EXHIBIT 10.15
$7,000,000
InCapS ▇▇
▇▇▇▇▇▇▇▇ CAPITAL TRUST II
PLACEMENT AGREEMENT
-------------------
New York, New York
December 5, ▇▇▇▇
▇▇▇▇▇▇▇ ▇'▇▇▇▇▇ & PARTNERS, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇ Capital Trust II (the "Trust"), a statutory trust organized under
the Delaware Statutory Trust Act, 12 Del. C. Sections 3801 et seq. (the
"Delaware Act") and ▇▇▇▇▇▇▇▇ (U.S.A.), Inc., an Oklahoma corporation (the
"Company" and together with the Trust, the "Offerors"), confirm their agreement
(the "Agreement") with Sandler ▇'▇▇▇▇▇ & Partners, L.P., as agent of the
Offerors (the "Placement Agent"), with respect to the issue and sale by the
Trust and the placement by the Placement Agent of 7,000 InCapS SM (liquidation
amount of $1,000 per security) of the Trust (the "Capital Securities"). The
Capital Securities will be guaranteed by the Company to the extent provided in
the Guarantee Agreement, to be dated as of the Closing Date (as defined in
Section 2(a) hereof) (the "Guarantee Agreement"), between the Company, as
guarantor, and Wilmington Trust Company, as guarantee trustee (the "Guarantee
Trustee"), with respect to distributions and payments upon liquidation,
redemption and otherwise.
The entire proceeds from the sale of the Capital Securities will be
combined with the entire proceeds from the sale by the Trust to the Company of
its common securities (the "Common Securities"), and will be used by the Trust
to purchase $7,000,000 aggregate principal amount of Floating Rate Junior
Subordinated Debt Securities due 2034 (the "Subordinated Debt Securities")
issued by the Company. The Capital Securities and the Common Securities will
be issued pursuant to the Amended and Restated Declaration of Trust, to be
dated as of the Closing Date (the "Declaration"), among the Company, as
sponsor, the Administrators named therein (the "Administrators"), Wilmington
Trust Company, as institutional trustee (the "Institutional Trustee"),
Wilmington Trust Company, as Delaware trustee (the "Delaware Trustee"), and
the holders, from time to time, of undivided beneficial interests in the assets
of the Trust. The Subordinated Debt Securities will be issued pursuant to the
Indenture, to be dated as of the Closing Date (the "Indenture"), between the
Company and Wilmington Trust Company, as indenture trustee (the "Indenture
Trustee"). The Indenture, the Guarantee Agreement, the Declaration, this
Agreement and the Subscription Agreement (as defined in Section 2(a) hereof)
are hereinafter referred to collectively as the "Operative Documents."
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SECTION 1. REPRESENTATIONS AND WARRANTIES.
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(a) The Trust and the Company, jointly and severally, represent and
warrant to the Placement Agent and the Purchaser (as defined in Section 2(a)
hereof) of Capital Securities as of the date hereof and as of the Closing Date,
and agree with the Placement Agent and the Purchaser, as follows:
(i) SIMILAR OFFERINGS. Within a period of six months before or
after the date hereof, the Offerors have not, directly or indirectly, solicited
any offer to buy or offered to sell, and will not, directly or indirectly,
solicit any offer to buy or offer to sell, in the United States or to any
United States citizen or resident, any security which is or would be integrated
with the sale of the Capital Securities (including any securities of the same
or a similar class as the Capital Securities, other than the Capital
Securities) in a manner that would require the Capital Securities to be
registered under the Securities Act of 1933, as amended (the "1933 Act").
(ii) INCORPORATED DOCUMENTS. The documents of the Company filed
with the Securities and Exchange Commission (the "Commission") in accordance
with the Securities Exchange Act of 1934, as amended (the "1934 Act"), from and
including the commencement of the fiscal year covered by the Company's most
recent Annual Report on Form 10-K, at the time they were or hereafter are filed
by the Company with the Commission (collectively, the "1934 Act Reports"),
complied and will comply in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), and, at the date of this Agreement and on the Closing Date,
do not and will not include 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 the light of the circumstances under which they were
made, not misleading; and other than such instruments, agreements, contracts
and other documents as are filed as exhibits to the Company's Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there
are no instruments, agreements, contracts or documents of a character described
in Item 601 of Regulation S-K promulgated by the Commission to which the
Company or any of its subsidiaries is a party.
(iii) INDEPENDENT ACCOUNTANTS. The accountants of the Company who
certified the financial statements included in the 1934 Act Reports (the
"Independent Accountants") are independent public accountants of the Company
and its subsidiaries within the meaning of the 1933 Act and the rules and
regulations of the Commission thereunder (the "1933 Act Regulations").
(iv) FINANCIAL STATEMENTS AND INFORMATION. The consolidated
historical financial statements of the Company, together with the related
schedules and notes, included in the 1934 Act Reports present fairly, in all
material respects, the respective consolidated financial positions of the
Company and its consolidated subsidiaries at the respective dates indicated,
and the consolidated statements of income, changes in stockholders' equity
and cash flows of the Company and its consolidated subsidiaries for the
respective periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis throughout the periods involved, except as
PAGE 2
disclosed in the notes to such financial statements; the supporting schedules,
if any, included in the 1934 Act Reports present fairly, in all material
respects, the information required to be stated therein and any pro forma
financial statements and the related notes thereto included in the 1934 Act
Reports present fairly the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions and circumstances referred to therein; the statutory financial
statements of National American Insurance Company, an Oklahoma corporation (the
"Insurance Subsidiary") as filed with the applicable insurance regulatory
authorities in the jurisdiction in which each such Insurance Subsidiary is
organized (each such regulatory authority, the "State Regulatory Authority")
for the years ended December 31, 2002, 2001 and 2000 and for any quarters ended
subsequent to December 31, 2002, including all supporting documents filed
therewith (collectively, the "Insurance Subsidiary Financial Statements"):
(i) have been prepared in accordance with statutory accounting principles
promulgated by the National Association of Insurance Commissioners, as applied,
with respect to the Insurance Subsidiary, by the applicable State Regulatory
Authority of such entity, consistently applied for the periods covered thereby
and present fairly the statutory financial position of such Insurance
Subsidiaries as at the respective dates thereof and the results of operations
of such Insurance Subsidiaries for the respective periods then ended; and (ii)
complied in all material respects with all applicable laws, rules and
regulations when filed, and, to the knowledge of the Company, no material
deficiency has been asserted with respect to the Insurance Subsidiary Financial
Statements by any applicable Regulatory Agency. As used herein, the term
"Regulatory Agency" means any federal or state agency charged with the
supervision or regulation of insurance companies, or any court, administrative
agency or commission or other governmental agency, authority or instrumentality
having supervisory or regulatory authority with respect to the Company or any
of its subsidiaries.
(v) NO MATERIAL ADVERSE CHANGE. Since the respective dates as of
which information is given in the 1934 Act Reports, there has not been (A) any
material adverse change in the condition, financial, regulatory or otherwise,
or in the earnings, business affairs or business prospects of the Trust or of
the Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse Effect") or
(B) any dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock other than regular dividends on the
Company's common stock declared and paid consistent with past practice.
