Exhibit 1
BANC OF AMERICA SECURITIES LLC
BANK OF AMERICA CORPORATE CENTER
100 NORTH TRYON STREET, SEVENTH FLOOR
CHARLOTTE, NC 28255
January 31, 2001
CII Financial, Inc.
2716 North Tenaya Way
Las Vegas, Nevada 89128
Attn: Kathleen M. Marlon
President and
Chief Executive Officer
Ladies and Gentlemen:
This amended and restated letter agreement (the "Agreement"), is made
and entered into by and between CII Financial, Inc., a California corporation
(the "Company"), and Banc of America Securities LLC ("BAS" or the "Dealer
Manager") in order to amend and restate that certain letter agreement, dated
December 22, 2000 (the "Original Agreement"), pursuant to which the Company has
retained BAS to act as the exclusive dealer manager on the terms and subject to
the conditions set forth therein, in connection with the Company's proposed
exchange offer for its 7 1/2% convertible subordinated debentures due 2001 (the
"Old Debentures"). In consideration of the mutual covenants and agreements of
the parties set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Original Agreement
is hereby amended and restated in its entirety and shall continue in full force
and effect as set forth herein.
The Company proposes to offer to exchange (collectively referred to as
the "Offer"): (i) $1,000 in principal amount of its new 9% senior subordinated
debentures due September 15, 2006 (the "New Debentures") for every $1,000 in
principle amount of the Old Debentures that are tendered or (ii) $525 in cash
for every $1,000 in principal amount of the Old Debentures that are tendered,
subject to a maximum of $19,500,000 aggregate principal amount of Old Debentures
to be exchanged for cash. The Offer shall be made upon the terms and subject to
the conditions set forth in the Registration Statement on Form S-4 (the
"Registration Statement") and the Prospectus and Exchange Offer (the
"Prospectus") contained therein (including all information incorporated by
reference therein and exhibits, appendices and attachments thereto, as amended,
modified or supplemented from time to time, the "Exchange Offer").
The holders of the Old Debentures are hereinafter referred to as the
"Holders."
Capitalized terms used and not defined in this letter agreement shall
have the meanings assigned to them in the Exchange Offer.
1. Engagement.
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Subject to the terms and conditions set forth herein:
(a) The Company hereby retains the Dealer Manager, and the
Dealer Manager agrees to act, as the exclusive dealer manager to the
Company in connection with the Offer until the date on which the Offer
expires or is earlier terminated in accordance with its terms. BAS will
advise the Company with respect to the terms and timing of the Offer
and assist the Company in preparing any documents (including the
Exchange Offer) to be delivered by the Company to the Holders or used
in connection with the Offer (collectively, the "Documents"). The
Company authorizes BAS, in accordance with its customary practices and
consistent with industry practice and all applicable laws, to
communicate generally regarding the Offer with the Holders and their
authorized agents in connection with the Offer.
(b) The Company acknowledges that BAS has been retained solely
to provide the services set forth in this Agreement. In rendering such
services, BAS shall act as an independent contractor, and any duties of
BAS arising out of its engagement hereunder shall be owed solely to the
Company. The Company also acknowledges that (i) the Documents have been
or will be prepared and approved by and are the sole responsibility of
the Company, (ii) BAS shall not be deemed to act as an agent of the
Company or any of its affiliates (except that in any jurisdiction in
which the Offer is required to be made by a registered licensed broker
or dealer, it shall be deemed made by the Dealer Manager on behalf of
the Company) and neither the Company nor any of its affiliates shall be
deemed to act as the agent of BAS and (iii) no securities broker,
dealer, bank or trust company shall be deemed to act as the agent of
BAS or as the agent of the Company or any of its affiliates, and BAS
shall not be deemed to act as the agent of any securities broker,
dealer, bank or trust company. BAS shall not have any liability in
tort, contract or otherwise to the Company or to any of its affiliates
for any act or omission on the part of any securities broker or dealer
or any bank or trust company or any other person except to the extent
that such liability arises out of the gross negligence, bad faith or
the willful misconduct of BAS.
(c) The Company acknowledges that the Dealer Manager is a
securities firm that is engaged in securities trading and brokerage
activities as well as in providing investment banking and financial
advisory services. In the ordinary course of trading and brokerage
activities, the Dealer Manager and its affiliates may at any time hold
long or short positions, and may trade or otherwise effect
transactions, for their own account or the accounts of customers, in
debt or equity securities of the Company and its affiliates or other
entities that may be involved in the transactions contemplated hereby.
