidating dividends after
the payment of dividends and distributions on any shares entitled to preference,
and the holders of which shall ordinarily, in the absence of contingencies or in
the absence of any provision to the contrary in the Certificate of
Incorporation, be entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote has been suspended by the
happening of such a contingency or provision), and (c) any other securities into
which or for which any of the securities described in (a) or (b) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
"COMPANY" shall have the meaning assigned to such term in the
introductory sentence hereof.
"CONFIDENTIAL INFORMATION" shall mean information belonging to or in
possession of the Company or its Subsidiaries which is of a confidential,
proprietary or trade secret nature that is furnished or disclosed to any
Purchaser under this Agreement. The Confidential Information to be disclosed by
the Company under this Agreement includes, without limitation, information
regarding its financial information (including, without limitation, projections)
and its past, current and proposed business strategies.
"CONNING" shall have the meaning assigned to such term in Section 5.08.
"CONNING DESIGNEE" shall have the meaning assigned to such term in
Section 5.08.
"CONTRACT" means any contract, agreement, commitment, indenture, lease,
note, bond, mortgage, license, plan, arrangement or understanding, whether
written or oral.
"EFFECTIVE DATE" shall have the meaning assigned to such term in
Section 5.02.
"EMPLOYMENT, CONSULTING OR SEVERANCE AGREEMENTS" means all oral and
written (i) agreements for the employment for any period of time whatsoever, or
in regard to the employment, or restricting the employment, of any employee of
the Company or any Subsidiary, (ii) consulting, independent contractor or
similar agreements, and (iii) policies, agreements, arrangements or
understandings relating to the payment or provision of severance, termination or
similar pay or benefits to any present or former employees, officers, directors,
consultants, independent contractors or other agents of the Company or any
Subsidiary.
"ENTITY PURCHASER" shall have the meaning assigned to such term in
Section 3.01.
"EQUITY SECURITIES" shall mean, with respect to any Person, (a) shares
of common stock, partnership interests or membership interests of such Person,
(b) any other equity security of such Person, including, without limitation,
shares of preferred stock, (c) any equity-linked securities including, without
limitation, stock appreciation rights, "phantom" stock rights or rights to
payment based on the performance (E.G., revenues, EBITDA, earnings, etc.) of
such Person, (d) any notes or debt securities of such Person containing equity
features (including any notes or debt securities convertible into or
exchangeable for equity securities, issued in
14
connection with the issuance of equity securities or containing profit
participation features) or (e) any right, option or warrant to acquire any such
equity security or any such note or debt security.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated pursuant
thereto.
"GAAP" shall mean generally accepted accounting principles as set forth
from time to time in the opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements of the
Financial Accounting Standards Board or in such opinions and statements of such
other entities as shall be approved by a significant segment of the accounting
profession, applied on a consistent basis.
"INDEMNIFIED PARTY" shall have the meaning assigned to such term in
Section 7.02.
"INSURANCE SUBSIDIARY" shall mean any corporation or other Person
listed on SCHEDULE 2.01(B).
"KNOWLEDGE" the Company will be deemed to have "Knowledge" of a
particular fact or other matter if the Company's Chief Executive Officer, Chief
Financial Officer or Chief Claims Officer is actually aware of such fact or
other matter.
"MATERIAL ADVERSE EFFECT" shall mean any material adverse effect on the
financial condition of the Company and the Subsidiaries, taken as a whole, which
is in excess of $20.0 million in any 12 month period.
"OBSERVER" shall have the meaning assigned to such term in Section
5.09.
"OPTIONS" shall have the meaning assigned to such term in Section 1.01.
"OPTION SHARES" shall have the meaning assigned to such term in Section
1.01.
"PERSON" shall mean an individual, corporation, partnership, joint
venture, limited liability company or partnership, trust, university, or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"PUBLIC FILINGS" shall have the meaning assigned to such term in
Section 2.02.
"PURCHASER" shall have the meaning assigned to such term in Section
1.01 and shall include the original Purchaser and each holder of Shares, Options
and Option Shares.
"REGISTRATION RIGHTS AGREEMENT" shall mean that certain Registration
Rights Agreement, dated as of the date hereof, attached hereto as EXHIBIT C.
"REGISTRATION PERIOD" shall have the meaning assigned to such term in
the Registration Rights Agreement.
