EXHIBIT 10.3
Composite Conformed Copy
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FIRST AMERICAN CAPITAL TRUST I
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8.50% Capital Securities
guaranteed by
THE FIRST AMERICAN FINANCIAL CORPORATION
PURCHASE AGREEMENT
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Dated April 17, 1997
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FIRST AMERICAN CAPITAL TRUST I
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8.50% Capital Securities
PURCHASE AGREEMENT
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April 17, 1997
CHASE SECURITIES INC.
UBS SECURITIES LLC
c/o Chase Securities Inc.
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Ladies and Gentlemen:
First American Capital Trust I (the "Issuer"), a statutory business trust
formed under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801 et
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seq.), proposes to issue and sell an aggregate of $100,000,000 8.50% Capital
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Securities, Liquidation Amount $1,000 per Capital Security (the "Capital
Securities"). The First American Financial Corporation (the "Company") hereby
confirms its agreement with Chase Securities Inc. ("CSI") and UBS Securities LLC
("UBS") (together with CSI, the "Initial Purchasers") concerning the purchase of
the Capital Securities from the Issuer by the several Initial Purchasers.
The Capital Securities will be guaranteed by the Company, to the extent set
forth in the Offering Memorandum (as defined below), with respect to
distributions and amounts payable upon liquidation or redemption (the
"Guarantee"), pursuant to the Guarantee Agreement (the "Guarantee Agreement"),
to be dated as of the Closing Date (as defined below), executed and delivered by
the Company and Wilmington Trust Company, a Delaware banking corporation, not in
its individual capacity but solely as trustee (the "Guarantee Trustee") for the
benefit of the holders from time to time of the Capital Securities. The proceeds
from the sale of the Capital Securities to the Initial Purchasers will be
aggregated with the entire proceeds from the sale by the Issuer to the Company
of all of the Issuer's common securities, liquidation amount $1,000 per common
security (the "Common Securities") and will be used by the Issuer to purchase
the 8.50% Junior Subordinated Deferrable Interest Debentures due 2012 (the
"Debentures") issued by the Company. The Capital Securities and the Common
Securities will be issued pursuant to the Amended and Restated Declaration of
Trust of the Issuer, to be dated as of the Closing Date (the "Trust Agreement"),
among the Company, as Sponsor, the trustees named therein (the "Trustees") and
the holders from time to time of the Capital Securities and the Common
Securities, which
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represent undivided beneficial interests in the assets of the
Issuer. The Debentures will be issued pursuant to a Junior Subordinated
Indenture, to be dated as of the Closing Date (the "Indenture"), between the
Company and Wilmington Trust Company. as trustee (the "Indenture Trustee" and a
Company Order (as defined in the Indenture), dated as of the Closing Date. The
Capital Securities, the Guarantee and the Debentures are collectively referred
to herein as the "Securities". This Agreement, the Indenture, the Trust
Agreement, the Guarantee Agreement and the Registration Rights Agreement (as
defined below) are referred to collectively as the "Transaction Documents".
Capitalized terms used herein without definition have the respective meanings
specified in the Offering Memorandum.
The Capital Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. In connection with the sale of the Capital
Securities, the Issuer and the Company have prepared a preliminary offering
memorandum dated April 11, 1997 (the "Preliminary Offering Memorandum") and will
prepare an offering memorandum dated the date hereof (the "Offering
Memorandum"), each setting forth information concerning the Issuer, the Company,
the Transaction Documents and the Securities. Copies of the Preliminary Offering
Memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchasers pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted and shall be deemed to include the filing of any
document under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that is, or is deemed to be, incorporated by reference in the Offering
Memorandum. The Issuer and the Company hereby confirm that they have authorized
the use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Capital Securities by the Initial
Purchasers.
The Issuer and the Company understand that the Initial Purchasers propose
to make an offering of the Capital Securities only on the terms, subject to the
conditions and in the manner set forth in the Offering Memorandum and Section 3
hereof, as soon as the Initial Purchasers deem advisable after this Agreement
has been executed and delivered.
Holders of the Capital Securities (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Issuer and
the Company will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of capital
securities of the Issuer and related junior subordinated deferrable interest
debentures and guarantees of the Company (collectively, the "Exchange
Securities") which are identical in all material respects to the Securities
(except that the Exchange Securities will not contain terms with respect to
transfer restrictions) and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement").
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All references in this Agreement to financial statements and schedules and
other information that is "contained", "included", "deemed included" or "stated"
in the Offering Memorandum (and all other references of like import) shall be
deemed to include all such financial statements and schedules and other
information that are, or are deemed to be, incorporated by reference in the
Offering Memorandum.
Section 1. Representations and Warranties. The Issuer and the Company,
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jointly and severally, represent and warrant to and agree with the Initial
Purchasers that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that no representation or warranty
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is made as to information contained in or omitted from the Preliminary
Offering Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information relating to the Initial Purchasers
furnished to the Company by or on behalf of any Initial Purchaser
specifically for use therein (the "Initial Purchasers' Information"). The
documents incorporated by reference or deemed to be incorporated by
reference in the Offering Memorandum (the "Exchange Act Reports"), when
they became effective or were last amended or filed with the Commission, as
the case may be, conformed in all material respects to the requirements of
the Securities Act and the Exchange Act as applicable, and the rules and
regulations promulgated under the Securities Act and Exchange Act (the
"Rules and Regulations") of the Commission, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and any further documents so filed and incorporated
by reference or deemed to be incorporated by reference in the Offering
Memorandum, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Securities Act and the Exchange Act and the Rules
and Regulations, as applicable, and shall not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Each of the Capital Securities, the Guarantee and the Debentures
satisfy the eligibility requirements of Rule 144A(d)(3) of the Rules and
Regulations.
(c) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Capital Securities,
would be required to be provided to such prospective purchaser pursuant to
Rule 144A(d)(4) of the Rules and Regulations.
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(d) None of the Issuer, the Company, any of their respective affiliates
(as such term is defined in Rule 501(b) of Regulation D of the Rules and
Regulations ("Regulation D")), or any person acting on behalf of the
foregoing (other than an Initial Purchaser) has, directly or indirectly,
made or will, directly or indirectly, make offers or sales of any security,
or solicited offers to buy any security, under circumstances that would
require the registration of any of the Securities under the Securities Act.
(e) None of the Issuer, the Company or any of their respective
affiliates (as such term is defined in Rule 501(b) of Regulation D) or any
person (other than an Initial Purchaser) acting on the behalf of the
foregoing has engaged or will engage, in connection with the offering of
the Securities or any security of the same class or series as any of the
Securities, in any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D. The Company and the
Issuer have not entered and will not enter into any contractual arrangement
with respect to the distribution of any of the Securities except for the
Transaction Documents.
(f) Assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 3 hereof and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Capital Securities to the Initial Purchasers, and
the offer, resale and delivery of the Capital Securities by the Initial
Purchasers in the manner contemplated by this Agreement and the Offering
Memorandum, to register any of the Securities under the Securities Act or
to qualify the Indenture, the Guarantee or the Trust Agreement under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(g) The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of California with the power
and authority to own, lease and operate its properties, to conduct its
business and to execute, deliver and perform its obligations under each of
the Transaction Documents. Each subsidiary of the Company that is listed on
Schedule B hereto (such subsidiaries collectively called the "Material
Subsidiaries") is a corporation duly incorporated or organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization with power and authority to own, lease and
operate its properties and conduct its business.
(h) The Issuer has been duly formed and is validly existing in good
standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business.
(i) The Company and the Material Subsidiaries are duly qualified in or
licensed to transact business by, and are in good standing as foreign
corporations in, each jurisdiction in which they own or lease real
property, maintain an office or conduct their respective businesses and in
which the failure, individually or in the aggregate with all other failures
to be so licensed or qualified or to be in good
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standing, would reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), results of operations or business
of the Company and its subsidiaries taken as a whole (a "Material Adverse
Effect").
(j) As of December 31, 1996, the Company had a duly authorized, issued
and outstanding capitalization as set forth in the Offering Memorandum
under the caption "Capitalization".