(d) BAS agrees, in accordance with its customary practice and
consistent with industry practice and in accordance with applicable law
and the Offer, to perform those services in connection with the Offer
as are customarily performed by investment banks in connection with
similar transactions of a like nature, including, but not limited to,
using all reasonable efforts to solicit tenders of Old Debentures
pursuant to the Offer and communicating generally regarding the Offer
with brokers, dealers, commercial banks and trust companies and other
Holders.
(e) The Company shall arrange for D.F. King & Co., Inc. to act
as information agent (the "Information Agent") in connection with the
Offer and, as such, to advise the Dealer Manager promptly as to such
matters relating to the Offer as the Dealer Manager may reasonably
request. The Company shall arrange with Wells Fargo Corporate Trust to
act as the exchange agent (the "Exchange Agent") in connection with the
Offer, and as such to advise the Dealer Manager promptly as to such
matters relating to the Offer as the Dealer Manager may reasonably
request. In addition, the Company hereby authorizes the Dealer Manager
to communicate with the Information Agent, the Exchange Agent, The
Depository Trust Company and others as appropriate with respect to
matters relating to the Offer.
(f) The Company shall furnish the Dealer Manager, or take
efforts to cause the Trustee or registrars for the Old Debentures to
furnish the Dealer Manager, as soon as practicable, with cards or lists
or copies thereof showing the names of persons who were the Holders of
record of Old Debentures as of the date or dates specified by the
Dealer Manager and, to the extent reasonably available to the Company,
the beneficial Holders of the Old Debentures as of such date or dates,
together with their addresses and the principal amount of Old
Debentures held by them. Additionally, the Company shall update such
information from time to time during the term of this Agreement as
reasonably requested by the Dealer Manager and to the extent such
information is reasonably available to the Company within the time
constraints specified.
(g) The Company agrees to advise the Dealer Manager promptly
of the occurrence of any event, of which it becomes aware, which could
cause or require the Company to withdraw, rescind or modify the
Documents. In addition, if any event occurs as a result of which it
shall be necessary to amend or supplement any Documents in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading in any material respect, the Company
shall, promptly upon becoming aware of any such event, advise the
Dealer Manager of such event and, as promptly as practicable under the
circumstances, prepare and furnish copies of such amendments or
supplements of any such Documents to the Dealer Manager, so that the
statements in such Documents, as so amended or supplemented, will not,
in light of the circumstances under which they were made, be misleading
in any material respect.
(h) Except as otherwise required by law or regulation, the
Company will not use or publish any material in connection with the
Offer, or refer to the Dealer Manager in any such material, without the
prior approval of the Dealer Manager (which shall not be unreasonably
withheld). The Company, upon receiving such approval, will promptly
furnish the Dealer Manager with as many copies of such approved
materials as the Dealer Manager may reasonably request.
(i) The Company will promptly inform the Dealer Manager of any
litigation or administrative or similar proceeding of which it becomes
aware which is initiated or threatened with respect to the Offer.
(j) Upon completion of the Offer, the Company agrees to pay
promptly, in accordance with the terms of the Documents, the applicable
consideration for the Old Debentures to the Holders entitled thereto.
2. Fees and Expenses.
(a) In consideration of services provided hereunder as the
Dealer Manager, the Company shall pay the Dealer Manager the cash fees
as set forth in that certain engagement letter from BAS with you dated
as of November 16, 2000 (the "Engagement Letter"), and the provisions
of the Engagement Letter regarding fees to be paid by the Company for
the services of BAS are incorporated by reference herein as if restated
herein in full.
(b) Whether or not any Old Debentures are tendered pursuant to
the Offer or in the event that this Agreement is terminated by either
the Company or the Dealer Manager in accordance with the provisions
contained herein, the Company shall (x) pay all expenses of (i) the
preparation, printing, mailing and publishing of the Documents, (ii)
any and all amounts payable to securities brokers and dealers
(including the Dealer Manager), commercial banks, trust companies and
nominees as reimbursement of their customary mailing and handling
expenses incurred in forwarding the Documents to their customers, and
of any forwarding agent, and all other expenses of the Company, (iii)
all reasonable fees and expenses of the Information Agent and the
Exchange Agent, (iv) all advertising charges, (v) all other expenses in
connection with the Offer, and (y) reimburse the Dealer Manager for all
reasonable expenses incurred by the Dealer Manager in connection with
its services as Dealer Manager under this Agreement, including its
reasonable out of pocket expenses and the reasonable fees and expenses
of Moore & Van Allen PLLC, counsel to the Dealer Manager, provided that
such fees and expenses of such counsel shall not exceed a total amount
of $100,000.