(vi) INTERNAL ACCOUNTING CONTROLS. Each of the Company and its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with the management's general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
the management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
PAGE 4
(vii) DISCLOSURE CONTROLS. The Company has established and
maintains disclosure controls and procedures (as such term is defined in Rule
13a-15(e) and 15d-15(e) under the 1934 Act); such disclosure controls and
procedures (i) are designed to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to the
Company's Chief Executive Officer and its Chief Financial Officer by others
within those entities, particularly during the periods in which the 1934 Act
Reports are being prepared, (ii) have been evaluated for effectiveness as of
the end of the annual or quarterly period reported to the Commission and (iii)
are effective to perform the functions for which they were established; the
Company's auditors and the Audit Committee of the Board of Directors have been
advised of: (A) any significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's ability to record,
process, summarize, and report financial data and (B) any fraud, whether or not
material, that involves management or other employees who have a role in the
Company's internal controls; any material weaknesses in internal controls have
been identified for the Company's auditors; and since the date of the most
recent evaluation of such disclosure controls and procedures, there have been
no significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
(viii) REGULATORY MATTERS. Neither the Company nor any of its
subsidiaries is subject or is party to, or has received any notice or advice
that any of them may become subject or party to, any investigation with respect
to any corrective, suspension or cease-and-desist order, agreement, consent
agreement or other regulatory enforcement action, proceeding or order with or
by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of, any Regulatory
Agency that currently relates to or restricts in any material respect their
business or that in any manner relates to their capital and surplus adequacy or
their management (each, a "Regulatory Agreement"), nor has the Company or any
of its subsidiaries been advised by any Regulatory Agency that it is
considering issuing or requesting any such Regulatory Agreement; there is no
unresolved violation, criticism or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of the Company
or any of its subsidiaries which, in the reasonable judgment of the Company,
is expected to result in a Material Adverse Effect; and without limiting the
generality of the foregoing, there are no restrictions or limitations on the
authority of the Insurance Subsidiary to pay dividends to the Company, directly
or indirectly, other than general restrictions and limitations applicable to
all insurance companies domiciled in the state of organization of such
Insurance Subsidiary pursuant to applicable law.
(ix) NO UNDISCLOSED LIABILITIES. Neither the Company nor any of
its subsidiaries has any material liability, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due, including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or its subsidiaries giving rise to any such liability), except (i)
for liabilities set forth in the financial statements referred to in Section
1(a)(iv) above and (ii) normal fluctuations in the amount of the liabilities
referred to in clause (i) above occurring in the ordinary course of business
of the
PAGE 5
Company and all of its subsidiaries since the date of the most recent balance
sheet included in such financial statements.
(x) INSURANCE RESERVING PRACTICES. The Company and its
Insurance Subsidiaries have made no material change in their insurance
reserving practices since the respective dates as of which information is
given in the 1934 Act Reports.
(xi) REINSURANCE TREATIES. All reinsurance and retrocessional
treaties, contracts, agreements and arrangements to which the Insurance
Subsidiary is a party are in full force and effect and the Insurance Subsidiary
is not in violation of, or in default in the performance, observance or
fulfillment of, any obligation, agreement, covenant or condition contained
therein, with such exceptions that would not, singularly or in the aggregate,
have a Material Adverse Effect; and no Insurance Subsidiary has received any
notice from any of the other parties to such treaties, contracts, agreements
or arrangements that such other party intends not to perform thereunder; and,
to the best knowledge of the Company, none of the other parties to such
treaties, contracts, agreements or arrangements will be unable to perform
thereunder except to the extent adequately and properly reserved for in the
consolidated financial statements of the Company, with such exceptions that
would not, singularly or in the aggregate, have a Material Adverse Effect.
(xii) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Oklahoma and has full power and authority under such laws
to own, lease and operate its properties and to conduct its business, to enter
into and perform its obligations under each of the Operative Documents to which
it is a party, and to issue the Subordinated Debt Securities.
(xiii) GOOD STANDING OF THE SUBSIDIARIES. Each "significant
subsidiary" (as defined in Rule 1-02 of Regulation S-X) of the Company (a
"Significant Subsidiary") and the Insurance Subsidiary has been duly organized
and is validly existing as an entity in good standing under the laws of the
jurisdiction in which it is chartered and has full power and authority under
such laws to own, lease and operate its properties and to conduct its current
and contemplated business.
(xiv) FOREIGN QUALIFICATIONS. Each of the Company and its
subsidiaries is duly qualified as a foreign entity to transact business and is
each in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to be so qualified would not
singularly, or in the aggregate, in the reasonable judgment of the Company, be
expected to result in a Material Adverse Effect.
(xv) CAPITAL STOCK DULY AUTHORIZED AND VALIDLY ISSUED. All of
the issued and outstanding capital stock of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; all of the
issued and outstanding capital stock of each subsidiary of the Company has been
duly authorized and validly issued, is fully paid and nonassessable and is
owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equitable
right; and none of the issued and outstanding capital stock of the Company or
its Significant Subsidiaries was
PAGE 6
issued in violation of any preemptive or similar rights arising by operation of
law, under the charter, by-laws or code of regulations of the Company or any of
its Significant Subsidiaries or under any agreement to which the Company or any
of its Significant Subsidiaries is a party.
(xvi) GOOD STANDING OF THE TRUST. The Trust has been duly created
and is validly existing in good standing as a statutory trust under the
Delaware Act with the power and authority to own property and to conduct its
business as provided in the Declaration, to enter into and perform its
obligations under the Operative Documents to which it is a party, and to issue
the Capital Securities and the Common Securities; the Trust is not a party to
or otherwise bound by any agreement other than the Operative Documents to which
it is a party; and the Trust is, and will be, under current law, classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.
(xvii) AUTHORIZATION OF COMMON SECURITIES. On the Closing Date,
the Common Securities will have been duly authorized for issuance by the Trust
pursuant to the Declaration and, when duly issued and executed in accordance
with the Declaration and delivered by the Trust to the Company against payment
therefor in accordance with the subscription agreement therefor, will be
validly issued and fully paid and nonassessable undivided common beneficial
ownership interests in the assets of the Trust; the issuance of the Common
Securities is not subject to preemptive or other similar rights; and on the
Closing Date, all of the issued and outstanding Common Securities of the Trust
will be owned directly by the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equitable right.
(xviii) AUTHORIZATION OF CAPITAL SECURITIES. On the Closing Date,
the Capital Securities will have been duly authorized for issuance by the Trust
pursuant to the Declaration and, when duly issued, executed and authenticated
in accordance with the Declaration and delivered by the Trust against payment
therefor as provided herein and in the Subscription Agreement, will be validly
issued and fully paid and nonassessable undivided preferred beneficial
ownership interests in the assets of the Trust; the issuance of the Capital
Securities will not be subject to preemptive or other similar rights; and t
he Capital Securities will be in the form contemplated by, and entitled to the
benefits of, the Declaration.
(xix) AUTHORIZATION OF SUBSCRIPTION AGREEMENT. The Subscription
Agreement has been duly authorized, executed and delivered by each of the
Offerors, and assuming due authorization, execution and delivery of the
Subscription Agreement by the Purchaser, the Subscription Agreement will
constitute a valid, legal and binding agreement of each of the Offerors,
enforceable against each of the Offerors in accordance with its terms, except
to the extent that enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) (collectively, the "Enforceability Exceptions").
(xx) AUTHORIZATION OF THIS AGREEMENT. This Agreement has been
duly authorized, executed and delivered by each of the Offerors and assuming
the due authorization, execution and delivery of this Agreement by the
Placement Agent, this Agreement will constitute
PAGE 7
a valid, legal and binding agreement of the Company, enforceable against the
Company in accordance with its terms except to the extent that enforceability
may be limited by the Enforceability Exceptions.