"REGISTRATION STATEMENT" shall mean any disclosure document that the
Company is required to file under the Securities Act pursuant to the
Registration Rights Agreement.
15
"REGULATION D" shall have the meaning assigned to such term in Section
2.12.
"RELATED AGREEMENTS" shall mean the Options and the Registration Rights
Agreement, including all amendments, modifications or supplements thereto.
"REORGANIZATION" shall have the meaning assigned to such term in
Section 5.02.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated pursuant thereto.
"SHARES" shall have the meaning assigned to such term in Section 1.01.
"SHAREHOLDER" shall mean ▇▇▇▇▇▇▇▇ Investments, LLC.
"SHAREHOLDER PURCHASE AGREEMENT" shall mean the Securities Purchase
Agreement, dated the Closing Date, among the Purchasers and the Shareholder.
"SUBSIDIARY" shall mean any corporation or other Person listed on
SCHEDULE 2.01(A).
"TRANSFER AGENT" shall have the meaning assigned to such term in
Section 5.11.
"UNIT" shall mean one Share and one Option.
6.02. ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistently applied, and all
financial data submitted pursuant to this Agreement, unless otherwise specified,
shall be prepared in accordance with GAAP.
7. INDEMNIFICATION
7.01. GENERAL INDEMNITY. The Company agrees to indemnify and save
harmless each Purchaser (and its directors, officers, affiliates, consultants,
partners, limited partners, successors and assigns) from and against any and all
losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and disbursements)
incurred by such Purchaser as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company or any Subsidiary
herein or in any of the Related Agreements. Each Purchaser severally but not
jointly agrees to indemnify and save harmless the Company and its directors,
officers, Affiliates, successors and assigns from and against any and all
losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys' fees, charges and disbursements)
incurred by the Company as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by such Purchaser herein; PROVIDED
that, with respect to each indemnifying party, the amount of indemnity provided
to the indemnified party shall be limited to $10,500,000.
7.02. INDEMNIFICATION PROCEDURE. Any party entitled to indemnification
under this Section 7 (an "INDEMNIFIED PARTY") will give written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
promptly after the discovery by such party of any matters giving rise to a claim
for indemnification; PROVIDED that the failure of any party
16
entitled to indemnification hereunder to give notice as provided herein shall
not relieve the indemnifying party of its obligations under this Section 7
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any action, proceeding or claim is brought
against an indemnified party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to participate in and,
unless in the reasonable judgment of the indemnified party a conflict of
interest between it and the indemnifying party may exist in respect of such
action, proceeding or claim, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified party. In the event that the
indemnifying party advises an indemnified party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such party of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In any event, unless
and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the indemnified party's
costs and expenses arising out of the defense, settlement or compromise of any
such action, claim or proceeding shall be losses subject to indemnification
hereunder. The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates to such
action or claim. The indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. The indemnifying party shall not be liable for any settlement of any
action, claim or proceeding effected without its written consent; PROVIDED that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. Anything in this Section 7 to the contrary notwithstanding, the
indemnifying party shall not, without the indemnified party's prior written
consent, settle or compromise any claim or consent to entry of any judgment in
respect thereof which imposes any future obligation on the indemnified party or
which does not include, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the indemnified party, a release from all liability
in respect of such claim. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar right of the indemnified party
against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
8. MISCELLANEOUS
8.01. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any party to this Agreement or any Related Agreement in exercising any right,
power or remedy hereunder or thereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder or thereunder. The remedies herein and therein provided are
cumulative and not exclusive of any remedies provided by law.
8.02. AMENDMENTS, WAIVERS AND CONSENTS. Except as otherwise provided in
this Agreement, (i) changes in, termination or amendments of or additions to
this Agreement may be
17
made, and compliance with any covenant or provision set forth herein may be
omitted or waived, if the Company shall obtain consent thereto in writing from
the holders of at least a majority of the then outstanding Shares, Options and
Option Shares (determined on an "as-if exercised" basis) and shall deliver
copies of such consent in writing to any holders who did not execute such
consent and (ii) no consents shall be effective to reduce the percentage in
interest of the Shares, the Options and the Option Shares the consent of the
holders of which is required under this Section 8.02. Any waiver or consent may
be given subject to satisfaction of conditions stated therein and any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
8.03. ADDRESSES FOR NOTICES. Any notice, demand, request, waiver or
other communication under this Agreement or any Related Agreement shall be in
writing and shall be deemed to have been duly given on the date of service, if
personally served, on the date of transmission, if sent by facsimile, receipt
confirmed, or on the third day after mailing, if mailed to the party to whom
notice is to be given, by first class mail, registered, return receipt requested
and postage prepaid, in each case addressed as follows (or to such other address
as shall be designated by the applicable party to the other party in writing in
compliance with this Section):
To the Company: NYMAGIC, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Executive Vice President,
Vice President, General Counsel
and Secretary
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Mayer, Brown, ▇▇▇▇ & Maw
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
If to the Purchaser: Conning Capital Partners VI, L.P.