(k) All of the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and nonassessable. All of the outstanding shares of capital stock of each
Material Subsidiary (other than First American Title Guaranty Holding
Company and First American Home Buyers Protection Corporation) have been
duly and validly authorized and issued, are fully paid and nonassessable
and are owned, directly or indirectly, by the Company free and clear of any
pledge, lien, security interest, charge, claim, restriction on voting or
transfer or encumbrance of any kind, except that (i) all of the issued and
outstanding shares of First American Title Insurance Company, First
American Trust Company and First American Real Estate Information Services,
Inc. have been pledged to secure the Company's indebtedness under the
Credit Facility (as such term is defined in the Offering Memorandum) and
(ii) the transfer of ownership of the capital stock of First American Title
Insurance Company is subject to the prior approval of the California
Department of Insurance. The Company owns 80% of the issued and outstanding
shares of the capital stock of First American Title Guaranty Holding
Company ("FATGHC"). The Company owns 79% of the issued and outstanding
shares of the capital stock of First American Home Buyers Protection
Corporation ("FAHBPC"). The outstanding shares of the capital stock of
FATGHC and FAHBPC that are owned by the Company have been duly and validly
authorized and issued, are fully paid and are nonassessable, and are owned,
indirectly, by the Company free and clear of any pledge, lien, security
interest, charge, claim, restriction on voting or transfer or encumbrance
of any kind, except that the holders of the minority interests in FATGHC
and FAHBPC have the right to "put" their minority interests to First
American Title Insurance Company.
(l) Each of the Company and the Issuer has full right, power and
authority to execute and deliver each of the Transaction Documents to which
it is a party and to perform its obligations thereunder; and all action
required to be taken by the Company or the Issuer for the due and proper
authorization, execution and delivery of each Transaction Document to which
it is a party and the consummation of the transactions contemplated thereby
have been duly and validly taken.
(m) This Agreement has been duly authorized, executed and delivered by
each of the Company and the Issuer and is a legal, valid and binding
agreement of each of the Company and the Issuer enforceable against each of
the Issuer and the Company in accordance with its terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally
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and by general equitable principles (whether considered in a proceeding in
equity or at law) (the "Enforceability Exceptions").
(n) The Registration Rights Agreement has been duly authorized by each
of the Company and the Issuer and, on the Closing Date, will have been
executed and delivered by each of the Issuer and the Company and upon such
execution by each of the Issuer and the Company (assuming the due
authorization, execution and delivery thereof by the other parties thereto)
the Registration Rights Agreement will constitute a valid and legally
binding obligation of each of the Issuer and the Company enforceable
against each of the Issuer and the Company, except as enforcement thereof
may be limited by the Enforceability Exceptions.
(o) The Trust Agreement has been duly authorized by the Company and, on
the Closing Date, will have been executed and delivered by the Company and
the Regular Trustees (as defined in the Trust Agreement), and assuming the
due authorization, execution and delivery of the Trust Agreement by the
Delaware Trustee and the Property Trustee (each as defined in the Trust
Agreement), the Trust Agreement will constitute a valid and legally binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by the
Enforceability Exceptions.
(p) The Guarantee Agreement has been duly authorized by the Company and,
on the Closing Date, will have been duly executed and delivered by the
Company, and assuming due authorization, execution and delivery thereof by
the Guarantee Trustee, not in its individual capacity but solely as
trustee, will constitute a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by the Enforceability
Exceptions.
(q) The Capital Securities have been duly authorized by the Issuer and,
when executed, authenticated, issued and delivered in the manner provided
for in the Trust Agreement and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable undivided beneficial interests
in the assets of the Issuer and will be entitled to the benefits of the
Trust Agreement (and to the extent set forth therein, the Indenture); the
issuance of the Capital Securities is not subject to preemptive or other
similar rights; and holders of Capital Securities will be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit incorporated under the General Corporation Law of
the State of Delaware.
(r) The Common Securities have been duly authorized by the Issuer and,
when executed, issued and delivered by the Issuer to the Company against
payment therefor as described in the Offering Memorandum, will be validly
issued, fully paid and nonassessable undivided beneficial interests in the
assets of the Issuer and will be entitled to the benefits of the Trust
Agreement; the issuance of the Common Securities is not subject to
preemptive or other similar rights; and on the Closing Date, all of the
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issued and outstanding Common Securities of the Issuer will be directly
owned by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(s) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been duly executed and delivered by the Company in
accordance with its terms, and assuming due authorization, execution and
delivery thereof by the Indenture Trustee, will constitute a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by
the Enforceability Exceptions. On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture
Act and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
(t) The Debentures have been duly authorized by the Company and, when
duly executed, authenticated, issued and delivered as provided in the
Indenture, and the Company Order, dated as of the Closing Date, will be
duly and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms, except as enforcement thereof may be limited by the Enforceability
Exceptions.
(u) Except as disclosed in the Offering Memorandum, upon payment by the
Issuer of the purchase price therefor, the Property Trustee will, on the
Closing Date, have good and valid title to all such Debentures, free from
liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by
the Issuer.
(v) Each Transaction Document conforms in all material respects to the
description thereof contained in the Offering Memorandum.
(w) Price Waterhouse LLP, who is reporting upon the financial statements
incorporated or deemed incorporated by reference in the Offering
Memorandum, are and were independent public accountants as required by the
Securities Act and the Rules and Regulations during the periods covered by
the financial statements which are incorporated or deemed incorporated in
the Offering Memorandum.
(x) The consolidated financial statements of the Company incorporated or
deemed incorporated by reference in the Offering Memorandum fairly present
in all material respects the financial condition of the Company and its
consolidated subsidiaries as of the respective dates indicated and the
consolidated results of operations and changes in stockholders' equity of
the Company and its consolidated subsidiaries for the periods specified.
The consolidated financial statements of the Company incorporated or deemed
incorporated by reference in the Offering Memorandum have been prepared in
all material respects in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
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periods involved (except as indicated in the notes thereto), and the
supporting schedules, if any, incorporated or deemed incorporated by
reference in the Offering Memorandum present fairly in accordance with GAAP
the information required to be stated therein. The summary historical
consolidated financial data of the Company included in the Offering
Memorandum fairly present in all material respects the information shown
therein and have been compiled on a basis consistent with that of the
consolidated audited financial statements of the Company incorporated or
deemed incorporated by reference in the Offering Memorandum.
(y) The execution, delivery and performance by the Company and the
Issuer of each of the Transaction Documents, the issuance, authentication,
sale and delivery of the Capital Securities and compliance by the Company
and the Issuer with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents will not conflict
with or result in a breach or violation of any of the material terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries or the Issuer pursuant to, any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of its
subsidiaries or the Issuer is a party or by which the Company or any of its
subsidiaries or the Issuer is bound or to which any of the property or
assets of the Company or any of its subsidiaries or the Issuer is subject,
nor will such actions result in any violation of the provisions of the
charter or by-laws of the Company or any of its Material Subsidiaries, the
Trust Agreement or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body having
jurisdiction over the Company or any of its Material Subsidiaries or the
Issuer or any of their properties or assets; and no consent, approval,
authorization or order of, or filing or registration with, any such court
or arbitrator or governmental agency or body under any such statute,
judgment, order, decree, rule or regulation is required for the execution,
delivery and performance by the Company and the Issuer of each of the
Transaction Documents, the issuance, authentication, sale and delivery of
the Capital Securities and compliance by the Company and the Issuer with
the terms thereof and the consummation of the transactions contemplated by
the Transaction Documents, except for such consents, approvals,
authorizations, orders, filings, registrations or qualifications (i) which
shall have been obtained or made prior to the Closing Date and (ii) as may
be required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement.
(z) Since the respective dates as of which information is given in the
Offering Memorandum, except as may be otherwise stated therein (i) there
has been no material adverse change or any development involving a
prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or business
prospects of the Company, whether or not arising in the ordinary course of
business, (ii) the Company has not incurred any material liability or
obligation, direct or contingent, other than in the ordinary course of
business, (iii) the Company has not entered into any material transaction
other than in
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the ordinary course of business and (iv) except for the issuance of 57,105
shares of the Company's common stock pursuant to its stock bonus plans,
there has not been any change in the capital stock or long-term debt of the
Company, or any dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock.
(aa) There are no legal or governmental proceedings pending to which the
Company, any of its subsidiaries or the Issuer is a party or of which any
property or assets of the Company, any of subsidiaries or the Issuer is the
subject which, singularly or in the aggregate, if determined adversely to
the Company, any of its subsidiaries or the Issuer, could reasonably be
expected to have a Material Adverse Effect; and to the best knowledge of
the Company, no such proceedings are, to the best knowledge of the Company,
threatened or contemplated by governmental authorities or threatened by
others.