(xxi) AUTHORIZATION OF DECLARATION. The Declaration has been duly
authorized by the Company and, on the Closing Date, will have been duly
executed and delivered by the Company and the Administrators, and assuming
due authorization, execution and delivery of the Declaration by the
Institutional Trustee and the Delaware Trustee, the Declaration will constitute
a valid, legal and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except to the extent that enforceability
may be limited by the Enforceability Exceptions.
(xxii) AUTHORIZATION OF GUARANTEE AGREEMENT. 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 of the Guarantee Agreement by the
Guarantee Trustee, the Guarantee Agreement will constitute a valid, legal and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforceability may be limited by the
Enforceability Exceptions.
(xxiii) AUTHORIZATION OF INDENTURE. The Indenture 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 of the Indenture by the Indenture Trustee, the Indenture
will constitute a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforceability may be limited by the Enforceability Exceptions.
(xxiv) AUTHORIZATION OF SUBORDINATED DEBT SECURITIES. The
Subordinated Debt Securities have been duly authorized by the Company; on the
Closing Date, the Subordinated Debt Securities will have been duly executed by
the Company and, when authenticated in the manner provided for in the Indenture
and delivered by the Company to the Trust against payment therefor as
contemplated in the subscription agreement therefor, will constitute valid,
legal and binding obligations of the Company, enforceable against the Company
in accordance with their terms, except to the extent that enforceability may be
limited by the Enforceability Exceptions; the Subordinated Debt Securities will
be in the form contemplated by, and entitled to the benefits of, the Indenture;
and the Company has no present intention to exercise its option to defer
payments of interest on the Subordinated Debt Securities as provided in the
Indenture.
(xxv) AUTHORIZATION OF ADMINISTRATORS. Each of the Administrators
of the Trust is an officer or employee of the Company or one of its
subsidiaries and has been duly authorized by the Company to execute and deliver
the Declaration.
(xxvi) NOT AN INVESTMENT COMPANY. Neither the Trust nor the
Company is, and immediately following consummation of the transactions
contemplated hereby and the application of the net proceeds therefrom neither
the Trust nor the Company will be, an "investment company" or an entity
"controlled" by an "investment company", in each case
PAGE 8
within the meaning of Section 3(a) of the Investment Company Act of 1940, as
amended (the "1940 Act"), without regard to Section 3(c) of the 1940 Act.
(xxvii) ABSENCE OF DEFAULTS AND CONFLICTS. The Trust is not in
violation of the trust certificate of the Trust filed with the State of
Delaware (the "Trust Certificate") or the Declaration, and neither the Company
nor any of its Significant Subsidiaries or Insurance Subsidiaries is in
violation of its charter, by-laws or code of regulations; except as set forth
in Schedule 1(a)(xxv) attached hereto, none of the Trust, the Company or any
subsidiary of the Company is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which it is a party or by which it or any of
them may be bound or to which any of its properties or assets is subject
(collectively, "Agreements and Instruments"), except for such defaults under
Agreements and Instruments that, in the reasonable judgment of the Company, are
not expected to result in a Material Adverse Effect; and the execution,
delivery and performance of the Operative Documents by the Trust or the
Company, as the case may be, the issuance, sale and delivery of the Capital
Securities and the Subordinated Debt Securities, the consummation of the
transactions contemplated by the Operative Documents, and compliance by the
Trust and the Company with the terms of the Operative Documents to which they
are a party have been duly authorized by all necessary corporate action on the
part of the Company and, on the Closing Date, will have been duly authorized by
all necessary action on the part of the Trust and do not and will not, whether
with or without the giving of notice or passage of time or both, violate,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any, security
interest, mortgage, pledge, lien, charge, encumbrance, claim or equitable right
upon any properties or assets of the Trust or the Company or any of its
Significant Subsidiaries or Insurance Subsidiaries pursuant to any of the
Agreements and Instruments, nor will such action result in any violation of the
provisions of the charter, by-laws or code of regulations of the Company or any
of its Significant Subsidiaries or Insurance Subsidiaries or the Declaration or
the Trust Certificate, or violation by the Company or any of its Significant
Subsidiaries or Insurance Subsidiaries of any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
authority, agency (including, without limitation, each applicable Regulatory
Agency) or instrumentality or court, domestic or foreign, having jurisdiction
over the Trust or the Company or any of its Significant Subsidiaries or
Insurance Subsidiaries or their respective properties or assets (collectively,
"Governmental Entities"). As used herein, a "Repayment Event" means any event
or condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Trust or the Company or any of its Significant Subsidiaries
or Insurance Subsidiaries prior to its scheduled maturity.
(xxviii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the executive officers of the Company, is imminent, which, in the reasonable
judgment of the Company, is expected to result in a Material Adverse Effect.
(xxix) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation (including, without limitation, any action
to revoke or deny renewal of
PAGE 9
any Insurance License (as defined in paragraph (xxxi) below)) before or brought
by any Governmental Entity, now pending, or, to the knowledge of the Trust or
the Company, threatened, against or affecting the Trust or the Company or any
of its subsidiaries, which, in the reasonable judgment of the Trust or the
Company is expected to result in a Material Adverse Effect or materially and
adversely affect the consummation of the transactions contemplated by the
Operative Documents or the performance by the Trust or the Company of its
obligations hereunder or thereunder; and the aggregate of all pending legal or
governmental proceedings to which the Trust or the Company or any of its
subsidiaries is a party or of which any of their respective properties or
assets is the subject, including ordinary routine litigation incidental to the
business, are not, in the reasonable judgment of the Company or the Trust,
expected to result in a Material Adverse Effect.
(xxx) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification
or decree of, any Governmental Entity, other than those that have been made or
obtained, is necessary or required for the authorization, execution, delivery
or performance by the Trust or the Company of their respective obligations
under the Operative Documents, the Subordinated Debt Securities or the Capital
Securities, as applicable, or the consummation by the Trust or the Company of
the transactions contemplated by the Operative Documents.
(xxxi) POSSESSION OF LICENSES AND PERMITS. Each of the Trust, the
Company and the subsidiaries of the Company, other than the Insurance
Subsidiary, possesses such permits, orders, certificates, licenses, approvals,
consents and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate Governmental Entities necessary to conduct the
business now operated by it, with such exceptions that would not, in the
reasonable judgment of the Company, be expected to, singularly or in the
aggregate, have a Material Adverse Effect; the Insurance Subsidiary is duly
licensed or authorized (including, without limitation, from its applicable
State Regulatory Authority) as an insurer in each jurisdiction where it is
required to be so licensed or authorized to conduct its business (collectively
"Insurance Licenses"), with such exceptions that would not, in the reasonable
judgment of the Company, be expected to, singularly or in the aggregate, have a
Material Adverse Effect; each of the Trust, the Company and the subsidiaries of
the Company is in compliance with the terms and conditions of all of its
Governmental Licenses and Insurance Licenses, as applicable, except where the
failure so to comply, in the reasonable judgment of the Company, is not
expected to, singularly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses and Insurance Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses or
Insurance Licenses or the failure of such Governmental Licenses or Insurance
Licenses to be in full force and effect, in the reasonable judgment of the
Company, is not expected to have a Material Adverse Effect; and none of the
Trust, the Company or any subsidiary of the Company has received any notice of
proceedings, and to the knowledge of the Trust or the Company there has been no
threatened action, suit, proceeding or investigation, relating to the
revocation, termination, suspension or modification of any such Governmental
Licenses or Insurance Licenses which, singularly or in the aggregate, in the
reasonable judgment of the Company or the Trust, is expected to result in a
Material Adverse Effect.