CityPlace II
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq.
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
8.04. COSTS, EXPENSES AND TAXES. As a condition precedent to the
Closing, the Company hereby agrees to pay 50% of the reasonable fees and other
out-of-pocket expenses of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel to the
Purchasers, at the Closing in connection
18
with the preparation, execution and delivery of this Agreement, the Related
Agreements, the Shareholder Purchase Agreement, the issuance of the Shares and
the Options and the sale of the securities contemplated by the Shareholder
Purchase Agreement at the Closing. In addition, the Company shall pay any and
all stamp, or other similar taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement, the issuance of
the Shares, the Options and, upon exercise of the Options, in whole or in part,
from time to time, the Option Shares and the other instruments and documents to
be delivered hereunder or thereunder, and agrees to save each holder of Shares,
Options or Option Shares harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
8.05. BINDING EFFECT; ASSIGNMENT. This Agreement and each Related
Agreement to which it is a party shall be binding upon and inure to the benefit
of the Company and each of the Purchasers and their respective heirs, successors
and assigns, except that the Company shall not have the right to delegate its
obligations hereunder or to assign its rights hereunder or any interest herein
except as otherwise provided herein and this Agreement may not be assigned by
any Purchaser without the prior written consent of the Company.
8.06. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Agreement, each Related Agreement, the Shares, or
any other instrument or document delivered in connection herewith or therewith,
shall survive the execution and delivery hereof or thereof.
8.07. PRIOR AGREEMENTS. This Agreement and each Related Agreement and
the other agreements executed and delivered herewith constitute the entire
agreement between the parties and supersede any prior understandings or
agreements concerning the subject matter hereof.
8.08. SEVERABILITY. The provisions of this Agreement and each Related
Agreement are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of a
provision contained in this Agreement or any Related Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement and any Related Agreement; but the
terms of this Agreement and each Related Agreement shall be reformed and
construed as if such invalid or illegal or unenforceable provision, or part of a
provision, had never been contained herein, and such provisions or part reformed
so that it would be valid, legal and enforceable to the maximum extent possible.
8.09. CONFIDENTIALITY. Each Purchaser agrees that it will keep
confidential and will not disclose or divulge any Confidential Information which
such Purchaser may obtain from the Company pursuant to financial statements,
reports and other materials submitted by the Company to such Purchaser pursuant
to this Agreement, unless such information is known, or until such Confidential
Information becomes known, to the public or such Purchaser currently possesses
such Confidential Information or subsequently acquires or independently develops
such Confidential Information other than as a result of any disclosure made to
such Purchaser in connection with the transactions contemplated by this
Agreement; PROVIDED that a Purchaser may disclose such Confidential Information
(a) on a confidential basis to its attorneys, accountants,
19
consultants and other professionals, (b) after notice to the Company to any
prospective purchaser of any Shares, Options or Option Shares from such
Purchaser, (c) to any entity controlling, controlled or under common control
with such Purchaser, or to any shareholder, partner or member of a Purchaser
which is a corporation, partnership or limited liability company, or (d) as
required by applicable law; PROVIDED, that with respect to subsection (d) the
Purchaser shall give the Company reasonable notice prior to such disclosure; and
PROVIDED FURTHER, that the Purchaser shall remain liable for any breach by the
individuals or entities referred to in subsections (a), (b) and (c) of this
Section 8.09. Without limitation to the foregoing, Confidential Information
shall not be used by or shared by any Purchaser with any Person, including its
own affiliates, except for the purpose of evaluating, monitoring or reporting
its investment in the Company.