3. Termination.
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Subject to Section 8 hereof, this Agreement may be terminated by the
Company on the date the Company terminates (by notice in writing to the Dealer
Manager) or withdraws the Offer.
4. Representations and Warranties by the Company.
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The Company represents and warrants to the Dealer Manager (i) as of the
date of the Original Agreement, (ii) subject to the proviso contained in clause
(A) of the first paragraph of Annex A hereto regarding indemnification, on each
date that any Documents are published, sent, given or otherwise distributed, and
(iii) on the date of exchange of New Debentures and/or cash for the Old
Debentures by the Company pursuant to the Offer and upon the consummation of the
Offer that:
(a) Each of the Company and its subsidiaries (including when
referred to herein any direct and indirect subsidiaries) has been duly
formed and is validly existing (in the case of the Company, as a
corporation) and in good standing under the laws of the jurisdiction of
its formation.
(b) The Company (i) has all necessary corporate power and
authority to execute and deliver this Agreement, and to perform all its
obligations hereunder to issue the New Debentures and to pay the cash
consideration in exchange for the Old Debentures to consummate the
Offer in accordance with its terms, and (ii) shall use all reasonable
efforts to take on a timely basis all actions necessary or required in
relation to the Offer.
(c) The Company has taken all necessary corporate action to
authorize the making and consummation of the Offer and the execution,
delivery and performance by the Company of this Agreement; and this
Agreement has been duly executed and delivered by the Company and
assuming due authorization, execution and delivery by the Dealer
Manager, constitutes a valid and legally binding agreement of the
Company.
(d) The New Debentures have been duly authorized by the
Company for issuance and exchange pursuant to the Offer and, when duly
executed, authenticated, issued and delivered in the manner provided
for in the New Indenture (as defined below) against payment of the
consideration therefor as contemplated by the Offer, will constitute
valid, legal and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally,
general equitable principles and the discretion of courts in granting
equitable remedies. The New Debentures will be substantially in the
form contemplated by, and entitled to the benefits of, the New
Indenture.
(e) The New Indenture shall have been duly authorized,
executed and delivered by the Company and, upon such authorization,
execution and delivery, will constitute a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, subject, as to enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies.
(f) The New Debentures will conform in all material respects
to the descriptions thereof contained in the Prospectus and, when
issued, will be in substantially the form required by the New
Indenture, as filed as an exhibit to the Registration Statement.
(g) The Offer meets the requirements for use of Form S-4 under
the Securities Act of 1933, as amended (the "Securities Act"). Upon
issuance of the New Debentures and upon consummation of the
transactions contemplated by the Offer, the indenture pursuant to which
the New Debentures are issued (the "New Indenture") shall have been
duly qualified under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act").
(h) The Company will use all reasonable efforts to qualify the
New Debentures for offering and sale under the applicable securities
laws of such states and other jurisdictions (domestic and foreign) as
contemplated by the Offer and shall maintain such qualifications in
effect for so long as required for the distribution of the New
Debentures; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation or as a broker or dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject.
(i) The Offer and the Documents (including the documents
incorporated or deemed to be incorporated by reference into the
Documents) comply and (as amended or supplemented, if amended or
supplemented) will comply in all material respects with all applicable
requirements of the federal securities laws and the Trust Indenture Act
and with all applicable foreign, local or state securities laws, and,
in each case, the rules and regulations thereunder; and the Documents
(including the documents incorporated or deemed to be incorporated by
reference into the Documents) do not and (as amended or supplemented,
if amended or supplemented) will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(j) The financial statements, together with related schedules,
included in each of the Documents present fairly the consolidated
financial position, results of operations, stockholder's equity and
cash flows of the Company and its subsidiaries on the basis stated
therein at the respective dates or for the respective periods to which
they relate; and such statements and related schedules have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as
disclosed therein.
(k) The Offer pursuant to the terms of the Documents,
including the receipt of certain third party consents, and the
execution, delivery and performance by the Company of this Agreement
and the transactions contemplated hereby and thereby (x) do not and
will not conflict with, or result in a breach or violation of, or
constitute a default under, any of the provisions of the New Indenture
or of the charter or bylaws (or similar organizational documents) of
the Company or any other note, indenture (including without limitation
the indenture governing the Old Debentures), loan agreement, mortgage
or other agreement, instrument or undertaking to which the Company or
any of its subsidiaries or affiliates is a party or by which any of
them is bound or to which any of their properties or assets is subject,
and (y) will not result in any violation of any law, rule or regulation
or any order of any court or of any other governmental agency or
instrumentality having jurisdiction over the Company or any of its
subsidiaries or affiliates or any of its or their respective properties
or assets.