PAGE 10
(xxxii) TITLE TO PROPERTY. Each of the Trust, the Company and the
subsidiaries of the Company has good and marketable title to all of its
respective real and personal properties, in each case free and clear of all
liens, encumbrances and defects, except such as, in the reasonable judgment of
the Trust or the Company, singularly or in the aggregate, are not expected to
result in a Material Adverse Effect; and all of the leases and subleases under
which the Trust, the Company or any subsidiary of the Company holds properties
are in full force and effect, except when the failure of such leases and
subleases to be in full force and effect, in the reasonable judgment of the
Company, singularly or in the aggregate, is not expected to have a Material
Adverse Effect, and none of the Trust, the Company or any subsidiary of the
Company has any notice of any claim of any sort that has been asserted by
anyone adverse to the rights of the Trust, the Company or any subsidiary of the
Company under any of the leases or subleases under which the Trust, the Company
or any subsidiary of the Company holds properties, or affecting or questioning
the rights of such entity to the continued possession of the leased or
subleased premises under any such lease or sublease, except when such claim, in
the reasonable judgment of the Company, singularly or in the aggregate, is not
expected to have a Material Adverse Effect.
(xxxiii) STABILIZATION. The Company has not taken and will not take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price of
the Capital Securities.
(xxxiv) NO GENERAL SOLICITATION. Neither the Trust or the Company
nor any of their Affiliates (as defined in Rule 501(b) under the ▇▇▇▇ ▇▇▇) or
any person acting on its or any of their behalf (other than the Placement
Agent, as to whom the Offerors make no representation) has engaged or will
engage, in connection with the offering of the Capital Securities, in any form
of general solicitation or general advertising within the meaning of Rule
502(c) under the 1933 Act.
(xxxv) NO DIRECTED SELLING EFFORTS. Neither the Trust or the
Company nor any of their Affiliates or any person acting on its or any of
their behalf (other than the Placement Agent, as to whom the Offerors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the 1933 Act ("Regulation S") with
respect to the offering of the Capital Securities.
(xxxvi) NO REGISTRATION. Subject to compliance by the Placement
Agent with the relevant provisions of Section 6 hereof, it is not necessary in
connection with the offer, sale and delivery of the Capital Securities by the
Trust in the manner contemplated by this Agreement to register the Capital
Securities, the guarantee as described in the Guarantee Agreement or the
Subordinated Debt Securities under the 1933 Act or to qualify the Declaration,
the Guarantee Agreement or the Indenture under the Trust Indenture Act of 1939,
as amended.
(b) Any certificate signed by any Trustee of the Trust or any duly
authorized officer of the Company or any of its subsidiaries and delivered to
the Placement Agent or to counsel for the Placement Agent shall be deemed a
representation and warranty by the Trust or the Company, as the case may be, to
the Placement Agent as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY THROUGH PLACEMENT AGENT; CLOSING.
--------------------------------------------------
PAGE 11
(a) The Offerors propose to issue and sell the Capital Securities on
December 16, 2003 (or such other date mutually agreed to by the Offerors and
the Placement Agent) (the "Closing Date") to InCapS Funding II, Ltd., a newly
formed company with limited liability incorporated under the laws of the Cayman
Islands (the "Purchaser"), pursuant to the terms of the Capital Securities
Subscription Agreement, entered into on the date hereof (the "Subscription
Agreement"), between the Offerors and the Purchaser. In addition, the Offerors
agree that the Purchaser shall be entitled to the benefit of, and to rely on,
the provisions of this Agreement to the extent such provisions address or
relate to the Purchaser or the Capital Securities to be purchased by the
Purchaser.
(b) The Offerors hereby grant to the Placement Agent the exclusive right
to arrange the placement of the Capital Securities with the Purchaser on their
behalf. The Placement Agent accepts such right and agrees to use its best
efforts, on and prior to the Closing Date, to effect such placement.
(c) Deliveries of certificates for the Capital Securities shall be made
by the Trust to or on behalf of the Purchaser at the offices of Sidley ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇ LLP in The City of New York, and payment of the purchase price for
the Capital Securities shall be made by the Purchaser to the Trust by wire
transfer of immediately available funds to a bank designated by the Company
contemporaneous with closing on the Closing Date.
Certificates for the Capital Securities in the aggregate liquidation
amount thereof shall be registered in the name of the Purchaser.
(d) As compensation to the Placement Agent for its placement of the
Capital Securities and in view of the fact that the proceeds of the sale of the
Capital Securities will be used to purchase the Subordinated Debt Securities of
the Company, the Company hereby agrees to pay on the Closing Date to the
Placement Agent in immediately available funds a commission of $30.00 per
Capital Security to be delivered by the Trust hereunder on the Closing Date.
(e) In performing its duties under this Agreement, the Placement Agent
shall be entitled to rely upon any notice, signature or writing which the
Placement Agent shall in good faith believe to be genuine and to be signed or
presented by a proper party or parties. The Placement Agent may rely upon any
opinions or certificates or other documents delivered by the Offerors or their
counsel or designees either to it or the Purchaser. In addition, in connection
with the performance of its duties under this Agreement, the Placement Agent
shall not be liable for any error of judgment or any action taken or omitted to
be taken unless it was grossly negligent or engaged in willful misconduct in
connection with such performance or non-performance. No provision of this
Agreement shall require the Placement Agent to expend or risk its own funds or
otherwise incur any financial liability on behalf of the Purchaser in
connection with the performance of any of its duties hereunder. The Placement
Agent shall be under no obligation to exercise any of the rights or powers
vested in it by this Agreement.
SECTION 3. NOTICE OF MATERIAL EVENTS. The Offerors covenant with the
Placement Agent and the Purchaser that, prior to the completion of the initial
placement of the Capital Securities through the Placement Agent, the Offerors
will immediately notify the
PAGE 12
Placement Agent, and confirm such notice in writing, of any event or
development that, in the reasonable judgment of the Company, is expected to
result in a Material Adverse Effect.
SECTION 4. PAYMENT OF EXPENSES. Whether or not this Agreement or the
Subscription Agreement is terminated or the sale of the Capital Securities is
consummated, the Company, as borrower under the Subordinated Debt Securities,
will pay all expenses incident to the performance of its obligations under
this Agreement, including (i)the preparation, issuance and delivery of the
certificates for the Capital Securities and Subordinated Debt Securities, (ii)
the fees and disbursements of the Company's counsel, accountants and other
advisors, and (iii) the fees and disbursements of the trustees and their
counsel appointed under any of the Operative Documents whether incurred on or
prior to the Closing Date or thereafter.
SECTION 5. CONDITIONS OF PLACEMENT AGENT'S OBLIGATIONS. The obligations
of the Placement Agent and the Purchaser on the Closing Date are subject to the
accuracy of the representations and warranties of the Offerors contained in
Section 1 hereof or in certificates of any Administrator of the Trust or any
officer of the Company or any of its subsidiaries delivered pursuant to the
provisions hereof, to the performance by the Offerors of their obligations
hereunder, and to the following further conditions:
(a) OPINION OF COUNSEL FOR THE OFFERORS. On the Closing Date, the
Placement Agent and the Purchaser shall have received the favorable opinion,
dated as of the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel
for the Offerors, in substantially the form set out in Annex A hereto, in form
and substance reasonably satisfactory to counsel for the Placement Agent.
Such counsel may state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of
Administrators of the Trust, officers of the Company or any of its subsidiaries
and public officials.