8.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND WITHOUT
GIVING EFFECT TO CHOICE OF LAW PROVISIONS WHICH MIGHT REQUIRE THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
8.11. PUBLIC ANNOUNCEMENTS. Neither the Company or any Subsidiary nor
any Purchaser shall use any Purchaser's or the Company's name or refer to any
Purchaser or the Company directly or indirectly in connection with such
Purchaser's investment in the Company or such Subsidiary in any advertisement,
news release or professional or trade publication, or in any other manner,
unless otherwise required by law or with such party's prior consent. The parties
hereto agree and acknowledge that the Company and the Purchasers jointly intend
to issue a press release upon execution of this Agreement and further agree that
each will provide the other the opportunity to review and include reasonable
changes prior to such release and issuance.
8.12. CONSENT TO JURISDICTION. Each party hereto hereby irrevocably
submits to the non-exclusive jurisdiction of any state or federal court sitting
in New York, New York in any action or proceeding arising out of or relating to
this Agreement or any of the transactions contemplated hereby and hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such state court or, to the extent permitted by law,
in such federal court and each party hereto agrees to first initiate any such
claim or proceeding in any such court. Each of the parties hereby irrevocably
consents to the service of process in any such action or proceeding by the
mailing by certified mail of copies of any service or copies of the summons and
complaint and any other process to such party at the address specified in
Section 8.03. The parties agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section 8.12 shall affect the right of a party to serve legal process in any
other manner permitted by law or affect the right of a party to bring any action
or proceeding in the courts of other jurisdictions except as otherwise provided
in this Section 8.12.
8.13. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND
COVENANTS THAT HE OR IT WILL NOT ASSERT WHETHER AS PLAINTIFF, DEFENDANT, OR
OTHERWISE, ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, CAUSE OF ACTION,
20
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING
AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. ANY OF THE PARTIES HERETO MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 8.13 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF EACH OF THE PARTIES HERETO TO THE WAIVER OF HIS OR
ITS RIGHT TO TRIAL BY JURY.
8.14. HEADINGS. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
8.15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart and shall become effective when one or more counterparts
have been signed by each party thereto and delivered (including by facsimile) to
the other parties.
8.16. FURTHER ASSURANCES. Each party hereto shall execute and deliver
such instruments, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement, each Related Agreement, the Options and the Units.
8.17. SPECIFIC ENFORCEMENT. Each Purchaser and the Company acknowledges
and agrees that irreparable damage would occur in the event that any of the
provisions of this Agreement and each Related Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement, each
Related Agreement and to enforce specifically the terms and provisions hereof
and thereof in any court of the United States or any state thereof having
jurisdiction, this being in addition to any other remedy to which they may be
entitled at law or equity.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK; NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
NYMAGIC, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
CONNING CAPITAL PARTNERS VI, L.P.
By: Conning Investment Partners VI, LLC,
its General Partner
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Manager
Signature Page to Securities Purchase Agreement
SCHEDULE 1.01
SCHEDULE OF PURCHASERS
------------------------------------------------ ------------------- --------------------- ------------ -------
AGGREGATE PURCHASE NUMBER OF SHARES OF NUMBER OF TOTAL
NAME AND ADDRESS OF PURCHASER PRICE COMMON STOCK OPTIONS UNITS
------------------------------------------------ ------------------- --------------------- ------------ -------
Conning Capital Partners VI, L.P.
c/o Conning & Company
CityPlace II
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇ $8,400,000.00 400,000 400,000 400,000
------------------------------------------------ ------------------- --------------------- ------------ -------
------------------------------------------------ ------------------- --------------------- ------------ -------
TOTAL $8,400,000.00 400,000 400,000 400,000
------------------------------------------------ ------------------- --------------------- ------------ -------
SCHEDULE 2.01(A)
SCHEDULE OF SUBSIDIARIES
NEW YORK MARINE AND GENERAL INSURANCE COMPANY
GOTHAM INSURANCE COMPANY
MUTUAL MARINE OFFICE, INC.
PACIFIC MUTUAL MARINE OFFICE, INC.
MUTUAL MARINE OFFICE OF THE MIDWEST, INC.
MMO EU, LTD.
MMO UK, LTD.
SCHEDULE 2.01(B)
SCHEDULE OF INSURANCE SUBSIDIARIES
NEW YORK MARINE AND GENERAL INSURANCE COMPANY
GOTHAM INSURANCE COMPANY
EXHIBIT A
FORM OF OPTION AGREEMENT
EXHIBIT B
FORM OF OPINIONS
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT