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EXHIBIT 99.3
[FORM OF EXCHANGE AGENCY AGREEMENT]
December __, 1997
Wilmington Trust Company
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Attention: Corporate Trust Administration
Re: Superior National Capital Trust I, $105,000,000 10 3/4% Trust
Preferred Securities
Ladies and Gentlemen:
Superior National Insurance Group, Inc., a Delaware corporation,
as Depositor (the "Company"), and Superior National Capital Trust I, a Delaware
business trust (the "Trust"), hereby appoint Wilmington Trust Company
("Wilmington Trust") to act as exchange agent (the "Exchange Agent") in
connection with an exchange offer by the Company and the Trust to exchange up to
$105,000,000 10 3/4% Trust Preferred Securities (the "Preferred Securities").
The terms and conditions of the exchange offer are set forth in a Prospectus,
dated ________, 1998 (as the same may be amended or supplemented from time to
time, the "Prospectus"), and in the related Letter of Transmittal, which
together constitute the "Exchange Offer." The registered holders of the
Preferred Securities are hereinafter referred to as the "Holders." Capitalized
terms used herein and not defined shall have the respective meanings described
thereto in the Prospectus.
On the basis of the representations, warranties and agreements of the
Company, the Trust and Wilmington Trust contained herein and subject to the
terms and conditions hereof, the following sets forth the agreement among the
Company, the Trust and Wilmington Trust as Exchange Agent for the Exchange
Offer:
1. APPOINTMENT AND DUTIES AS EXCHANGE AGENT.
a. The Company and the Trust hereby authorize Wilmington Trust to act as
Exchange Agent in connection with the Exchange Offer and Wilmington Trust agrees
to act as Exchange Agent in connection with the Exchange Offer. As Exchange
Agent, Wilmington Trust
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will perform those services as are outlined herein, including, but not limited
to, accepting tenders of Preferred Securities, and communicating generally
regarding the Exchange Offer with brokers, dealers, commercial banks, trust
companies and other persons, including Holders of the Preferred Securities.
b. The Company and the Trust acknowledge and agree that Wilmington Trust
has been retained pursuant to this Agreement to act solely as Exchange Agent in
connection with the Exchange Offer, and in such capacity, Wilmington Trust shall
perform such duties in good faith as are outlined herein.
c. Wilmington Trust will examine each of the Letters of Transmittal and
certificates for the Preferred Securities and any other documents delivered or
mailed to Wilmington Trust by or for Holders of the Preferred Securities, and
any book entry confirmations received by Wilmington Trust with respect to the
Preferred Securities, to ascertain whether: (i) the Letters of Transmittal and
any such other documents are duly executed and properly completed in accordance
with the instructions set forth therein and that such book entry confirmations
are in due and proper form and contain the information required to be set forth
therein, (ii) the Preferred Securities have otherwise been properly tendered,
(iii) the Preferred Securities tendered in part are tendered in liquidation
amounts of $100,000 (100 Preferred Securities) and integral multiples of $1,000
in excess thereof and that if any Preferred Securities are tendered for exchange
in part, the untendered liquidation amount thereof is $100,000 (100 Preferred
Securities) or any integral multiple of $1,000 in excess thereof, and (iv)
Holders have provided their correct Tax Identification Number or required
certification. Determination of all questions as to validity, form, eligibility
and acceptance for exchange of any Preferred Securities shall be made by the
Company and the Trust, which determination shall be final and binding. In each
case where the Letters of Transmittal or any other documents have been
improperly completed or executed or where book-entry conformations are not in
due and proper form or omit certain information, or any of the certificates for
Preferred Securities are not in proper form for transfer or some other
irregularity in connection with the tender or acceptance of the Preferred
Securities exists, Wilmington Trust will endeavor, upon request of the Company
or the Trust, to advise the tendering Holders of the irregularity and to take
any other action as the Company or the Trust may request to cause such
irregularity to be corrected. Notwithstanding the above, Wilmington Trust shall
not be under any duty to give any notification of any irregularities in tenders
or incur any liability for failure to give any such notification.
d. Tenders of Preferred Securities may be made only as set forth in the
Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer" and Preferred Securities shall be considered properly tendered
only when tendered in accordance with such procedures set forth therein.