(b) OPINION OF SPECIAL DELAWARE COUNSEL FOR THE TRUST. On the Closing
Date, the Placement Agent and the Purchaser shall have received the favorable
opinion, dated as of the Closing Date, of Morris, James, Hitchens & ▇▇▇▇▇▇▇▇
LLP, special Delaware counsel for the Trust, in substantially the form set out
in Annex B hereto, in form and substance reasonably satisfactory to counsel
for the Placement Agent.
(c) OPINION OF SPECIAL TAX COUNSEL FOR THE OFFERORS. On the Closing
Date, the Placement Agent and the Purchaser shall have received an opinion,
dated as of the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood LLP, special tax
counsel for the Offerors, that (i) the Trust will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation and (ii) the Subordinated Debt Securities will
constitute indebtedness of the Company for United States federal income tax
purposes, in substantially the form set out in Annex C hereto. Such opinion
may be conditioned on, among other things, the initial and continuing accuracy
of the facts, financial and other information, covenants and representations
set forth in certificates of officers of the Company and other documents deemed
necessary for such opinion.
(d) OPINION OF COUNSEL TO THE GUARANTEE TRUSTEE, THE INSTITUTIONAL
TRUSTEE, THE DELAWARE TRUSTEE AND THE INDENTURE TRUSTEE. On the Closing Date,
the Placement Agent and the Purchaser shall have received the favorable
opinion, dated as of the Closing Date, of ▇▇▇▇▇▇,
PAGE 13
▇▇▇▇▇, Hitchens & ▇▇▇▇▇▇▇▇ LLP, counsel for the Guarantee Trustee, the
Institutional Trustee, the Delaware Trustee and the Indenture Trustee, in
substantially the form set out in Annex D hereto, in form and substance
reasonably satisfactory to counsel for the Placement Agent.
(e) CERTIFICATES. On the Closing Date, there shall not have been, since
the date hereof or since the respective dates as of which information is given
in the 1934 Act Reports, any Material Adverse Effect, and the Placement Agent
shall have received a certificate of the Chairman, the Chief Executive Officer,
the President, any Executive Vice President or any Vice President of the
Company and of the Chief Financial Officer or Chief Accounting Officer of the
Company and a certificate of an Administrator of the Trust, dated as of the
Closing Date, to the effect that (i) there has been no such Material Adverse
Effect, (ii) the representations and warranties in Section 1 hereof were true
and correct when made and are true and correct with the same force and effect
as though expressly made on and as of the Closing Date, and (iii) the Offerors
have complied with all agreements and satisfied all conditions on their part to
be performed or satisfied on or prior to the Closing Date.
(f) MAINTENANCE OF RATINGS. From the date of this Agreement through the
Closing Date, (i) there shall not have occurred a downgrading in or withdrawal
of the rating assigned to the debt securities or preferred stock of the Trust,
the Company or the Insurance Subsidiary or the financial strength or claims
paying ability of the Trust, the Company or the Insurance Subsidiary, in each
case by A.M. Best & Co. or any "nationally recognized statistical rating
organization," as that term is defined by the Commission for the purposes of
Rule 436(g)(2) under the 1933 Act, and (ii) neither A.M. Best & Co. nor any
such organization shall have publicly announced that it has under surveillance
or review its rating of any debt security, preferred stock or the financial
strength or the claims paying ability of the Trust, the Company or the
Insurance Subsidiary.
(g) PURCHASER'S SALE OF SECURITIES. The Purchaser shall have sold
securities issued by it in such an amount that the net proceeds therefrom shall
be available on the Closing Date and shall be sufficient to purchase the
Capital Securities and all other capital securities, surplus notes and senior
notes contemplated in agreements similar to this Agreement and the Subscription
Agreement.
(h) ADDITIONAL DOCUMENTS. On the Closing Date, the Placement Agent and
the Purchaser shall have been furnished such documents and opinions as they may
reasonably request in connection with the issue, sale and placement of the
Capital Securities; and all proceedings taken by the Offerors in connection
with the issuance, sale and placement of the Capital Securities shall be
satisfactory in form and substance to the Placement Agent and the Purchaser.
(i) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Placement Agent by notice to the Offerors
at any time on or prior to the Closing Date. If the sale of the Capital
Securities provided for herein is not consummated because any condition set
forth in Section 5(a), (b), (c), (d), (e), (f) or (h) is not satisfied, because
of any termination pursuant to Section 10(a) hereof or because of any refusal,
inability or failure on the part of the Offerors to perform any agreement
herein or comply with any provision hereof, the Company
PAGE 14
will reimburse the Placement Agent upon demand for all documented out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by the Placement Agent in connection with the proposed
offering of the Capital Securities. In addition, such termination shall be
subject to Section 4 hereof, and Sections 7 and 8 hereof shall survive any such
termination and remain in full force and effect.
SECTION 6. OFFERS AND SALES OF THE CAPITAL SECURITIES.
(a) OFFER AND SALE PROCEDURES. The Placement Agent and the Offerors
hereby establish and agree to observe the following provisions with respect to
the offer, issue, sale and placement of the Capital Securities:
(i) OFFERS AND SALES ONLY TO THE PURCHASER. Offers and sales of
the Capital Securities will be made only to the Purchaser in a transaction not
requiring registration under the 1933 Act.
(ii) NO GENERAL SOLICITATION. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the ▇▇▇▇ ▇▇▇) has been or
will be used in connection with the offering of the Capital Securities.
(iii) NO DIRECTED SELLING EFFORTS. No directed selling efforts
(within the meaning of Regulation S) has been or will be used with respect to
the offering of the Capital Securities.
(iv) PURCHASER NOTIFICATION. Prior to or contemporaneously with
the purchase of the Capital Securities by the Purchaser, the Placement Agent
will take reasonable steps to inform the Purchaser that the Capital Securities
(A) have not been and will not be registered under the 1933 Act, (B) are being
sold to them without registration under the 1933 Act in accordance with an
exemption from registration under the 1933 Act and (C) may not be offered,
sold or otherwise transferred except in accordance with the legend set forth
in Annex E hereto.
(b) COVENANTS OF THE OFFERORS. Each of the Offerors, jointly and
severally, covenant with the Placement Agent and the Purchaser as follows:
(i) DUE DILIGENCE. In connection with the initial placement of
the Capital Securities, the Offerors agree that, prior to any offer or sale of
the Capital Securities through the Placement Agent, the Placement Agent and the
Purchaser shall have the right to make reasonable inquiries into the business
of the Trust, the Company and the subsidiaries of the Company. The Offerors
also agree to provide answers to the Placement Agent and the Purchaser, if
requested, concerning the Trust, the Company and the subsidiaries of the
Company (to the extent that such information is available or can be acquired
and made available without unreasonable effort or expense and to the extent the
provision thereof is not prohibited by applicable law) and the terms and
conditions of the offering of the Capital Securities and the Subordinated Debt
Securities.
(ii) INTEGRATION. The Offerors agree that they will not, and
will cause their Affiliates not to, make any offer or sale of securities of
the Offerors of any class if, as a
PAGE 15
result of the doctrine of "integration" referred to in Rule 502 under the 1933
Act, such offer or sale would render invalid the exemption from the
registration requirements of the 1933 Act provided by Section 4(2) thereof or
by Rule 144A or otherwise.