(ab) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Capital Securities or suspends the sale
of the Capital Securities in any jurisdiction; no injunction, restraining
order or order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to the Company, any of its
subsidiaries or the Issuer which would prevent or suspend the issuance or
sale of the Capital Securities or the use of the Preliminary Offering
Memorandum or the Offering Memorandum in any jurisdiction; no action, suit
or proceeding is pending against or, to the best knowledge of the Company,
threatened against or affecting the Company, any of its subsidiaries or the
Issuer before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Capital Securities
or in any manner draw into question the validity or enforceability of any
of the Transaction Documents or any action taken or to be taken pursuant
thereto; and the Company and the Issuer have complied with any and all
requests by any securities authority in any jurisdiction for additional
information to be included in the Preliminary Offering Memorandum and the
Offering Memorandum.
(ac) Neither the Company nor any of its Material Subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any material term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) in violation in
any material respect of any law, ordinance, governmental rule, regulation
or court decree to which it or its property or assets may be subject.
(ad) The Company and each of its subsidiaries holds such licenses,
certificates, consents, orders, approvals, permits and other authorizations
from governmental authorities (including, without limitation, insurance
licenses from the
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insurance regulatory agencies of the various states where it conducts
business ("Insurance Licenses")) which are necessary to own or lease, as
the case may be, and to operate their respective properties and to carry on
their respective business as presently conducted, except for such licenses,
certificates, consents, orders, approvals, permits or other authorizations
the failure to hold which could not reasonably be expected to have a
Material Adverse Effect; the Company and each of its subsidiaries has
fulfilled and performed all obligations necessary to maintain such
licenses, certificates, consents, orders, approvals, permits and other
authorizations (including, without limitation, the Insurance Licenses),
except where the failure to so fulfill or perform such obligations could
not reasonably be expected to have a Material Adverse Effect. There is no
pending, or to the best knowledge of the Company threatened, action, suit,
proceeding or investigation (and, to the best knowledge of the Company, no
facts exist which the Company believes could reasonably be the basis for
any such action, suit, proceeding or investigation) that may reasonably be
expected to lead to the revocation, termination or suspension of any such
license, certificate, consent, order, approval, permit or other
authorization (including, without limitation, the Insurance Licenses),
except where such revocation, termination or suspension could not
reasonably be expected to have a Material Adverse Effect; and no insurance
regulatory agency or body has issued any order or decree restricting or
prohibiting the payment of dividends by the Company's insurance company
subsidiaries to the Company.
(ae) All ceded reinsurance and retrocessional agreements to which the
Company's insurance company subsidiaries are a party are in full force and
effect. Neither the Company nor any of such subsidiaries has received any
notice from any of the other parties to such agreements that such other
party intends not to perform in any material respect such agreement and
none of the Company and such subsidiaries has any reason to believe that
any of the other parties to such agreements will be unable to perform such
agreements, except to the extent that (i) the Company or such subsidiary
has established appropriate reserves on its financial statements or (ii)
such nonperformance could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect; and each of the Company
and its insurance company subsidiaries is entitled to give effect in its
underwriting results in its most recently filed statutory financial
statements in conformity with the insurance department of the state of
domicile of each such subsidiary in effect at such time of preparation for
reinsurance ceded pursuant to such agreements.
(af) Neither the Issuer nor the Company is, or after giving effect to the
consummation of the transactions contemplated herein, will be, and neither
the Company nor the Issuer is directly or indirectly controlled by, or
acting on behalf of any person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
(ag) Other than pursuant to this Agreement or as disclosed in the
Offering Memorandum under the caption "Plan of Distribution", there are no
contracts, agreements or understandings between either the Issuer or the
Company and any
11
person that give rise to a valid claim against the Issuer, the Company or
any Initial Purchaser for a brokerage commission, finder's fee or other
like payment.
(ah) Except as set forth in the Registration Rights Agreement or as
described in the Offering Memorandum and except for common share piggyback
registration rights granted to ▇▇▇▇ ▇. ▇▇▇▇ in respect of the 137,143
shares of the Company's common stock received by him as partial
consideration for the sale of Nationwide Field Services-▇▇▇▇ Associates,
Inc. to the Company, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Securities
Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities to be covered by the Exchange Offer Registration Statement or
the Shelf Registration Statement.
Section 2. Sale and Delivery to the Initial Purchasers; Closing. (a) On
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the basis of the representations, warranties and agreements herein
contained, and subject to the terms and conditions herein set forth, the
Issuer agrees to issue and sell to each Initial Purchaser, severally and
not jointly, and each Initial Purchaser agrees, severally and not jointly,
to purchase from the Issuer, at the purchase price of $ 1,000 per Capital
Security, an aggregate of $100,000,000 Capital Securities (except as
otherwise provided in this Agreement, to be allocated to the Initial
Purchasers in the number of Capital Securities set forth opposite the name
of each Initial Purchaser in Schedule 1 hereto). The Issuer shall not be
obligated to deliver any of the Capital Securities except upon payment for
all of the Capital Securities to be purchased as provided herein.
(b) As compensation to the Initial Purchasers for their commitments
hereunder and in view of the fact that the proceeds of the sale of the
Capital Securities and the Common Securities will be used to purchase the
Debentures, the Company hereby agrees to pay on the Closing Date to CSI,
for the accounts of the Initial Purchasers, a commission of $ 10.00 per
Capital Security purchased by the Initial Purchasers by wire transfer of
immediately available funds to a bank account designated in writing to the
Company by CSI at least one business day prior to the Closing Date.
(c) Payment of the purchase price for, and delivery of certificates for,
the Capital Securities shall be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M.,
New York City time, on April 22, 1997 or such later date and time not more
than seven full business days thereafter as you, the Company and the Issuer
shall mutually determine (such date and time of payment and delivery being
herein called the "Closing Date"). On the Closing Date, payment of the
purchase price for the Capital Securities shall be made to the Issuer by
wire or book-entry transfer of same-day funds to such account or accounts
as the Issuer shall specify prior to the Closing Date or by such other
means as the parties hereto shall agree prior to the Closing Date against
delivery to the Property Trustee as custodian for The Depository Trust
Company ("DTC") of the certificates evidencing the Capital Securities. Time
shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition
12
of the obligations of the Initial Purchasers hereunder. Upon delivery, the
Capital Securities sold to Qualified Institutional Buyers shall be in
global form and Capital Securities sold to Accredited Investors (as defined
in Section 3) shall be in certificated form, in each case registered in
such names and in such denominations as CSI on behalf of the Initial
Purchasers shall have requested in writing not less than two full business
days prior to the Closing Date. The Company agrees to make one or more
global certificates evidencing the Capital Securities available for
inspection by CSI on behalf of the Initial Purchasers in New York, New York
at least 24 hours prior to the Closing Date.
(d) It is understood that each Initial Purchaser has authorized CSI, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Capital Securities that it has agreed to purchase.
You may (but shall not be obligated to) make payment of the purchase price
for the Capital Securities to be purchased by any Initial Purchaser whose
funds shall not have been received by the Closing Date, but such payment
shall not relieve such Initial Purchaser from its obligations hereunder.
Section 3. Resale of the Securities. (a) The Initial Purchasers have
------------------------
advised the Company and the Issuer that they propose to offer the Capital
Securities for resale upon the terms and subject to the conditions set
forth herein and in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents and warrants to, and agrees with, the
Company and the Issuer that (i) it is purchasing the Capital Securities
pursuant to a private sale exempt from registration under the Securities
Act, (ii) it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Capital Securities by means of
any form of general solicitation or general advertising within the meaning
of Rule 502(c) of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Capital Securities only from, and
has offered or sold and will offer, sell or deliver the Capital Securities,
as part of its initial offering, only to (A) persons whom it reasonably
believes to be qualified institutional buyers ("Qualified Institutional
Buyers") as defined in Rule 144A under the Securities Act, or if any such
person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has
represented to it that each such account is a Qualified Institutional Buyer
to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A and in each case, in transactions in accordance with
Rule 144A and (B) a limited number of other accredited investors
("Accredited Investors") as defined in Rule 501(a)(1), (2), (3) or (7)
under Regulation D that are institutional investors in private sales exempt
from registration under the Securities Act. Each Initial Purchaser,
severally and not jointly, agrees that, prior to or simultaneously with the
confirmation of sale by such Initial Purchaser to any purchaser of any of
the Capital Securities purchased by such Initial Purchaser from the Issuer
pursuant hereto, such Initial Purchaser shall furnish to that purchaser a
copy of the Offering Memorandum (and any amendment or supplement thereto
that the Company shall have furnished to such Initial Purchaser prior to
the date of such confirmation of sale). In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (h), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations
and warranties of the Initial Purchasers and their compliance with their
13
agreements contained in this Section 3, and each Initial Purchaser hereby
consents to such reliance.