Notwithstanding the provisions of this paragraph, Preferred Securities which the
Trust and the Chairman of the Board, Chief Executive Officer, President, any
Vice President, the Treasurer or the Secretary of the Company, shall approve
(such approval, if given orally, to be confirmed in writing) as having been
properly tendered shall be considered to be properly tendered.
e. Wilmington Trust shall advise the Company and the Trust with respect
to any Preferred Securities received as soon as possible after 5:00 p.m., New
York City time, on the
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Expiration Date and accept its instructions with respect to disposition of such
Preferred Securities.
f. Wilmington Trust shall deliver certificates for Preferred Securities
tendered in part to the transfer agent for split-up and shall return any
untendered Preferred Securities or Preferred Securities which have not been
accepted by the Company and the Trust to the Holders promptly after the
expiration or termination of the Exchange Offer.
g. Upon acceptance by the Company and the Trust of any Preferred
Securities duly tendered pursuant to the Exchange Offer (such acceptance if
given orally, to be confirmed in writing), the Company and the Trust will cause
Exchange Preferred Securities in exchange therefor to be issued as promptly as
practicable and Wilmington Trust will deliver such Exchange Preferred Securities
on behalf of the Company and the Trust at the rate of $100,000 (100 Preferred
Securities) liquidation amount of Exchange Preferred Securities for each
$100,000 liquidation amount of Preferred Securities tendered as promptly as
practicable after acceptance by the Company and the Trust of the Preferred
Securities for exchange and notice (such notice if given orally, to be confirmed
in writing) of such acceptance by the Company and the Trust. Unless otherwise
instructed by the Company or the Trust, Wilmington Trust shall issue Exchange
Preferred Securities only in denominations of $100,000 (100 Preferred
Securities) or any integral multiple of $1,000 in excess thereof.
h. Tenders pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and the conditions set forth in the Prospectus and the
Letter of Transmittal, Preferred Securities tendered pursuant to the Exchange
Offer may be withdrawn at any time on or prior to the Expiration Date in
accordance with the terms of the Exchange Offer.
i. Notice of any decision by the Company and the Trust not to exchange
any Preferred Securities tendered shall be given by the Company and the Trust
either orally (if given orally, to be confirmed in writing) or in a written
notice to Wilmington Trust.
j. If, pursuant to the Exchange Offer, the Company and the Trust do not
accept for exchange all or part of the Preferred Securities tendered because of
an invalid tender, the occurrence of certain other events set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions to the Exchange
Offer" or otherwise, Wilmington Trust, upon notice from the Company and the
Trust (such notice if given orally, to be confirmed in writing), promptly after
the expiration or termination of the Exchange Offer, shall return such
certificates for unaccepted Preferred Securities (or effect appropriate
book-entry transfer), together with any related required documents and the
Letters of Transmittal relating thereto that are in Wilmington Trust's
possession, to the persons who deposited such certificates.
k. Certificates for reissued Preferred Securities, unaccepted Preferred
Securities or Exchange Preferred Securities shall be forwarded by (a)
first-class certified mail, return receipt requested under a blanket surety bond
obtained by Wilmington Trust protecting Wilmington Trust, the Company and the
Trust from loss or liability arising out of the non-receipt or non-delivery of
such certificates or (b) by registered mail insured by Wilmington Trust
separately for the replacement value of each such certificate.
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l. Wilmington Trust is not authorized to pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer, commercial
bank, trust company or other nominee or to engage or use any person to solicit
tenders.
m. As Exchange Agent, Wilmington Trust:
(i) shall have no duties or obligations other than those
specifically set forth herein or in the Prospectus or in the related
Letter of Transmittal;
(ii) will make no representations and will have no
responsibilities as to the validity, value or genuineness of any of the
certificates for the Preferred Securities deposited pursuant to the
Exchange Offer, and will not be required to and will make no
representation as to the validity, value or genuineness of the Exchange
Offer;
(iii) shall not be obligated to take any legal action hereunder
which might in Wilmington Trust's reasonable judgment involve any
expense or liability, unless Wilmington Trust shall have been furnished
with indemnity satisfactory to it and additional fees for taking of such
action;
(iv) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to Wilmington Trust and
reasonably believed by Wilmington Trust to be genuine and to have been
signed by the proper party or parties;
(v) may reasonably act upon any tender, statement, request,
comment, agreement or other instrument whatsoever not only as to its due
execution and validity and effectiveness of its provisions, but also as
to the truth and accuracy of any information contained therein, which
Wilmington Trust believes in good faith to be genuine and to have been
signed or represented by a proper person or persons acting in a
fiduciary or representative capacity;
(vi) may rely on and shall be protected in acting upon written or
oral instructions from the President, any Senior Vice President, any
Executive Vice President, any Vice President, the Treasurer, any
Assistant Treasurer or any other designed officer of the Company;
(vii) may consult with its own counsel with respect to any
questions relating to Wilmington Trust's duties and responsibilities and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by Wilmington Trust hereunder in good faith and in accordance with
the advice of such counsel; and
(viii) shall not advise any person tendering Preferred Securities
pursuant to the Exchange Offer as to whether to tender or refrain from
tendering all or any portion of its Preferred Securities or as to the
market value, decline or appreciation in market value of
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any Preferred Securities that may or may not occur as a result of the
Exchange Offer or as to the market value of the Exchange Preferred
Securities. Wilmington Trust shall furnish copies of the Prospectus,
Letter of Transmittal and the Notice of Guaranteed Delivery or such
other forms as may be approved from time to time by the Company and the
Trust, to all persons requesting such documents from Wilmington Trust.