(iii) RESTRICTION ON REPURCHASES. Until the expiration of two
(2) years (or such shorter period as may hereafter be referred to in Rule
144(k) (or similar successor rule)) after the original issuance of the Capital
Securities, the Offerors will not, and will cause their Affiliates not to,
purchase or agree to purchase or otherwise acquire any Capital Securities which
are "restricted securities" (as such term is defined under Rule 144(a)(3) under
the 1933 Act), whether as beneficial owner or otherwise, unless, immediately
upon any such purchase, the Offerors or any Affiliate shall submit such Capital
Securities to the Institutional Trustee for cancellation.
SECTION 7. INDEMNIFICATION.
---------------
(a) INDEMNIFICATION OF THE PLACEMENT AGENT AND THE PURCHASER. Each of
the Offerors agrees, jointly and severally, to indemnify and hold harmless:
(x) the Placement Agent and the Purchaser, (y) each person, if any, who
controls (within the meaning of Section 15 of the 1933 Act or ▇▇▇▇▇▇▇ ▇▇ ▇▇
▇▇▇ ▇▇▇▇ ▇▇▇) the Placement Agent or the Purchaser (each such person, a
"controlling person") and (z) the respective partners, directors, officers,
employees and agents of the Placement Agent and the Purchaser or any such
controlling person, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, relating to or arising out of, or based upon,
in whole or in part, (A) any untrue statement or alleged untrue statement of a
material fact included in the 1934 Act Reports, or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (B) any untrue statement or alleged untrue statement of material
fact contained in any information (whether written or oral) or documents
executed in favor of or furnished or made available to the Placement Agent or
the Purchaser by the Offerors; (C) any omission or alleged omission to state in
any information (whether written or oral) or documents executed in favor of or
furnished or made available to the Placement Agent or the Purchaser by the
Offerors a material fact necessary to make the statements therein not
misleading; or (D) the breach or alleged breach of any representation, warranty
and agreement of any Offeror contained herein or in the Subscription Agreement;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, or breach or alleged breach of any such
representation, warranty or agreement; PROVIDED, that (subject to Section 7(c)
hereof) any such settlement is effected with the written consent of the
Offerors; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the Placement
Agent), reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by
PAGE 16
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, or breach or alleged breach of any such
representation, warranty or agreement, to the extent that any such expense is
not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that the Company and the Insurance Subsidiaries agree,
jointly and severally, to indemnify and hold harmless the Trust against any and
all loss, liability, claim, damage and expense whatsoever, as incurred, which
is due from the Trust pursuant to the foregoing.
(b) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof, and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. Counsel to the indemnified parties shall be selected by
the Placement Agent. An indemnifying party may participate at its own expense
in the defense of any such action; PROVIDED, HOWEVER, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition
to any local counsel) separate from their own counsel for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 or Section 8 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(c) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have validly requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement, PROVIDED, HOWEVER, that an indemnifying party
shall not be liable for any such settlement effected without its consent if
such indemnifying party (1) reimburses such indemnified party with respect to
those fees and expenses of counsel that it determines in good faith are
reasonable and (2) provides written notice within 10 days after receipt of
the request for reimbursement to the indemnified party
PAGE 17
substantiating the unpaid balance as unreasonable, in each case prior to the
date of such settlement.
SECTION 8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances under which the indemnification provided for in
Section 7 hereof is for any reason held to be unenforceable for the benefit of
an indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i)in such proportion as is
appropriate to reflect the relative benefits received by the Offerors, on the
one hand, and the Placement Agent, on the other hand, from the offering of the
Capital Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i)above but also the relative fault of the Offerors, on the one hand,
and the Placement Agent, on the other hand, in connection with the statements,
omissions or breaches which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Offerors, on the one hand, and the
Placement Agent, on the other hand, in connection with the offering of the
Capital Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Capital Securities pursuant to this Agreement (before deducting expenses)
received by the Offerors and the total commission received by the Placement
Agent bear to the aggregate of such net proceeds and commissions.
The Offerors and the Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 8.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement, omission or alleged omission or breach or
alleged breach.
Notwithstanding the provisions of this Section 8, the Placement Agent
shall not be required to contribute any amount in excess of the total
commissions received by it.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, the Purchaser, each person, if any, who
controls the Placement Agent or the Purchaser within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act and the respective partners,
directors, officers, employees and agents of the Placement Agent, the Purchaser
or any such controlling person shall have the same rights to contribution as
the Placement Agent, while each officer and director of the Company, each
PAGE 18
Trustee of the Trust and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Offerors.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
in certificates of officers of the Company or Trustees of the Trust submitted
pursuant hereto shall remain operative and in full force and effect, and shall
survive delivery of the Capital Securities by the Trust.
SECTION 10. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Placement Agent may terminate this
Agreement, by notice to the Offerors, at any time on or prior to the Closing
Date if, since the time of execution of this Agreement or, in the case of (i),
since the respective dates as of which information is given in the 1934 Act
Reports, (i)there has occurred any Material Adverse Effect, or (ii) there has
occurred any material adverse change in the financial markets in the United
States, any outbreak of hostilities or escalation thereof or any other calamity
or crisis, or any change or development involving political, financial or
economic conditions, in each case the effect of which is such as to make it, in
the judgment of the Placement Agent, impracticable to market the Capital
Securities or to enforce contracts for the sale of the Capital Securities, or
(iii) trading in any securities of the Company has been suspended or limited by
the Commission or any national stock exchange or market on or in which such
securities are traded or quoted, or if trading generally on the American Stock
Exchange, the New York Stock Exchange or the Nasdaq National Market has been
suspended or limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
Securities Dealers or any other governmental authority, or (iv)a banking
moratorium has been declared by United States federal, Delaware or New York
authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 and Section 5 hereof, and provided
further that Sections 1, 7 and 8 hereof shall survive such termination and
remain in full force and effect.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Placement Agent shall be directed to Sandler ▇'▇▇▇▇▇ & Partners, L.P., as
follows: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Principal, with a copy to Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇;
and notices to the Offerors shall be directed to Chandler (U.S.A.), Inc.,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood LLP, Two World Financial Center, New
York, New York 10281, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and
be binding upon each of the Placement Agent and the Offerors and their
respective successors.
PAGE 19
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Placement
Agent, the Purchaser and the Offerors, and their respective successors and
the controlling persons and other persons referred to in Sections 1, 7 and 8
hereof and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Placement Agent, the
Purchaser and the Offerors and their respective successors, and said
controlling persons and other persons and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES OF SAID STATE OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW.
EACH OF THE TRUST AND THE COMPANY, ON BEHALF OF ITSELF AND ITS
SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE TRUST), HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY,
IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT. EACH OF THE TRUST AND THE COMPANY, ON
BEHALF OF ITSELF AND ITS SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE
TRUST), IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 14. DISCLOSURE OF TAX TREATMENT AND TAX STRUCTURE.
Notwithstanding anything herein to the contrary, any party to this Agreement
(and each employee, representative or other agent of any party to this
Agreement) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the offering and all materials of any
kind (including opinions or other tax analyses) that are provided to it
relating to such tax treatment and tax structure. However, such information
relating to the tax treatment or tax structure is required to be kept
confidential to the extent necessary to comply with any applicable federal or
state securities laws. For this purpose, "tax structure" means any facts
relevant to the federal income tax treatment of the offering contemplated by
this Agreement but does not include information relating to the identity of
the Offeror.
SECTION 15. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
PAGE 20
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Placement Agent and the Offerors in accordance with its
terms.
Very truly yours,
CHANDLER (U.S.A.), INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
President
▇▇▇▇▇▇▇▇ CAPITAL TRUST II
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇
Administrator
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER ▇'▇▇▇▇▇ & PARTNERS, L.P.