(l) No consent, approval, authorization or order of, or
registration, qualification or filing with, any court or regulatory
authority or other governmental agency or instrumentality is or will be
required in connection with the making or consummation of the Offer or
the execution, delivery or performance by the Company of this Agreement
and the transactions contemplated hereby, except as such may be
described in the Exchange Offer or such as would not have a material
adverse effect on the operations, assets, condition (financial or
otherwise) or prospects of the Company or any of its subsidiaries or
affiliates, or on the ability of the parties to consummate the Offer as
contemplated thereby (a "Material Adverse Effect").
(m) the Company shall advise the Dealer Manager promptly of
(i) the occurrence of any event of which the Company becomes aware
which could cause the Company to withdraw, rescind or terminate the
Offer or would permit the Company to exercise any right not to purchase
or exchange Old Debentures tendered under the Offer, (ii) the
occurrence of any event of which the Company becomes aware, or the
discovery by the Company of any fact, the occurrence or existence of
which it believes would make it necessary or advisable to make any
change in the Documents being used or would cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any
material respect, (iii) any proposal or requirement to make, amend or
supplement any Document or any filing in connection with the Offer
pursuant to the Securities Act, the Exchange Act, the Trust Indenture
Act or any applicable law, rule or regulation, (iv) its awareness of
the issuance by any regulatory authority of any comment or order or the
taking of any other action concerning the Offer (and, if in writing,
will furnish the Dealer Manager with a copy thereof), (v) its awareness
of any material developments in connection with the Offer or the
financing thereof including, without limitation, the commencement of
any lawsuit relating to the Offer and (vi) any other information known
to the Company relating to the Offer, the Documents or this Agreement
which the Dealer Manager may from time to time reasonably request.
(n) There is no action, suit or proceeding before or by any
court or governmental agency or body now pending or, to the knowledge
of the Company, threatened against the Company or any of its
subsidiaries which would adversely affect in any material respect the
Offer pursuant to the terms of the Documents or the effectiveness of
this Agreement.
The representations and warranties set forth in
this Section 4 shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of
any Indemnified Person (as defined in Annex A attached hereto) or (ii)
any termination of this Agreement.
5. Conditions and Obligations.
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The obligations of the Dealer Manager to act as a Dealer Manager
hereunder shall at all times be subject, in its discretion, to the conditions
that:
(a) All representations and warranties of the Company
contained herein or in any certificate or writing delivered hereunder
at all times during the Offer shall be true and correct in all material
respects.
(b) The Company at all times during the Offer shall have
performed, in all material respects, all of its obligations hereunder
required as of such time to have been performed by it.
(c) Counsel for the Company shall have delivered to the Dealer
Manager an opinion, on the date of closing of the Offer, reasonably
acceptable to the Dealer Manager, dated such date and covering
substantially the following matters:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of California.
(ii) (a) The Company has duly taken all necessary
corporate action to authorize the making and consummation of
the Offer pursuant to the terms of the Documents and the
execution, delivery and performance by the Company of this
Agreement, and (b) this Agreement has been duly executed and
delivered by the Company.
(iii) The New Debentures have been duly authorized by
the Company and, when executed, authenticated, and issued in
accordance with the provisions of the New Indenture and
delivered and exchanged as contemplated by the Offer, will
constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with
their terms, subject, as to enforcement of remedies, to
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally, general equitable
principles and the discretion of the courts in granting
equitable remedies; and the New Debentures will be entitled to
the benefits of the New Indenture. The New Debentures will in
all material respects be in the form contemplated by the New
Indenture.
(iv) The New Indenture has been duly authorized,
executed and delivered by the Company and, assuming that the
Trustee has satisfied all legal requirements that are
applicable to it to the extent necessary to make the New
Indenture enforceable against it, the New Indenture
constitutes a legal, valid and binding instrument of the
Company, enforceable against the Company in accordance with
its terms, subject, as to enforcement of remedies, to
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally, general equitable
principles and the discretion of the courts in granting
equitable remedies; and the New Indenture has been duly
qualified under the Trust Indenture Act.
(v) The New Debentures and the New Indenture
conform in all material aspects to the description thereof
in the Prospectus.
(vi) The statements in the Prospectus under the
caption "Description of Debentures", "United States Federal
Income Tax Consequences", and in the Registration Statement
under Item 15, insofar as such statements constitute matters
law, summaries of legal matters, the Company's Articles of
Incorporation and Bylaws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all
material respects.