(b) The Company acknowledges and agrees that the Initial Purchasers may
sell Capital Securities to any affiliate of an Initial Purchaser and that
any such affiliate may sell Capital Securities purchased by it to an
Initial Purchaser, in each case in accordance with the terms of this
Agreement.
Section 4. Certain Covenants of the Issuer and the Company. The Issuer
-----------------------------------------------
and the Company covenant with each Initial Purchaser as follows:
(a) The Issuer and the Company will promptly deliver to each Initial
Purchaser and counsel for the Initial Purchasers, without charge, as many
copies of the Preliminary Offering Memorandum, the Offering Memorandum, any
amendments or supplements thereto, the documents incorporated or deemed
incorporated by reference in the Offering Memorandum and the Transaction
Documents as such Initial Purchaser and their counsel may reasonably
request.
(b) Prior to making any amendment or supplement to the Offering
Memorandum, the Company will furnish a copy thereof to each of the Initial
Purchasers and counsel of the Initial Purchasers and will not effect such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Company after a reasonable period of review.
(c) If at any time prior to completion of the distribution of the
Capital Securities by the Initial Purchasers any event shall occur or
condition exist as a result of which it is necessary, in the reasonable
opinion of the Initial Purchasers, counsel for the Initial Purchasers or
counsel for the Company, to amend or supplement the Offering Memorandum in
order that the Offering Memorandum will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading or if, in the
reasonable opinion of the Initial Purchasers, counsel to the Initial
Purchasers or counsel to the Company, such amendment or supplement is
necessary to comply with applicable law, the Issuer and the Company will,
subject to paragraph (b) of this Section 4, promptly prepare such amendment
or supplement as may be necessary to correct such untrue statement or
omission or to effect such compliance (in form and substance reasonably
agreed upon by counsel to the Initial Purchasers), so that as so amended or
supplemented, the statements in the Offering Memorandum will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading or so that such Offering Memorandum as so amended or
supplemented will comply with applicable law, as the case may be, and
furnish to the Initial Purchasers such number of copies of such amendment
or supplement as the Initial Purchasers may reasonably request. The Issuer
and the Company agree to notify the Initial Purchasers in writing to
suspend use of the Offering Memorandum as
14
promptly as practicable after the occurrence of an event specified in this
paragraph (c), and the Initial Purchasers hereby agree upon receipt of such
notice from the Issuer and the Company to suspend use of the Offering
Memorandum until the Issuer and the Company have amended or supplemented
the Offering Memorandum to correct such misstatement or omission or to
effect such compliance.
(d) Except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, the Company and the Issuer will not, and will cause their affiliates
not to, and will not authorize or knowingly permit any person acting on
their behalf to, solicit any offer to buy or offer to sell any of the
Securities by means of any form of general solicitation or general
advertising within the meaning of Regulation D or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act;
and the Company and the Issuer will not offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would cause
the exemption afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Securities as contemplated by
this Agreement and the Offering Memorandum;
(e) So long as any of the Securities are outstanding and "restricted
securities" within the meaning of Rule 144(a)(3) of the Rules and
Regulations, the Company will, during any period in which it is not subject
to and in compliance with Section 13 or 15(d) of the Exchange Act, provide
to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities,
upon the request of such holder or prospective purchaser, any information
required to be provided by Rule 144A(d)(4) of the Rules and Regulations.
This covenant is intended to be for the benefit of the holders, and the
prospective purchasers designated by such holders, from time to time of
such restricted securities.
For so long as the Securities are outstanding and so long as the Initial
Purchasers are making a market for the Capital Securities, the Company will
furnish to the Initial Purchasers copies of any annual reports, quarterly
reports and current reports filed by the Company with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as
shall be furnished by the Company to the Indenture Trustee or the Property
Trustee or to the holders of the Debentures or the Capital Securities
pursuant to the Trust Agreement or the Indenture or the Exchange Act or any
Rule or Regulation.
(f) For so long as the Securities are outstanding, the Company agrees to
file with the Commission, in a timely manner, all forms and reports
required to be filed by it under the Exchange Act.
(g) Each Capital Security (and each Debenture distributed to holders of
Capital Securities pursuant to the terms of the Trust Agreement) will bear
a legend (and with respect to the Debentures a similar legend)
substantially in the following form until
15
such legend shall no longer be necessary or advisable because the Capital
Securities (and the Debentures) are no longer subject to the restrictions
on transfer described herein:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT:
(I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE WHICH IS TWO YEARS
AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF SUCH RESTRICTED
SECURITIES (OR ANY PREDECESSOR) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE
JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS
SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO
THE FOREGOING CLAUSE (II)(D) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS
SECURITY AND THE PROPERTY TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION
ACCEPTABLE TO THEM IN FORM AND SUBSTANCE."
(h) The Company will, or will cause the Issuer to, arrange for the
registration and qualification of the Capital Securities for offering and
sale under the applicable securities or "blue sky" laws of such states and
other U.S. jurisdictions as the Initial Purchasers may reasonably designate
in connection with the resale of Capital Securities as contemplated by this
Agreement and the Offering Memorandum and will
16
continue such qualifications in effect for as long as may be reasonably
required to complete the distribution of the Capital Securities; provided
--------
that the Company shall not be required to qualify as a foreign corporation
or consent to the service of process under the laws of any such state
(except service of process with respect to the offering and sale of the
Capital Securities). The Company shall, or shall cause the Issuer to,
promptly advise the Initial Purchasers of the receipt by the Company or the
Issuer, as the case may be, of any order preventing or suspending the use
of the Preliminary Offering Memorandum or the Offering Memorandum or any
notification with respect to the suspension of the qualification or
exemption from qualification of the Capital Securities for offering or sale
in any jurisdiction or the institution of any proceeding for such purpose
and shall use its best efforts to prevent the issuance of any such order
preventing or suspending the use of the Preliminary Offering Memorandum or
the Offering Memorandum or suspending any such qualification and, if any
such suspension is issued, to obtain the lifting thereof at the earliest
possible time
(i) Neither the Issuer nor the Company shall, directly or indirectly, for
a period commencing on the date hereof and ending on the 30th day after the
Closing Date, except with the prior written consent of CSI, offer to sell,
pledge, sell, grant any option, warrant or other right to purchase, or
otherwise transfer or dispose of (or agree to do any of the foregoing) (a)
any trust certificates or other securities of the Issuer or any similar
trust, (b) any preferred stock or any other security of the Company that is
substantially similar to the Capital Securities or (c) any other securities
which are convertible into, or exercisable or exchangeable for, any of the
securities described in (a) and (b) above. The foregoing sentence shall not
apply to (i) the issuance of the Common Securities to the Company by the
Issuer, (ii) the issuance of the Capital Securities being sold hereunder
and the sale thereof pursuant hereto, (iii) the issuance of the Debentures
to the Issuer by the Company or (iv) the issuance of the Exchange
Securities.
(j) The Company and the Issuer agree that no future offer and sale of
securities of the Company or the Issuer of any class will be made if, as a
result of the doctrine of "integration" referred to in Rule 502 of
Regulation D, such offer and sale could reasonably have been expected, at
the time of such sale, based upon public laws, Commission releases and
Commission no-action letters available at such time, to render invalid the
exemption from the registration requirements of the Securities Act relied
upon in connection with the transactions contemplated by this Agreement.
(k) In connection with the original distribution of the Capital
Securities, the Company agrees that, prior to any offer or resale of the
Capital Securities by the Initial Purchasers, the Initial Purchasers and
counsel for the Initial Purchasers shall have the right to make, and
promptly receive from the Company adequate information with respect to,
reasonable inquiries into the business of the Company and its subsidiaries.
17
(l) In connection with the offering of the Capital Securities, the
Company and the Issuer agree to make their officers, trustees, independent
accountants and legal counsel reasonably available upon request by the
Initial Purchasers.