The Company and the Trust will furnish you with copies of such documents
at your request.
n. Wilmington Trust shall advise orally, and promptly thereafter confirm
in writing, to the Company and the Trust and such other person or persons as the
Company and the Trust may request, daily (and more frequently during the week
immediately preceding the Expiration Date and if otherwise reasonably requested)
up to and including the Expiration Date, the aggregate liquidation amount of
Preferred Securities which have been tendered pursuant to the terms of the
Exchange Offer and the items received by Wilmington Trust pursuant to the
Exchange Offer and this Agreement. In addition, Wilmington Trust will also
provide, and cooperate in making available to the Company and the Trust, or any
such other person or persons upon request (such request if made orally, to be
confirmed in writing) made from time to time, such other information in its
possession as the Company and the Trust may reasonably request. Such cooperation
shall include, without limitation, the granting by Wilmington Trust to the
Company and the Trust, and such person or persons as the Company and the Trust
may request, access to those persons on Wilmington Trust's staff who are
responsible for receiving tenders, in order to ensure that immediately prior to
the Expiration Date the Company and the Trust shall have received adequate
information in sufficient detail to enable the Company and the Trust to decide
whether to extend the Exchange Offer. Wilmington Trust shall prepare a final
list of all persons whose tenders were accepted, the aggregate principal amount
of Preferred Securities tendered, the aggregate liquidation amount of Preferred
Securities accepted, and deliver said list to the Company and the Trust.
o. Letters of Transmittal, book-entry confirmations and Notices of
Guaranteed Delivery shall be stamped by Wilmington Trust as to the date and the
time of receipt thereof and shall be preserved by Wilmington Trust as to the
date and the time of receipt thereof and shall be preserved by Wilmington Trust
for a period of time at least equal to the period of time Wilmington Trust
preserves other records pertaining to the transfer of securities, or one year,
whichever is longer, and thereafter shall be delivered by Wilmington Trust to
the Company and the Trust. Wilmington Trust shall dispose of unused Letters of
Transmittal and other surplus materials by returning them to the Company or the
Trust.
2. COMPENSATION.
$5,000.00 will be payable to Wilmington Trust in its capacity as
Exchange Agent; provided, that Wilmington Trust reserves the right to receive
reimbursement from the Company for any reasonable out-of-pocket expenses
incurred as Exchange Agent in performing the services described herein.
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3. INDEMNIFICATION.
a. The Company and the Trust hereby agree to protect, defend, indemnify
and hold harmless Wilmington Trust against and from any and all costs, losses,
liabilities, taxes, expenses (including reasonable counsel fees and
disbursements) and claims imposed upon or asserted against Wilmington Trust on
account of any action taken or omitted to be taken by Wilmington Trust in
connection with its acceptance of or performance of its duties under this
Agreement and the documents related thereto as well as the reasonable costs and
expenses of defending itself against any claim or liability arising out of or
relating to this Agreement and the documents related thereto. This
indemnification shall survive the release, discharge, termination and/or
satisfaction of this Agreement. Anything in this Agreement to the contrary
notwithstanding, neither the Company nor the Trust shall be liable for
indemnification or otherwise for any loss, liability, cost or expense to the
extent arising out of Wilmington Trust's bad faith, gross negligence or willful
misconduct. In no case shall the Company or the Trust be liable under this
indemnification agreement with respect to any claim against Wilmington Trust
until the Company and the Trust shall be notified by Wilmington Trust, by
letter, of the written assertion of a claim against Wilmington Trust or of any
other action commenced against Wilmington Trust, promptly after Wilmington Trust
shall have received any such written assertion or shall have been served with a
summons in connection therewith; provided, that, Wilmington Trust's failure to
give such notice shall not excuse the Company or the Trust from its obligations
hereunder. The Company and the Trust shall be entitled to participate at their
own expense in the defense of any such claim or other action, and, if the
Company and the Trust so elect, the Company or the Trust may assume the defense
of any pending or threatened action against Wilmington Trust in respect of which
indemnification may be sought hereunder with counsel reasonably acceptable to
Wilmington Trust; provided that the Company and the Trust shall not be entitled
to assume the defense of any such action if the named parties to such action
include the Company or the Trust and Wilmington Trust and representation of the
parties by the same legal counsel would, in the reasonable opinion of counsel
for Wilmington Trust, be inappropriate due to actual or potential conflicting
interests between them. In the event that the Company or the Trust shall assume
the defense of any such suit with counsel reasonably acceptable to Wilmington
Trust, the Company or the Trust, as applicable, shall not be liable for the fees
and expenses incurred by Wilmington Trust of any counsel retained by Wilmington
Trust subsequent to such assumption of defense by the Company or the Trust.