(vii) The Registration Statement has become effective
under the Securities Act and the Prospectus has been filed
pursuant to Rule 424(b) under the Securities Act in the manner
and within the time period required by Rule 424. To our
knowledge, no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and
no proceedings for that purpose have been instituted or are
pending under the Securities Act.
(viii) The Registration Statement, as of its
effective date, and the Prospectus, as of its date and upon
consummation of the transactions contemplated by the Offer,
complied as to form in all material respects with the
requirements of the Securities Act and the rules and
regulations thereunder (in each case other than the financial
statements and supporting schedules, and the Form T-1 included
or incorporated by reference therein, as to which such counsel
need express no opinion).
(ix) Assuming the due authorization, execution and
delivery of this Agreement by the Dealer Manager, this
Agreement constitutes the valid and legally binding obligation
of the Company, enforceable against the Company in accordance
with its terms, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in
equity or at law), and except that rights to indemnification
or contribution contained in this Agreement may be limited by
federal or state securities laws or public policy relating
thereto.
(x) The making and consummation of the Offer pursuant
to the terms of the Documents and the execution, delivery and
performance by the Company of this Agreement, the New
Indenture, the Documents and the transactions related hereto
and thereto (A) do not and will not conflict with, or result
in a breach or violation of, or constitute a default under,
the charter or bylaws (or similar organizational documents) of
the Company or of any material note, indenture (including
without limitation the indenture governing the Old
Debentures), loan agreement, mortgage or other agreement,
instrument or undertaking of which counsel has knowledge of
which the Company, any of its subsidiaries or affiliates is a
party or by which any of them is bound or any of their
respective subsidiaries or affiliates is a party or by which
any of them is bound or to which any of their respective
properties or assets is subject will not result in a violation
of any corporate or foreign or federal law, rule or regulation
applicable to, or any order known to such counsel of any court
or of any other governmental agency or instrumentality having
jurisdiction over the Company or any of its subsidiaries or
affiliates or any of their respective properties or assets and
will comply in all material respects with the requirements of
all applicable federal securities laws, rules and regulations.
(xi) Except for filings under state securities laws
and consent of insurance regulators, no consent, approval,
authorization, order of, or registration, qualification or
filing with, any court or regulatory authority or governmental
agency or instrumentality is or will be required in connection
with the making and consummation of the Offer pursuant to the
terms of the Documents or the execution, delivery and
performance by the Company of this Agreement and the
transactions contemplated hereby.
In giving the opinions required by this Section 5, such counsel shall
additionally state that such counsel has participated in conferences and
discussions with the Company, the Dealer Manager, the Dealer Manager's counsel
and others in the course of the preparation by the Company of the Offer, at
which conferences the contents of the Exchange Offer and other related documents
were discussed, and, although such counsel has not independently verified and is
not passing upon and assumes no responsibility for the accuracy, completeness or
fairness of the information included in the Registration Statement and in the
Prospectus (except for the opinion rendered in item 5(c)(vi) above), no facts
have come to such counsel's attention which lead such counsel to believe that
the Registration Statement or the Prospectus contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel shall express no view with respect to the financial statements
and the related schedules thereto, contained or incorporated by reference in the
Registration Statement and the Prospectus).
All or portions of such opinion may be rendered by one or more internal
or special counsel to the Company reasonably acceptable to the Dealer Manager
and its counsel.
6. Indemnification.
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In consideration of the engagement hereunder, the Company shall
indemnify and hold BAS harmless, and BAS shall indemnify and hold the Company
harmless, in each case to the extent set forth in Annex A hereto, which
provisions are incorporated by reference herein and constitute a part hereof.
7. Confidentiality.
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BAS shall use all information provided to it by or on behalf of the
Company hereunder solely for the purpose of providing the services which are the
subject of this Agreement and the transactions contemplated hereby and shall
treat confidentially all such information, provided that nothing herein shall
prevent BAS from disclosing any such information (i) pursuant to the order of
any court or administrative or similar proceeding, (ii) upon the request or
demand of any regulatory authority having jurisdiction over BAS or any of its
affiliates, (iii) to the extent that such information is or becomes publicly
available other than by reason of disclosure by BAS in contravention of this
Agreement or (iv) to its employees, legal counsel, independent auditors and
other experts or agents who need to know such information and are informed of
the confidential nature of such information. With respect to clause (i) or (ii)
above, prior to making any such disclosure, BAS shall notify the Company of such
order or request and use commercially reasonable efforts to cooperate with the
Company, at the Company's expense, in seeking a protective order or taking such
action as the Company may reasonably request, consistent with applicable law.