(m) During the period from the Closing Date until two years after the
Closing Date, without the prior written consent of the Initial Purchasers,
neither the Company nor the Issuer, will, and will not permit any of its
affiliates (as defined in Rule 144 under the Securities Act) to, resell any
of the Capital Securities that have been reacquired by them, except for
Securities purchased by the Company or any of its affiliates and resold in
a transaction registered under the Securities Act.
(n) The Company and the Issuer will do and perform all things required
to be done and performed by it under this Agreement that are within their
control prior to or after the Closing Date, and to use their reasonable
best efforts to satisfy all conditions precedent on their part to the
delivery of the Capital Securities.
(p) Prior to the Closing Date, not to issue any press release or other
communication directly or indirectly or hold any press conference with
respect to the Company, its condition, financial or otherwise, or earnings,
business affairs or business prospects (except for routine oral marketing
communications in the ordinary course of business and consistent with the
past practices of the Company and of which the Initial Purchasers are
notified), without the prior written consent of the Initial Purchasers,
unless in the judgment of the Company and its counsel, and after
notification to the Initial Purchasers, such press release or communication
is required by law.
Section 5. Conditions of Initial Purchasers' Obligation. The respective
--------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Issuer contained
herein, to the accuracy of the statements of the Company and the Issuer and
their respective officers or trustees made in any certificates delivered
pursuant hereto, to the performance by the Company and the Issuer of their
respective obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements thereto)
shall have been printed and copies distributed to the Initial Purchasers as
promptly as practicable on or following the date of this Agreement or at
such other date and time as to which the Initial Purchasers may agree; and
no stop order suspending the sale of the Capital Securities in any
jurisdiction shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(b) None of the Initial Purchasers shall have discovered and disclosed
to the Company on or prior to the Closing Date that the Offering Memorandum
or any amendment or supplement thereto contains an untrue statement of a
fact which, in the opinion of counsel for the Initial Purchasers, is
material or omits to state any fact
18
which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not
misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and
the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company shall have furnished to the Initial Purchasers all documents and
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(d) White & Case shall have furnished to the Initial Purchasers their
written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex B hereto.
(e) ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have furnished to the Initial Purchasers his
written opinion, as General Counsel to the Company, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially in the
form of Annex C hereto.
(f) ▇▇▇▇▇▇ ▇▇▇▇▇ Hitchens & ▇▇▇▇▇▇▇▇ shall have furnished to the Initial
Purchasers their written opinion, as counsel to the Issuer, the Indenture
Trustee, the Property Trustee, the Delaware Trustee and the Guarantee
Trustee, addressed to the Initial Purchasers and dated the Closing Date, in
form and substance reasonably satisfactory to the Initial Purchasers and to
the effect that the Delaware Trustee is a Delaware banking corporation, has
been duly incorporated and is validly existing in good standing as a
banking corporation under the laws of the State of Delaware and has the
corporate power to act as trustee of a Delaware business trust under the
laws of the State of Delaware, 12 Del. (S) 3801 et seq, and substantially
--- -- ---
to the effect set forth in Annex D hereto.
(g) The Initial Purchasers shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company and the Issuer shall
have furnished to such counsel such documents and information as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(h) The Company shall have furnished to the Initial Purchasers a letter
(the "Initial Letter") of Price Waterhouse LLP, addressed to the Initial
Purchasers and dated the date hereof, in form and substance satisfactory to
the Initial Purchasers, substantially to the effect set forth in Annex E
hereto.
19
(i) The Company shall have furnished to the Initial Purchasers a letter
(the "Bring-Down Letter") of Price Waterhouse LLP, addressed to the Initial
Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the American Institute of Certified Public Accountants ("AICPA")
and its interpretations and rulings thereunder, (ii) stating, as of the
date of the Bring-Down Letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Offering Memorandum, as of a date not
more than five business days prior to the date of the Bring-Down Letter),
that the conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter are
accurate and (iii) confirming in all material respects the conclusions and
findings set forth in the Initial Letter. In addition, the Company shall
have received letters from such accountants consenting to the use, in
connection with the offering of the Capital Securities, of the audited
financial statements of the Company prepared by such accountants and
incorporated by reference in the Offering Memorandum.
(j) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its president and its chief
financial officer stating that (A) such officers have carefully examined
the Offering Memorandum, (B) in their opinion, the Offering Memorandum, as
of its date, did not include any untrue statement of a material fact and
did not omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and since the date of the Offering Memorandum, no
event has occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum so that the Offering Memorandum (as so
amended or supplemented) would not include any untrue statement of a
material fact and would not omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (C) as of the Closing Date,
the representations and warranties of the Company in this Agreement are
true and correct in all material respects, the Company has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date, and subsequent to the
date of the most recent financial statements contained or incorporated by
reference in the Offering Memorandum, there has been no material adverse
change in the financial position or results of operation of the Company or
any of its subsidiaries, or any change, or any development including a
prospective change, in or affecting the condition (financial or otherwise),
results of operations or business of the Company and its subsidiaries taken
as a whole, except as set forth in the Offering Memorandum.
(k) The Issuer shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its Regular Trustees stating that
(A) such trustees have carefully examined the Offering Memorandum, (B) in
their opinion, the Offering Memorandum, as of its date, did not include any
untrue statement of a material fact and did not omit to state a material
fact necessary in order to make the statements therein, in the light
20
of the circumstances under which they were made, not misleading, and since
the date of the Offering Memorandum, no event has occurred which should
have been set forth in a supplement or amendment to the Offering Memorandum
so that the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading and
(C) as of the Closing Date, the representations and warranties of the
Issuer in this Agreement are true and correct in all material respects, the
Issuer has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder on or prior to the Closing
Date.
(l) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company and the Issuer.
(m) Each of the Transaction Documents shall have been duly executed and
delivered by the parties thereto, and the Capital Securities and the
Debentures shall have been duly executed and delivered by the Issuer and
the Company and duly authenticated by the Property Trustee and the
Indenture Trustee, respectively.
(n) If any event shall have occurred that requires the Company under
Section 4(c) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have consented to its use, and copies thereof
shall have been delivered to the Initial Purchasers reasonably in advance
of the Closing Date.
(o) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any of the rules and regulations by the Commission or any amendment or
proposed amendment thereof by the Commission which in the judgment of the
Initial Purchasers would materially impair the ability of the Initial
Purchasers to purchase, hold or effect resales of the Capital Securities as
contemplated hereby.
(p) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of the Company and its subsidiaries taken as a whole, the effect
of which, in any such case described above, is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Capital Securities
on the terms and in the manner contemplated by this Agreement and the
Offering Memorandum (exclusive of any amendment or supplement thereto).
21
(q) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency
or body which would, as of the Closing Date, prevent the issuance or sale
of the Capital Securities; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would prevent the
issuance or sale of the Capital Securities.
(r) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Capital
Securities or any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization", as such term
is defined by the Commission for purposes of Rule 436(g)(2) of the Rules
and Regulations and (ii) no such organization shall have publicly announced
that it has under surveillance or review (other than an announcement with
positive implications of a possible upgrading), its rating of the Capital
Securities or any of the Company's debt securities or preferred stock.
(s) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities of
the Company on any exchange or in the over-the-counter market shall have
been suspended or (ii) any moratorium on commercial banking activities
shall have been declared by federal or New York state authorities or (iii)
an outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv), is, in
the judgment of the Initial Purchasers, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale or the delivery of
the Capital Securities on the terms and in the manner contemplated by this
Agreement and in the Offering Memorandum (exclusive of any amendment or
supplement thereto).