By: Sandler ▇'▇▇▇▇▇ & Partners Corp.,
the sole general partner
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
PAGE A-1
SCHEDULE 1(a)(xxvii) TO THE PLACEMENT AGREEMENT
BY AND BETWEEN CHANDLER (U.S.A.), INC. AND SANDLER ▇'▇▇▇▇▇ & PARTNERS, L.P.
Under the circumstances described herein, performance of the payment
obligations under the Operative Documents may result in a default under an
Indenture, by and between the U.S. Trust Company of Texas, N.A., as trustee,
as amended by the First Amendment to Indenture, dated as of May 13, 2003, and
as amended under the Second Amendment to Indenture, dated as of November 21,
2003, by and between the Company and The Bank of New York Trust Company of
Florida, N.A. as successor trustee to the U.S. Trust Company of Texas, N.A.
(the "Senior Indenture"). Under the Senior Indenture, the Company has (a)
issued 8.75% senior debentures due 2014 (the "Senior Debentures") and (b)
agreed not to make payments on the Subordinated Debt Securities if default
under either of the following three clauses shall have occurred and be
continuing:
(i) the Company fails to comply with any of its covenants or agreements
in the Senior Debentures or the Senior Indenture (other than a
payment default) and such failure continues for 60 days after
written notice delivered to the trustee under the Senior Indenture
(the "Senior Trustee");
(ii) the debt of the Company under the Senior Debentures is not paid
within any applicable grace period after final maturity or the
acceleration by the holders thereof because of a default and the
total amount of such debt unpaid or accelerated exceeds $5.0
million or its foreign currency equivalent at the time and such
failure continues for 20 days after delivery of notice to the
Senior Trustee; or
(iii) any judgment or decree for the payment of money in excess of $5.0
million or its foreign currency equivalent at the time is entered
against the Company or any subsidiary of the Company and is not
discharged, waived or stayed and either (A) an enforcement
proceeding has been commenced by any creditor upon such judgment or
decree which proceeding is not stayed or abandoned within 30 days
following the commencement thereof, or (B) such judgment or decree
remains outstanding for a period of 60 days following the entry
thereof stayed and, in either case, the default continues for ten
days after the date on which the notice specified below shall have
been given;
and, in the case of either (i), (ii) or (iii), the Senior Trustee or holder of
at least 25% in principal amount of the outstanding Senior Debentures shall
have given written notice to the Company of an intent to declare the principal
of and accrued but unpaid interest on all Senior Debentures due and payable
upon expiration of the applicable grace period if such default is not cured.
Notwithstanding the foregoing, the Company expressly acknowledges and
agrees that nothing in this Schedule 1(a)(xxvii) shall in any way limit,
impair, restrict, condition or otherwise modify the provisions of the Operative
Documents, the Capital Securities or the Subordinated Debt Securities,
including the rights and remedies of the Institutional Trustee, the Delaware
Trustee, the Indenture Trustee and the holders of such securities contained
therein.
PAGE A-2
ANNEX A
Pursuant to Section 5(a) of the Placement Agreement, special counsel for the
Offerors shall deliver an opinion in substantially the following form:
1. The Company is incorporated and is validly existing as a corporation
in good standing under the laws of the State of Oklahoma.
2. The Company has corporate power and authority to (i) execute and
deliver, and to perform its obligations under, the Operative Documents to which
it is a party and (ii) issue and perform its obligations under the Subordinated
Debt Securities.
3. (i) Each Significant Subsidiary is validly existing and in good
standing under the laws of the jurisdiction of its organization; and (ii) to
the best of our knowledge, all of the issued and outstanding shares of capital
stock of each Significant Subsidiary are owned of record by the Company,
directly or through other subsidiaries.
4. No consent, approval, authorization or order of or filing,
registration or qualification with any Governmental Entity is required under
any law or regulation of the United States or the states in which the Company
and the Insurance Subsidiary is organized in connection with the authorization,
execution, delivery and performance by the Company of the Operative Documents
or the Subordinated Debt Securities and the consummation of the transactions
contemplated thereby except as have already been obtained or made.
5. Each of the Placement Agreement and the Subscription Agreement has
been duly authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Placement Agent and the Purchaser,
respectively, constitutes a valid and binding instrument of the Company
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution thereunder may be limited under applicable law or
public policy, and subject to the qualifications that (i) enforcement thereof
may be limited by bankruptcy, insolvency, receivership, reorganization,
liquidation, voidable preference, moratorium or other laws (including the laws
of fraudulent conveyance and transfer) or judicial decisions affecting the
enforcement of creditors' rights generally or the reorganization of financial
institutions and (ii) the enforceability of the obligations of the Company
thereunder is subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and to
the effect of certain laws and judicial decisions upon the availability and
enforceability of certain remedies, including the remedies of specific
performance and self-help.
6. The Declaration has been duly authorized, executed and delivered by
the Company and the Administrators.
7. Each of the Guarantee Agreement and the Indenture has been duly
authorized, executed, and delivered by the Company and, assuming due
authorization, execution and delivery by the Guarantee Trustee and the
Indenture Trustee, respectively, constitutes a valid and binding instrument
of the Company, enforceable against the Company in accordance with its
PAGE A-3
terms, except as rights to indemnity and contribution thereunder may be limited
under applicable law or public policy, and subject to the qualifications that
(i) enforcement thereof may be limited by bankruptcy, insolvency, receivership,
reorganization, liquidation, voidable preference, moratorium or other laws
(including the laws of fraudulent conveyance and transfer) or judicial
decisions affecting the enforcement of creditors' rights generally or the
reorganization of financial institutions and (ii) the enforceability of the
Company's obligations thereunder is subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and to the effect of certain laws and judicial decisions upon
the availability and enforceability of certain remedies, including the remedies
of specific performance and self-help.
8. The Subordinated Debt Securities have been duly authorized for
issuance by the Company pursuant to the Indenture and, when executed,
authenticated and delivered in the manner provided for in the Indenture and
paid for in accordance with the subscription agreement therefor, will
constitute valid and binding obligations of the Company and will entitle the
holders thereof to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, except as rights to indemnity and
contribution thereunder may be limited under applicable law or public policy,
and subject to the qualifications that (i) enforcement thereof may be limited
by bankruptcy, insolvency, receivership, reorganization, liquidation, voidable
preference, moratorium or other laws (including the laws of fraudulent
conveyance and transfer) or judicial decisions affecting the enforcement of
creditors' rights generally or the reorganization of financial institutions
and (ii) the enforceability of the Company's obligations thereunder is subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and to the effect of certain
laws and judicial decisions upon the availability and enforceability of certain
remedies, including the remedies of specific performance and self-help.
9. The execution, delivery and performance of the Operative Documents,
the Subordinated Debt Securities and the Capital Securities, as applicable, by
the Company and the Trust and the consummation by the Company and the Trust of
the transactions contemplated by the Operative Documents, as applicable, will
not result in any violation of the charter or bylaws of the Company, any
Significant Subsidiary or the Insurance Subsidiary, the Declaration or the
Trust Certificate.
10. Assuming (i) the accuracy of the representations and warranties, and
compliance with the agreements, contained in the Placement Agreement and the
Subscription Agreement and (ii) that the Capital Securities are sold in the
manner contemplated by, and in accordance with, the Placement Agreement, the
Subscription Agreement and the Declaration, it is not necessary in connection
with the offer, sale and delivery of the Capital Securities by the Trust to the
Purchaser to register the Capital Securities, the Guarantee Agreement or the
Subordinated Debt Securities under the 1933 Act or to qualify an indenture
under the Trust Indenture Act of 1939, as amended.