Notwithstanding the foregoing provisions of this Section 7, BAS may share any
information or matters relating to the Company, the Offer and the transactions
contemplated hereby with its affiliates, and such affiliates may likewise share
information relating to the Company with BAS. BAS shall be responsible for
compliance by its affiliates with this Section 7.
8. Survival.
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The agreements contained in Sections 1(b), 2, 6 and 7 and the
representations and warranties of the Company set forth in Section 4 hereof
shall survive any termination or cancellation of this Agreement, any completion
of the engagement provided by this Agreement and any investigation made by or on
behalf of the Company, BAS or any Indemnified Person (as defined in Annex A) and
shall survive the termination or consummation of the Offer.
9. Governing Law.
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This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely within that State. THE COMPANY AND BAS IRREVOCABLY AGREE TO
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY
OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
10. Notices.
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Except as otherwise expressly provided in this Agreement, whenever
notice is required by the provisions of this Agreement to be given to (i) the
Company, such notice shall be in writing addressed to CII Financial, Inc., 2716
North Tenaya Way, Las Vegas, Nevada, Attention: Kathleen M. Marlon, facsimile
number: (702) 242-4819, with a copy to Morgan, Lewis & Bockius LLP, 101 Park
Avenue, New York, New York 10178, facsimile number: (212) 309-6273, and (ii)
BAS, such notice shall be in writing addressed to Banc of America Securities
LLC, Bank of America Corporate Center, 100 North Tryon Street, Seventh Floor,
Charlotte, North Carolina 28255, Attention: Andrew C. Karp, facsimile number:
(704) 388-0830.
11. Miscellaneous.
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This Agreement contains the entire agreement between the parties
relating to the subject matter hereof and supersedes all oral statements and
prior writings with respect thereto. This Agreement may not be amended or
modified except by a writing executed by each of the parties hereto. Section
headings herein are for convenience only and are not part of this Agreement.
This Agreement is solely for the benefit of the Company and BAS, and no other
person (except for Indemnified Persons, to the extent set forth in Annex A
hereto) shall acquire or have any rights under or by virtue of this Agreement.
If any term, provision, covenant or restriction contained in this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable
or against public policy, the remainder of the terms, provisions, covenants and
restrictions contained herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. The Company and BAS shall endeavor
in good faith negotiations to replace the invalid, void or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, void or unenforceable provisions. Neither the
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. This Agreement may be executed
in counterparts, each of which will be deemed an original, but all of which,
taken together, will constitute one and the same instrument.
If the foregoing correctly sets forth your understanding, please
indicate your acceptance of the terms hereof by signing in the appropriate space
below and returning to BAS the enclosed duplicate originals hereof, whereupon
this letter shall become a binding agreement between us.
Very truly yours,
BANC OF AMERICA SECURITIES LLC 100 North Tryon Street Seventh Floor
Charlotte, NC 28255
By:
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Name: Andrew C. Karp
Title: Managing Director
Accepted and agreed to as of the date first written above:
CII FINANCIAL, INC.
By:
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Name: Kathleen M. Marlon
Title: President and Chief Executive Officer
ANNEX A
to that Certain Amended and Restated Dealer
Manager Letter Agreement (the "Agreement") dated as of January 31, 2001 between
Banc of America Securities LLC and CII Financial, Inc.