6. Termination. The obligations of the Initial Purchasers hereunder may
-----------
be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and
payment for the Capital Securities if, prior to that time, any of the
events described in Section 5(p), (q), (r), (s) or (t) shall have occurred
and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
-----------------------------
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for
the purchase of the Capital Securities which such defaulting Purchaser
agreed but failed to purchase by other persons satisfactory to the Company
and the non-defaulting Initial Purchasers, but if no such arrangements are
made within 36 hours after such default, this Agreement shall terminate
without liability on the part
22
of the non-defaulting Initial Purchasers, the Issuer or the Company, except
that the Company and the Issuer will continue to be liable for the payment
of expenses to the extent set forth in Sections 8 and 12 and except that
the provisions of Sections 9 and 10 shall not terminate and shall remain in
effect. As used in this Agreement, the term "Initial Purchasers" includes,
for all purposes of this Agreement unless the context otherwise requires,
any party not listed in Schedule 1 hereto that, pursuant to this Section 7,
purchases Capital Securities which a defaulting Initial Purchaser agreed
but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company, the Issuer or any
non-defaulting Initial Purchaser for damages caused by its default. If
other persons are obligated or agree to purchase the Capital Securities of
a defaulting Initial Purchaser, either the non-defaulting Initial
Purchasers or the Company may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the opinion of
counsel for the Company or counsel for the Initial Purchasers may be
necessary in the Offering Memorandum or in any other document or
arrangement, and the Company and the Issuer agree to promptly prepare any
amendment or supplement to the Offering Memorandum that effects any such
changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement
---------------------------------------------
shall have been terminated pursuant to Section 7, (b) the Company or the
Issuer shall fail to tender any of the Securities for delivery to the
Initial Purchasers for any reason permitted under this Agreement or (c) the
Initial Purchasers shall decline to purchase the Capital Securities for any
reason permitted under this Agreement, the Company and the Issuer shall
reimburse the Initial Purchasers for such out-of-pocket expenses (including
reasonable fees and disbursements of counsel) as shall have been reasonably
incurred by the Initial Purchasers in connection with this Agreement and
the proposed purchase and resale of the Capital Securities. If this
Agreement is terminated pursuant to Section 7 by reason of the default of
one or more of the Initial Purchasers, the Company and the Issuer shall not
be obligated to reimburse any defaulting Initial Purchaser on account of
such expenses.
9. Indemnification. (a) The Company and the Issuer shall, jointly and
---------------
severally, indemnify and hold harmless each Initial Purchaser, its
affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 9(a) and Section
10 as an Initial Purchaser), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating
to purchases and sales of the Capital Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or in any information provided by the
Company pursuant to Section 4(e) or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
23
under which they were made, not misleading, and shall reimburse each
Initial Purchaser promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
--------- -------
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based
upon, an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information; and provided, further,
--------- -------
that with respect to any such untrue statement in or omission from the
Preliminary Offering Memorandum, the indemnity agreement contained in this
Section 9(a) shall not inure to the benefit of any such Initial Purchaser
to the extent that the sale to the person asserting any such loss, claim,
damage, liability or action was an initial resale by such Initial Purchaser
and any such loss, claim, damage, liability or action of or with respect to
such Initial Purchaser results from the fact that both (A) to the extent
required by applicable law, a copy of the Offering Memorandum was not sent
or given to such person at or prior to the written confirmation of the sale
of such Capital Securities to such person and (B) the untrue statement in
or omission from the Preliminary Offering Memorandum was corrected in the
Offering Memorandum unless, in either case, such failure to deliver the
Offering Memorandum was a result of non-compliance by the Company with
Section 4(a). For purposes of the last proviso to the immediately preceding
sentence, the term "Offering Memorandum" shall not be deemed to include the
documents incorporated therein by reference, and no Initial Purchaser shall
be obligated to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Offering Memorandum or the
Offering Memorandum to any person.
(b) Each Initial Purchaser, severally and not jointly, shall indemnify
and hold harmless the Company, its affiliates, the Issuer, their respective
officers, trustees, directors, employees, representatives and agents, and
each person, if any, who controls the Company or the Issuer within the
meaning of the Securities Act or the Exchange Act (collectively referred to
for purposes of this Section 9(b) and Section 10 as the Company), from and
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any
other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any Initial
Purchasers' Information provided by such Initial Purchaser and shall
reimburse the Company promptly upon demand for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred.
24
(c) Promptly after receipt by an indemnified party under this Section 9
of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
--------- -------
party shall not relieve it from any liability which it may have under this
Section 9 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure;
and, provided, further, that the failure to notify the indemnifying party
--------- -------
shall not relieve it from any liability which it may have to an indemnified
party otherwise than under this Section 9. If any such claim or action
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that an indemnified party shall have the
--------- -------
right to employ its own counsel in any such action, but the fees, expenses
and other charges of such counsel for the indemnified party will be at the
expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying
party, (2) the indemnified party has reasonably concluded (based upon
advice of counsel to the indemnified party) that there may be legal
defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a
conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory
to the indemnified party to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action,
in each of which cases the reasonable fees, disbursements and other charges
of counsel will be at the expense of the indemnifying party or parties. It
is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there
be a final judgment for the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and indemnity
could have been sought
25
hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding and contains no
findings of fault or culpability or failure to act by or on behalf of the
Indemnified Party.
The obligations of the Company and the Initial Purchasers in this Section
9 and in Section 10 are in addition to any other liability that the Company
or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9 is
------------
unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage
or liability, or action in respect thereof, (i) in such proportion as shall
be appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchasers on the other from the offering of
the Capital Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and
the Initial Purchasers on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action
in respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Capital Securities purchased under this Agreement (before
deducting expenses) received by or on behalf of the Company, on the one
hand, and the total discounts and commissions received by the Initial
Purchasers with respect to the Capital Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale of
the Capital Securities under this Agreement, in each case as set forth in
the table on the cover page of the Offering Memorandum. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to the Company information
supplied by the Company on the one hand or to any Initial Purchasers'
Information on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Initial Purchasers agree
that it would not be just and equitable if contributions pursuant to this
Section 10 were to be determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 10 shall be
deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which
the total discounts and commissions received by such Initial Purchaser with
respect to the Capital Securities purchased by it under
26
this Agreement exceeds the amount of any damages which such Initial
Purchaser has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Initial Purchasers' obligations to contribute as provided in this Section
10 are several in proportion to their respective purchase obligations and
not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure
----------------------------------------
to the benefit of and be binding upon the Initial Purchasers, the Company,
the Issuer and their respective successors. This Agreement and the terms
and provisions hereof are for the sole benefit of only those persons,
except as provided in Sections 9 and 10 with respect to affiliates,
officers, trustees, directors, employees, representatives, agents and
controlling persons of the Company, the Issuer and the Initial Purchasers
and in Section 4(e) with respect to holders and prospective purchasers of
the Capital Securities. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this
Section 11, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
12. Expenses. The Company and the Issuer agree with the Initial
--------
Purchasers to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Securities and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and
distribution of the Preliminary Offering Memorandum, the Offering
Memorandum and any amendments or supplements thereto; (c) the costs of
reproducing and distributing each of the Transaction Documents; (d) the
costs incident to the preparation, printing and delivery of the
certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's counsel and independent accountants; (f) the fees
and expenses of qualifying the Capital Securities under the securities laws
of the several jurisdictions as provided in Section 4(g) and of preparing,
printing and distributing Blue Sky Memoranda (including related reasonable
fees and expenses of counsel for the Initial Purchasers); (g) any fees
charged by rating agencies for rating the Capital Securities; (h) the fees
and expenses of the Trustees and any paying agent (including related fees
and expenses of any counsel to such parties); (i) the cost of qualifying
the Capital Securities with DTC and other costs and expenses incident to
the performance of the obligations of the Company under this Agreement
which are not otherwise specifically provided for in this Section 12;
provided, however, that except as provided in this Section 12 and Section
--------- -------
8, the Initial Purchasers shall pay their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
--------
representations, warranties and agreements of the Company, the Issuer and
the Initial Purchasers contained in this Agreement or made by or on behalf
of the Company, the Issuer or the Initial Purchasers pursuant to this
Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Capital Securities and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any
27
investigation made by or on behalf of any of them or any of their
respective affiliates, officers, directors, employees, representatives,
agents or controlling persons.
14. Notices, etc. All statements, requests, notices and agreements
------------
hereunder shall be in writing, and:
if to the Initial Purchasers, shall be delivered or sent by mail or
telecopy transmission to Chase Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ (telecopier no.: (212) 270-
----------------
6170); or
if to the Company or the Issuer, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ (telecopier no.: 714-836-
--------------
1841);
provided that any notice to an Initial Purchaser pursuant to Section 9(c)
--------
shall also be delivered or sent by mail to such Initial Purchaser at its
address set forth on the signature page hereof. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof. The Company and the Issuer shall be entitled to act and rely upon
any request, consent, notice or agreement given or made on behalf of the
Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the term
-------------------
"business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in
Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under
the Securities Act.