11. Neither the Company nor the Trust is, and, following the issuance of
the Capital Securities and the consummation of the transactions contemplated by
the Operative Documents and the application of the proceeds therefrom, neither
the Company nor the Trust will be, an "investment company" or entity
"controlled" by an "investment company", in each
PAGE A-4
case within the meaning of Section 3(a) of the 1940 Act, without regard to
Section 3(c) of such Act.
In rendering such opinions, such counsel may (A) state that its opinion is
limited to the laws of New York, the laws of the State of Oklahoma and the
Federal laws of the United States and (B) rely as to matters involving the
application of laws of any jurisdiction other than New York, Oklahoma or the
United States, to the extent deemed proper and specified in such opinion, upon
the opinion of other counsel of good standing believed to be reliable and who
are satisfactory to you and as to matters of fact, to the extent deemed proper,
on certificates of responsible officers of the Company, the Insurance
Subsidiaries and public officials.
PAGE B-1
ANNEX B
Pursuant to Section 5(b) of the Placement Agreement, special Delaware
counsel for the Trust shall deliver an opinion in substantially the following
form:
1. The Trust has been duly formed and is validly existing in good
standing as a statutory trust under the Delaware Act.
2. The Declaration constitutes a valid and binding obligation of the
Sponsor and Trustees party thereto, enforceable against such Sponsor and
Trustees in accordance with its terms.
3. Under the Delaware Act and the Declaration, the Trust has the
requisite trust power and authority (i) to own its properties and conduct its
business, all as described in the Declaration, (ii) to execute and deliver, and
perform its obligations under, the Operative Documents to which it is a party,
(iii) to authorize, issue, sell and perform its obligations under its Capital
Securities and Common Securities, and (iv) to purchase and hold the
Subordinated Debt Securities.
4. The Capital Securities have been duly authorized for issuance by the
Trust and, when issued, executed and authenticated in accordance with the
Declaration and delivered against payment therefor in accordance with the
Declaration and the Subscription Agreement, will be validly issued and, subject
to the qualifications set forth in paragraph 5 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust and
the holders of the Capital Securities will be entitled to the benefits provided
by the Declaration.
5. Each holder of Capital Securities, in such capacity, 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. We note, however, that the holders of the Capital
Securities may be required to make payment or provide indemnity or security as
set forth in the Declaration.
6. Under the Declaration and the Delaware Act, the issuance of the
Capital Securities and Common Securities is not subject to preemptive rights.
7. The Common Securities have been duly authorized for issuance by the
Trust and, when issued and executed in accordance with the Declaration and
delivered against payment therefor in accordance with the Declaration and the
subscription agreement therefor, will be validly issued undivided beneficial
interests in the assets of the Trust and the holders of the Common Securities
will be entitled to the benefits provided by the Declaration.
8. Under the Declaration and the Delaware Act, the execution and
delivery by the Trust of the Operative Documents to which it is a party, and
the performance by the Trust of its obligations thereunder, have been duly
authorized by the requisite trust action on the part of the Trust.
9. The issuance and sale by the Trust of its Capital Securities and
Common Securities, the execution, delivery and performance by the Trust of
the Operative Documents to
PAGE B-2
which it is a party, the consummation by the Trust of the transactions
contemplated by the Operative Documents to which it is party, and the
compliance by the Trust with its obligations thereunder are not prohibited by
(i) the Declaration or the Trust Certificate, or (ii) any law or administrative
regulation of the State of Delaware applicable to the Trust.
10. No authorization, approval, consent or order of any Delaware court or
Delaware governmental authority or Delaware agency is required to be obtained
by the Trust solely in connection with the issuance and sale by the Trust of
its Capital Securities and Common Securities, the due authorization, execution
and delivery by the Trust of the Operative Documents to which it is a party or
the performance by the Trust of its obligations under the Operative Documents
to which it is a party.
11. The holders of the Capital Securities (other than those holders 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 Trust, and the Trust will not be liable for any income tax
imposed by the State of Delaware.
PAGE C-1
ANNEX C
Pursuant to Section 5(c) of the Placement Agreement, special tax counsel
for the Offerors shall deliver an opinion in substantially the following form:
1. Under current law and assuming the performance of the Operative
Documents in accordance with the terms described therein, the Subordinated Debt
Securities will be treated for United States federal income tax purposes as
indebtedness of the Company.
2. The Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a corporation.
PAGE D-1
ANNEX D
Pursuant to Section 5(d) of the Placement Agreement, counsel to the
Guarantee Trustee, the Institutional Trustee, the Delaware Trustee and the
Indenture Trustee shall deliver an opinion in substantially the following form:
1. Wilmington Trust Company ("WTC") is a Delaware banking corporation
with trust powers, duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, with requisite corporate power and
authority to execute and deliver, and to perform its obligations under, the
Declaration, the Guarantee Agreement and the Indenture (collectively, the
"Transaction Documents").
2. The execution, delivery, and performance by WTC of the Transaction
Documents have been duly authorized by all necessary corporate action on the
part of WTC, and the Transaction Documents have been duly executed and
delivered by WTC.
3. The execution, delivery and performance of the Transaction Documents
by WTC and the consummation of any of the transactions by WTC contemplated
thereby are not prohibited by (i) the charter or bylaws of WTC, (ii) any law
or administrative regulation of the State of Delaware or the United States of
America governing the banking and trust powers of WTC, or (iii) to our
knowledge (based and relying solely on the Officer Certificates), any
agreements or instruments to which WTC is a party or by which WTC is bound or
any judgments or order applicable to WTC.
4. The Subordinated Debt Securities delivered on the date hereof have
been authenticated by due execution thereof and delivered by WTC, as Indenture
Trustee, in accordance with the Indenture. The Capital Securities delivered on
the date hereof have been authenticated by due execution thereof and delivered
by WTC, as Institutional Trustee, in accordance with the Declaration.
5. None of the execution, delivery and performance by WTC of the
Transaction Documents and the consummation of any of the transactions by WTC
contemplated thereby requires the consent, authorization, order or approval of,
the withholding of objection on the part of, the giving of notice to, the
registration with or the taking of any other action in respect of, any
governmental authority or agency, under any law or administrative regulation
of the State of Delaware or the United States of America governing the banking
and trust powers of WTC, except for the filing of the Trust Certificate with
the Office of the Secretary of State of the State of Delaware pursuant to the
Delaware Act (which filing has been duly made).
PAGE E-1
ANNEX E
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY OR ANY
INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE
CASE MAY BE, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY
INTEREST OR PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i)
TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE
SECURITIES ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE HEREOF AND
(Z) THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE (AS DEFINED IN RULE 405
UNDER THE SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF THIS SECURITY OR SUCH
INTEREST OR PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (ii) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW,
ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A, THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C)
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1),
(2), (3), (7) OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS SECURITY OR SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO NON-US PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER THE SECURITIES
ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE DEBENTURE
ISSUER AND THE TRUST PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (C), (D) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH
MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR
THEREOF, AS THE CASE MAY BE, AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
PAGE E-2
THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS
ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, ALSO AGREES, REPRESENTS AND
WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR
OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY
ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, UNLESS
SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60,
91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION IS NOT PROHIBITED
BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH
PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN
TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON
ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR
ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH
PURCHASE, OR (ii) SUCH PURCHASE AND HOLDING WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH
THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY
BE REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A
LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO
BE THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN FOR ANY
PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY OR ANY
INTEREST OR PARTICIPATION HEREIN.