The Company shall indemnify and hold harmless the Dealer Manager and
the Dealer Manager's affiliates and officers, directors, employees, legal
counsel, independent auditors, agents and controlling persons (each a "Dealer
Manager Indemnified Person") from and against any and all losses, claims,
damages, liabilities and reasonable expenses, joint or several, to which any
such Dealer Manager Indemnified Person may become subject arising out of or
based upon (A) any untrue or alleged untrue statement of a material fact
contained in the Documents or any of the documents incorporated by reference
therein or in any amendment or supplement to any of the foregoing, or the
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the foregoing indemnity
with respect to any such untrue statement or omission shall not inure to the
benefit of such Dealer Manager Indemnified Person if, and to the extent that the
Company is materially prejudiced thereby, the Company shall sustain the burden
of proving, and a determination shall have been made by a court of competent
jurisdiction by final and nonappealable judgment, that (i) the untrue statement
or omission contained in the Documents was corrected in a subsequent amendment
thereto; (ii) the person asserting any such claim was not sent or given a copy
of the amended Document (excluding any documents incorporated by reference)
which corrected the untrue statement or omission at or prior to the purchase or
exchange of such Old Debentures if required by applicable law; and (iii) the
Company had previously satisfied its obligation to provide a sufficient number
of copies of the Documents; (B) any withdrawal, termination, rescission or
modification of, or failure to purchase or exchange Old Debentures properly
tendered pursuant to, the Offer; (C) any breach by the Company of any
representation or warranty or failure to comply with any of the agreements set
forth in the Agreement to which this Annex A is attached; or (D) the
transactions contemplated by the Agreement to which this Annex A is attached or
the performance by the Dealer Manager thereunder, or any claim, litigation,
investigation or proceedings relating to the foregoing (collectively, "Dealer
Manager Proceedings"), regardless of whether any of such Dealer Manager
Indemnified Persons is a party thereto, and to reimburse such Dealer Manager
Indemnified Persons for any reasonable legal or other reasonable out-of-pocket
expenses as they are incurred in connection with investigating or defending any
of the foregoing, provided that such indemnification will not, as to any Dealer
Manager Indemnified Person, apply to losses, claims, damages, liabilities or
expenses to the extent that they are (i) in the case of clause (A) above, caused
by an untrue statement or omission or alleged untrue statement or omission that
is made in reliance upon and in conformity with information relating to the
Dealer Manager furnished in writing to the Company by the Dealer Manager
expressly for inclusion in the Documents as specified herein, or (ii) in the
case of clause (D) above, finally judicially determined to have resulted from
the gross negligence or willful misconduct of such Dealer Manager Indemnified
Person.
The Company shall not be liable for any settlement of any lawsuit,
claim or proceeding effected without its written consent (which consent shall
not be unreasonably withheld or delayed), but if settled with such consent, the
Company and its subsidiaries jointly and severally agree, subject to the
provisions of this Annex A, to indemnify the Dealer Manager Indemnified Person
from and against any loss, damage, liability or expense by reason of such
settlement.
The Dealer Manager shall indemnify and hold harmless the Company and
its affiliates and officers, directors, employees, legal counsel, independent
auditors, agents and controlling persons (each a "Company Indemnified Person")
from and against any and all losses, claims, damages, liabilities and reasonable
expenses, joint or several, to which any such Company Indemnified Person may
become subject arising out of or based upon the transactions contemplated by the
Agreement to which this Annex A is attached or the performance by the Company
thereunder, or any claim, litigation, investigation or proceedings relating to
the foregoing ("Company Proceedings") regardless of whether any of such Company
Indemnified Persons is a party thereto, and to reimburse such Company
Indemnified Persons for any reasonable legal or other reasonable out of pocket
expenses as they are incurred in connection with investigating or defending any
of the foregoing, but only to the extent such losses, claims, damages,
liabilities or expenses that are finally judicially determined to have resulted
from (x) the gross negligence or willful misconduct of any Dealer Manager
Indemnified Person, or (y) any material misstatement or omission that is made in
reliance upon and in conformity with information relating to the Dealer Manager
furnished in writing to the Company by the Dealer Manager expressly for
inclusion in the Documents. The Company acknowledges that such information in
(y) above refers to the penultimate line on the cover page and the last line on
the back cover page of the Prospectus (and elsewhere in the Documents)
specifying the identity, address and phone number of BAS. The terms "Dealer
Manager Indemnified Person" and "Company Indemnified Person" are herein
collectively referred to as an "Indemnified Person" and the terms "Dealer
Manager Proceedings" and "Company Proceedings" are herein collectively referred
to as "Proceedings".
The Dealer Manager shall not be liable for any settlement of any
lawsuit, claim or proceeding effected without its written consent (which consent
shall not be unreasonably withheld or delayed), but if settled with such
consent, the Dealer Manager agrees, subject to the provisions of this Annex A,
to indemnify the Company Indemnified Person from and against any loss, damage or
liability by reason of such settlement.
Promptly after receipt by an Indemnified Person of notice of the
commencement of any Proceedings, such Indemnified Person will, if a claim in
respect thereof is to be made against the Company or the Dealer Manager, as the
case may be, as indemnifying party (the "Indemnifying Party") for
indemnification hereunder, notify such Indemnifying Party in writing of the
commencement thereof; provided that (i) the failure so to notify the
Indemnifying Party will not relieve any Indemnifying Party from any liability
which it may have hereunder except to the extent such failure to give notice
results in the loss or compromise of any material rights or defenses of the
Indemnifying Party, and (ii) the failure so to notify such Indemnifying Party
will not relieve any Indemnifying Party from any liability which it may have to
such Indemnified Person otherwise than on account of the Agreement or this Annex
A. In case any such Proceedings are brought against any Indemnified Person and
it notifies the applicable Indemnifying Party of the commencement thereof, such
Indemnifying Party will be entitled to participate therein, and, to the extent
that it may elect by written notice delivered to such Indemnified Person, to
assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Person, provided that if the defendants in any such Proceeding
include both such Indemnified Person and the Indemnifying Party and counsel to
such Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party or its affiliates, such Indemnified Person
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such Proceedings on behalf of
such Indemnified Person, it being understood, however, that counsel for all
Indemnified Persons shall be designated in writing by BAS so long as it is one
of the Indemnified Persons or by mutual agreement if it is not such a person.