16. Initial Purchasers' Information. The parties hereto acknowledge and
-------------------------------
agree that the Initial Purchasers' Information consists solely of the
following information in the Preliminary Offering Memorandum and the
Offering Memorandum: (i) the last paragraph on the front cover page
concerning the terms of the offering by the Initial Purchasers; (ii) the
legend on the inside front cover page concerning stabilizing activities by
the Initial Purchasers; and (iii) the statements concerning the Initial
Purchasers contained in (i) the second sentence of the fifth paragraph and
(ii) paragraph seven and under the heading "Plan of Distribution".
17. Governing Law. This Agreement shall be governed by and construed in
-------------
with the laws of the State of New York.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
28
19. Amendments. No amendment or waiver of any provision of this
----------
Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by
the parties hereto.
20. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Company, the Issuer and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
FIRST AMERICAN CAPITAL TRUST
By The First American Financial Corporation,
as Sponsor
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Regular Trustee
THE FIRST AMERICAN FINANCIAL CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
Accepted:
CHASE SECURITIES INC.
By /s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Company, the Issuer and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
FIRST AMERICAN CAPITAL TRUST
By The First American Financial Corporation,
as Sponsor
By
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Regular Trustee
THE FIRST AMERICAN FINANCIAL CORPORATION
By
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
Accepted:
CHASE SECURITIES INC.
By /s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Chase Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
UBS SECURITIES LLC
By ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
---------------------
Authorized Signatory
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
VICE PRESIDENT
Address for notices pursuant to Section 9(c):
UBS Securities LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE 1
Principal Amount
Initial Purchasers of Capital Securities
------------------ ---------------------
Chase Securities Inc. $ 50,000,000
UBS Securities LLC 50,000,000
------------
Total $100,000,000
SCHEDULE 2
Material Subsidiaries
---------------------
First American Trust Company
First American Title Insurance Company
First American Title Guaranty Holding Company
First American Home Buyers Protection Corporation
First American Title Insurance Company of New York
First American Flood Data Services, Inc.
First American Real Estate Information Services, Inc.
Annex A
Form of Registration Rights Agreement
ANNEX B
Form of White & Case Opinion
White & Case shall have furnished to the Initial Purchasers their written
opinion, as counsel to the Company, addressed to the Initial Purchasers and
dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, substantially to the effect set forth below:
(a) The Company has full right, power and authority to execute and
deliver each of the Transaction Documents to which it is a party and to
perform its obligations thereunder; and all corporate action required to be
taken for the due and proper authorization, execution and delivery of each
of the Transaction Documents to which it is a party and the consummation of
the transactions contemplated thereby have been duly and validly taken.
(b) This Agreement has been duly authorized, executed and delivered by
the Company.
(c) Each of the Indenture, the Trust Agreement, the Guarantee
Agreement and the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company, and each of the Indenture, the Trust
Agreement, the Guarantee Agreement and the Registration Rights Agreement
constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company and the Trustee in accordance with its
terms, subject to the Enforceability Exceptions.
(d) The Debentures have been duly authorized, executed, issued and
delivered by the Company and, when the Debentures have been duly
authenticated by the Indenture Trustee and paid for by the Issuer, will
constitute legal, valid and binding obligations of the Company, entitled to
the benefits of the Indenture and enforceable against the Company in
accordance with their terms, subject to the Enforceability Exceptions.
(e) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(f) The statements set forth in the Offering Memorandum under the
captions "Description of Capital Securities", "Description of Junior
Subordinated Debentures", "Description of Guarantee", "Relationship Among
the Securities, the Junior Subordinated Debentures and the Guarantee" and
"Benefit Plan Considerations" insofar as they purport to describe the
provisions of the law and documents referred to therein are accurate.
(g) Assuming the accuracy of the representations, warranties and
agreements of the Company and of the Initial Purchasers contained in this
Agreement, the issuance and sale of the Capital Securities and the offer,
resale and delivery of the
2
Capital Securities in the manner contemplated by this Agreement and the
Offering Memorandum, are exempt from the registration requirements of the
Securities Act, and it is not necessary to qualify the Indenture under the
Trust Indenture Act.
(h) Neither the Issuer nor the Company nor any of its subsidiaries is
an "investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act and the rules and
regulations of the Commission thereunder, without taking account of any
exemption under the Investment Company Act arising out of the number of
holders of the Company's securities.
(i) Subject to the qualifications set forth therein, the statements
contained in the Offering Memorandum under the caption "Certain United
States Federal Income Tax Consequences," to the extent they constitute
matters of United States federal income tax law and legal conclusions with
respect thereto, are accurate in all material respects.
In addition, such counsel shall state that, although they have not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and do not assume any responsibility for the accuracy or
completeness of the Statements in the Offering Memorandum, as counsel for
the Company, they reviewed the Offering Memorandum and the documents
incorporated or deemed incorporated by reference therein (the "Exchange Act
Documents"), participated in the preparation of the Offering Memorandum and
in discussions with the Initial Purchasers and representatives of the
Company and its independent public accountants and advised the Company as
to the requirements of the Securities Act and the applicable rules and
regulations thereunder. Such counsel shall also state that they reviewed
certificates of certain officers of the Company and the letter from the
Company's independent accountants. Such counsel shall state that nothing
that came to their attention that has caused them to believe that any part
of the Offering Memorandum (including the Exchange Act Documents) contained
any untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need not express an opinion with respect to
the financial statements and notes and schedules thereto or any other
statistical or financial data included in the Offering Memorandum).
3
ANNEX C
[Form of Opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇]
▇▇▇▇▇ ▇. ▇▇▇▇▇, shall have furnished to the Initial Purchasers his written
opinion, as general counsel to the Company, addressed to the Initial Purchasers
and dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, substantially to the effect set forth below:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of California;
and the Company and each of its Material Subsidiaries is duly qualified or
licensed to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property, maintenance
of an office or the conduct of its businesses requires such qualification,
and has all power and authority necessary to own or hold its properties and
to conduct the businesses in which it is engaged (except where the failure
to so qualify or be licensed or have such power or authority would not,
singularly or in the aggregate, have a Material Adverse Effect).
(b) The Company has an authorized capitalization as set forth in the
Offering Memorandum.
(c) All of the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and were not issued in violation of the preemptive
rights of any other stockholder of the Company; and all of the issued and
outstanding shares of capital stock of each of the Company's Material
Subsidiaries (other than First American Title Guaranty Holding Company and
First American Home Buyers Protection Corporation) are owned of record by
the Company or one or more of its subsidiaries, and all such shares of such
capital stock are duly and validly issued, fully paid and non-assessable,
except that (i) all of the issued and outstanding shares of First American
Title Insurance Company, First American Trust Company and First American
Real Estate Information Services, Inc. have been pledged to secure the
Company's indebtedness under the Credit Facility (as such term is defined
in the Offering Memorandum) and (ii) the transfer of ownership of the
capital stock of First America Title Insurance Company is subject to the
prior approval of the California Department of Insurance. The Company owns
80% of the issued and outstanding shares of the capital stock of First
American Title Guaranty Holding Company ("FATGHC"). The Company owns 79% of
the issued and outstanding shares of the capital stock of First American
Home Buyers Protection Corporation ("FAHBPC"). The outstanding shares of
the capital stock of FATGHC and FAHBPC that are owned by the Company have
been duly and validly authorized and issued, are fully paid and are
nonassessable, and are owned, indirectly, by the Company free and clear of
any pledge, lien, security interest, charge, claim, restriction on voting
or transfer or encumbrance of any kind, except that the holders of the
minority interests in FATGHC and FAHBPC have the right to "put" their
minority interests to First American Title Insurance Company.
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(d) The execution, delivery and performance by the Company and the
Issuer of each of the Transaction Documents, the issuance, authentication,
sale and delivery of the Capital Securities and compliance by the Company
and the Issuer with the material terms thereof and the consummation of the
transactions contemplated by the Transaction Documents will not conflict
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries or the Issuer pursuant to, any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or any of its subsidiaries or
the Issuer is a party or by which the Company or any of its subsidiaries or
the Issuer is bound or to which any of the property or assets of the
Company or any of its subsidiaries or the Issuer is subject, nor will such
actions result in any violation of the provisions of the charter or by-laws
of the Company or any of its Material Subsidiaries, the Trust Agreement or
any statute or any judgment, order, decree, rule or regulation of any court
or arbitrator or governmental agency or body having jurisdiction over the
Company or any of its Material Subsidiaries or the Issuer or any of their
properties or assets; and no consent, approval, authorization or order of,
or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company and the Issuer of each of the Transaction
Documents, the issuance, authentication, sale and delivery of the Capital
Securities and compliance by the Company and the Issuer with the terms
thereof and the consummation of the transactions contemplated by the
Transaction Documents, except for such consents, approvals, authorizations,
filings, registrations or qualifications (i) which have been obtained or
made prior to the Closing Date and (ii) as may be required to be obtained
or made under the Securities Act and applicable state securities laws.