b. The Company agrees to indemnify and hold harmless the Trust from and
against any and all losses, claims, damages and liabilities whatsoever, as due
from the Trust under this Section.
4. TAX INFORMATION.
The Company or the Trust shall arrange to comply with all requirements
under the tax laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service. The Company and the Trust understand that they may be required,
in certain instances, to deduct 31% with respect to interest paid on the
Exchange Preferred Securities and proceeds from the sale, exchange, redemption
or retirement of the Exchange Preferred Securities from Holders who have not
supplied their
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correct Taxpayer Identification Number or required certification. Such funds
will be turned over to the Internal Revenue Service.
5. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
6. NOTICES. Any communication or notice provided for hereunder shall be in
writing and shall be given (and shall be deemed to have been given upon receipt)
by delivery in person, telecopy, or overnight delivery or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the addresses indicated below:
If to the Company:
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Telecopier No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: President
If to the Trust:
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Telecopier No.: (▇▇▇)▇▇▇-▇▇▇▇
Attention: President
If to Wilmington Trust:
Corporate Trust Operations
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
With a copy to:
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Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
or, as to each party, at such other address as shall be designated by such party
in a written notice complying as to delivery with the terms of this Section.
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7. PARTIES IN INTEREST. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement. Without limitation to the foregoing, the parties hereto expressly
agree that no holder of Preferred Securities shall have any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
8. COUNTERPARTS; SEVERABILITY. This Agreement may be executed in one or
more counterparts, and by different parties hereto on separate counterparts,
each of which when so executed shall be deemed an original, and all of such
counterparts shall together constitute one and the same agreement. If any term
or other provision of this Agreement or the application thereof is invalid,
illegal or incapable of being enforced by any rule of law, or public policy, all
other provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the agreements contained
herein is not affected in any manner adverse to any party. Upon such
determination that any term or provision or the application thereof is invalid,
illegal or unenforceable, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the agreements
contained herein may be performed as originally contemplated to the fullest
extent possible.
9. CAPTIONS. The descriptive headings contained in this Agreement are
included for convenience or reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
10. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement may not be amended or modified nor may any provision hereof be
waived except in writing signed by each party to be bound thereby.
11. TERMINATION. This Agreement shall terminate upon the earlier of (a) the
90th day following the expiration, withdrawal, or termination of the Exchange
Offer, (b) the close of business on the date of actual receipt of written notice
by Wilmington Trust from the Company and the Trust stating that this Agreement
is terminated, (c) one year following the date of this Agreement, or (d) the
time and date on which this Agreement shall be terminated by mutual consent of
the parties hereto.
Kindly indicate your willingness to act as Exchange Agent and Wilmington
Trust's acceptance of the foregoing provisions by signing in the space provided
below for that purpose and returning to the Company a copy of this Agreement so
signed, whereupon this Agreement and Wilmington Trust's acceptance shall
constitute a binding agreement among Wilmington Trust, the Company and the
Trust.
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Very truly yours,
SUPERIOR NATIONAL INSURANCE GROUP, INC.
By: ________________________________
Name:
Title:
SUPERIOR NATIONAL CAPITAL TRUST I
By: ________________________________
Name:
Title:
Accepted and agreed to as of the date first written above:
WILMINGTON TRUST COMPANY
By: ________________________________
Name:
Title:
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