Upon receipt of notice from the Indemnifying Party to such Indemnified Person of
its election so to assume the defense of such Proceedings within 30 days after
receipt of such notice and approval by such Indemnified Person of counsel, the
Indemnifying Party shall not be liable to such Indemnified Person for legal
expenses of other counsel subsequently incurred by such Indemnified Person in
connection with the defense thereof (other than reasonable costs of
investigation and in addition to any local counsel) unless (i) such Indemnified
Person shall have employed separate counsel in connection with the assertion of
legal defenses in accordance with the proviso to the next preceding sentence (it
being understood, however, that the Indemnifying Party shall not be liable for
the expenses of more than one separate counsel, approved by the Indemnified
Party, representing the Indemnified Persons who are parties to such
Proceedings), (ii) the Indemnifying Party shall not have employed separate
counsel reasonably satisfactory to such Indemnified Person to represent such
Indemnified Person within a reasonable time after notice of commencement of the
Proceedings, or (iii) the Indemnifying Party fails to assume such defense within
the 30 days specified above, or (iv) the Indemnifying Party shall have
authorized in writing the employment of counsel for such Indemnified Person. The
Indemnifying Party shall not effect, without the prior written consent of the
Indemnified Person, any settlement of any pending or threatened Proceedings
unless such settlement includes an unconditional release from the party bringing
such Proceedings of such Indemnified Person and 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 Person.
If at any time an Indemnified Party shall have requested an
Indemnifying Party to reimburse the Indemnified Party for reasonable fees and
expenses of counsel, such Indemnifying Party agrees that it shall be liable for
any settlement of the nature contemplated by the preceding paragraphs 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.
Notwithstanding the immediately preceding sentence, if at any time an
Indemnified Party shall have requested an Indemnifying Party to reimburse the
Indemnified Party for fees and expenses of counsel, an Indemnifying Party shall
not be liable for any settlement of the nature contemplated by the preceding
paragraphs effected without its consent if such Indemnifying Party (a)
reimburses such Indemnified Party in accordance with such request to the extent
it considers such request to be reasonable and (b) provides written notice to
the Indemnified Party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
If for any reason the foregoing indemnification is unavailable to any
Indemnified Person or insufficient to hold it harmless, then the applicable
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Person as a result of such loss, claim, damage, liability or expense
in such proportion as is appropriate to reflect not only the relative benefits
received by the Indemnifying Party on the one hand and such Indemnified Person
on the other hand, but also the relative fault of the Indemnifying Party on the
one hand, and such Indemnified Person, on the other hand, as well as any
relevant equitable considerations. It is hereby agreed that the relevant
benefits to the Company (including its affiliates, officers, directors,
employees, legal counsel, independent auditors, agents and controlling persons)
on the one hand and the Dealer Manager (including its affiliates, officers,
directors, employees, agents and controlling persons) on the other hand shall be
deemed to be in the same proportion as (i) the aggregate original principal
amount of the Old Debentures outstanding bears to (ii) the fee paid or proposed
to be paid to the Dealer Manager pursuant to Section 2 of the Agreement to which
this Annex A is attached. The relative fault of the Indemnifying Party on the
one hand and the Indemnified Person on the other hand relating to an untrue or
alleged untrue statement of material fact or the omission or alleged omission to
state a material fact shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by, or relating to, the Indemnifying Party and its affiliates or the
Indemnified Person and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The indemnity, reimbursement and contribution obligations of an
Indemnifying Party under this Annex A shall be in addition to any liability
which such Indemnifying Party may otherwise have to an Indemnified Party and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of such Indemnifying Party and any such Indemnified
Person. Notwithstanding the foregoing, in no event shall the Dealer Manager be
liable under the foregoing indemnity, reimbursement and contribution provisions
in an amount in excess of the fees actually received by the Dealer Manager
pursuant to the Agreement to which this Annex A is attached.
Capitalized terms used but not defined in this Annex A have the
meanings assigned to such terms in the Agreement to which this Annex A is
attached.