(e) To the best knowledge of such counsel, there are no pending actions
or suits or judicial, arbitral, rule-making, administrative or other
proceedings to which the Company or any of its subsidiaries or the Issuer
is a party or of which any property or assets of the Company or any of its
subsidiaries or the Issuer is the subject which (A) singularly or in the
aggregate, if determined adversely to the Company or any of its
subsidiaries or the Issuer, could reasonably be expected to have a Material
Adverse Effect or (B) questions the validity or enforceability of any of
the Transaction Documents or any action taken or to be taken pursuant
thereto; and to the best knowledge of such counsel, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(f) Neither the Company nor any of its Material Subsidiaries is (A) in
violation of its charter or by-laws, (B) in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any material term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound or
to which any of its material property or assets is subject or (C) in
violation
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in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its material property or assets
may be subject.
ANNEX D
[Form of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Opinion]
▇▇▇▇▇▇ ▇▇▇▇▇ Hitchens & ▇▇▇▇▇▇▇▇ shall have furnished to the Initial
Purchasers their written opinion, as counsel to the Indenture Trustee, the
Property Trustee, the Guarantee Trustee and the Delaware Trustee, addressed to
the Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the effect
set forth below:
(a) Wilmington Trust Company is a banking corporation duly
incorporated and validly existing under the laws of the State of Delaware.
(b) The execution, delivery and performance by Wilmington Trust
Company, as property trustee (the "Property Trustee") of the Trust
Agreement, as Guarantee Trustee, of the Guarantee Agreement, as the
Indenture Trustee, of the Indenture have been duly authorized by all
necessary corporate action on the part of the Property Trustee, the
Guarantee Trustee and the Indenture Trustee, respectively. The Trust
Agreement, the Guarantee Agreement and the Indenture have been duly
executed and delivered by the Property Trustee, the Guarantee Trustee and
the Indenture Trustee, respectively.
(c) The execution, delivery and performance of the Trust Agreement,
the Guarantee Agreement and the Indenture by the Property Trustee, the
Guarantee Trustee and the Indenture Trustee, respectively, do not conflict
with or constitute a breach of the applicable organizational documents or
by-laws of the Property Trustee, the Guarantee Trustee or the Indenture
Trustee, respectively, or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Property Trustee, the
Guarantee Trustee or the Indenture Trustee, respectively, is a party or is
bound or any judgment, order or decree known to such counsel to be
applicable to the Property Trustee, the Guarantee Trustee or the Indenture
Trustee, respectively, of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Property Trustee, the Guarantee Trustee or the Indenture Trustee,
respectively.
(d) No consent, approval or authorization of, or registration with or
notice to, any federal or Delaware banking authority is required for the
execution, delivery or performance by the Property Trustee, the Guarantee
Trustee or the Indenture Trustee of the Trust Agreement, the Guarantee
Agreement or the Indenture, respectively.
(e) The Issuer has been duly created and is validly existing in good
standing as a business trust under the Delaware Act, and all filings
required under the laws of the State of Delaware with respect to the
creation and valid existence of the Issuer as a business trust have been
made.
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(f) Under the Delaware Act and the Trust Agreement, the Issuer has the
trust power and authority to own its property and conduct its business, all
as described in the Offering Memorandum.
(g) The Trust Agreement constitutes a valid and binding obligation of
the Company and the Trustees, and is enforceable against the Company and
the Trustees in accordance with its terms, subject, as to enforcement, to
the effect upon the Trust Agreement of (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent transfer
and other similar laws relating to the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.
(h) Under the Delaware Act and the Trust Agreement, the Issuer has the
trust power and authority (i) to execute and deliver, and to perform its
obligations under, this Agreement and the Registration Rights Agreement and
(ii) to issue and perform its obligations under the Capital Securities and
the Common Securities.
(i) Under the Delaware Act and the Trust Agreement, the execution and
delivery by the Issuer of this Agreement and the Registration Rights
Agreement, and the performance by the Issuer of its obligations hereunder
and thereunder, have been duly authorized by all necessary trust action on
the part of the Issuer.
(j) The Capital Securities have been duly authorized by the Trust
Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and nonassessable undivided
beneficial interests in the assets of the Issuer and are entitled to the
benefits of the Trust Agreement. The holders of the Capital Securities, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of
Delaware. Such counsel may note that the holders of Capital Securities may
be obligated, pursuant to the Trust Agreement, (i) to provide indemnity
and/or security in connection with and pay taxes or governmental charges
arising from transfers or exchanges of certificates for Capital Securities
and the issuance of replacement certificates for Capital Securities, and
(ii) to provide security or indemnity in connection with requests of or
directions to the Property Trustee to exercise its rights and powers under
the Trust Agreement.
(k) Under the Delaware Act and the Trust Agreement, the issuance of
the Capital Securities is not subject to preemptive rights.
(l) The issuance and sale by the Issuer of the Capital Securities, the
execution, delivery and performance by the Issuer of this Agreement and the
Registration Rights Agreement, the consummation by the Issuer of the
transactions contemplated hereby and thereby and compliance by the Issuer
with its obligations
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hereunder and thereunder, and the performance by the Company, as sponsor,
of its obligations under the Trust Agreement (A) do not violate (i) any of
the provisions of the certificate of trust of the Issuer or the Trust
Agreement or (ii) any applicable Delaware law or administrative regulation
(except that such counsel need express no opinion with respect to the
securities laws of the State of Delaware) and (B) do not require any
consent, approval, license, authorization or validation of, or filing or
registration with, any Delaware legislative, administrative or regulatory
body under the laws or administrative regulations of the State of Delaware
(except that such counsel need express no opinion with respect to the
securities laws of the state of Delaware).
(m) Assuming that the Issuer derives no income from or in connection
with sources within the State of Delaware and has no assets, activities
(other than maintaining the Delaware Trustee and the filing of documents
with the Secretary of State of the State of Delaware) or employees in the
State of Delaware, the holders of the Capital Securities (other than those
holders of Capital Securities who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State of
Delaware solely as a result of their participation in the Issuer, and the
Issuer will not be liable for any income tax imposed by the State of
Delaware.
ANNEX E
[Form of Initial Comfort Letter]
The Company shall have furnished to the Initial Purchasers a letter of
Price Waterhouse LLP, addressed to the Initial Purchasers and dated the date of
the Purchase Agreement, in form and substance satisfactory to the Initial
Purchasers, substantially to the effect set forth below:
(a) they are independent certified public accountants with respect to
the Company within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings;
(b) in their opinion, the audited financial statements included or
incorporated by reference in the Offering Memorandum and reported on by
them comply in form in all material respects with the accounting
requirements of the Exchange Act and the related published rules and
regulations of the Commission thereunder that would apply to the Offering
Memorandum if the Offering Memorandum were a prospectus included in a
registration statement on Form S-3 under the Securities Act (except that
certain supporting schedules are omitted);
(c) based upon the procedures detailed in such letter with respect to
the period subsequent to the date of the last available balance sheet,
including reading of minutes and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters,
nothing has come to their attention that causes them to believe that (A) at
a specified date not more than three business days prior to the date of
such letter, there was any change in capital stock, increase in long-term
debt or decrease in net current assets as compared with the amounts shown
in the December 31, 1996 unaudited balance sheet included or incorporated
by reference in the Offering Memorandum or (B) for the period from
______________ __, 199_ to a specified date not more than five business
days prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year, in net sales,
income from operations, EBITDA or net income, except in all instances for
changes, increases or decreases that the Offering Memorandum discloses have
occurred or which are set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed necessary by the
Initial Purchasers]; and
(e) they have performed certain other specified procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company) set forth in the Offering Memorandum agrees with the
accounting records of the Company, excluding any questions of legal
interpretation.