EXHIBIT 10.08
TOWER GROUP STATUTORY TRUST IV
TOWER GROUP, INC.
SUBSCRIPTION AGREEMENT
DECEMBER 21, 2004
THIS SUBSCRIPTION AGREEMENT (this "Agreement") made among Tower Group
Statutory Trust IV (the "Trust"), a statutory trust created under the Delaware
Statutory Trust Act (Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
ss.ss. 3801, ET SEQ.), Tower Group, Inc., a Delaware corporation, with its
principal offices located at 120 Broadway, 14th Floor, New York, New York
10271-1699 (the "Company," and collectively with the Trust, the "Offerors"), and
Merrill Lynch International (the "Purchaser").
RECITALS:
1. The Trust desires to issue 13,000 of its Floating Rate Capital
Securities (the "Capital Securities"), liquidation amount
$1,000.00 per Capital Security, representing an undivided
beneficial interest in the assets of the Trust (the
"Offering"), to be issued pursuant to an Amended and Restated
Declaration of Trust (the "Declaration") by and among the
Company, JPMorgan Chase Bank, as Institutional Trustee
National Association and Chase Manhattan Bank USA, National
Association, as a Delaware Trustee, ("Trustees") the
administrators named therein, and the holders (as defined
therein), which Capital Securities are to be guaranteed by the
Company with respect to distributions and payments upon
liquidation, redemption and otherwise pursuant to the terms of
a Guarantee Agreement between the Company and the Trustees, as
trustee (the "Guarantee"); and
2. The proceeds from the sale of the Capital Securities will be
combined with the proceeds from the sale by the Trust to the
Company of its common securities, and will be used by the
Trust to purchase an equivalent amount of Floating Rate Junior
Subordinated Deferrable Interest Debentures of the Company
(the "Debentures") to be issued by the Company pursuant to an
indenture to be executed by the Company and the Trustees (the
"Indenture"); and
3. In consideration of the premises and the mutual
representations and covenants hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF CAPITAL SECURITIES
1.1. Upon the execution of this Agreement, the Purchaser hereby
subscribes for and agrees to purchase from the Trust 13,000 Capital Securities
at a price equal to $1,000.00 per Capital Security (the "Purchase Price") and
the Trust agrees to sell such Capital Securities to the Purchaser for said
Purchase Price. The rights and preferences of the Capital Securities are set
forth in the Declaration. The Purchase Price is payable in immediately available
funds on December 21, 2004, or such other business day as may be designated by
the Purchaser, but in no event later than December 29, 2004 (the "Closing
Date"). The Offerors shall provide the Purchaser wire transfer instructions no
later than 1 day following the date hereof.
1.2. The certificate for the Capital Securities shall be delivered by
the Trust on the Closing Date to the Purchaser or its designee.
1.3. The Placement Agreement, dated December 17, 2004 (the "Placement
Agreement"), among the Offerors and the Placement Agent identified therein
includes certain representations and warranties, covenants and conditions to
closing and certain other matters governing the Offering. The Placement
Agreement is hereby incorporated by reference into this Agreement and the
Purchaser shall be entitled to each of the benefits of the Placement Agent and
the Purchaser under the Placement Agreement and shall be entitled to enforce the
obligations of the Offerors under such Placement Agreement as fully as if the
Purchaser were a party to such Placement Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1. The Purchaser understands and acknowledges that neither the
Capital Securities, the Debentures nor the Guarantee have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable securities law, are being offered for sale by the Trust in
transactions not requiring registration under the Securities Act, and may not be
offered, sold, pledged or otherwise transferred by the Purchaser except in
compliance with the registration requirements of the Securities Act or any other
applicable securities laws, pursuant to an exemption therefrom or in a
transaction not subject thereto.
2.2. The Purchaser represents, warrants and certifies that (i) it is
not a "U.S. person" as such term is defined in Rule 902 under the Securities
Act, (ii) it is not acquiring the Capital Securities for the account or benefit
of any such U.S. person, (iii) the offer and sale of Capital Securities to the
Purchaser constitutes an "offshore transaction" under Regulation S of the
Securities Act, and (iv) it will not engage in hedging transactions with regard
to the Capital Securities unless such transactions are conducted in compliance
with the Securities Act and the Purchaser agrees to the legends and transfer
restrictions set forth on the Capital Securities certificate.
2.3. The Purchaser represents and warrants that it is purchasing the
Capital Securities for its own account, for investment, and not with a view to,
or for offer or sale in connection with, any distribution thereof in violation
of the Securities Act or other applicable securities laws, subject to any
requirement of law that the disposition of its property be at all times within
its control and subject to its ability to resell such Capital Securities
pursuant to an effective registration statement under the Securities Act or
under Rule 144A or any other exemption from registration available under the
Securities Act or any other applicable securities law.
2
2.4. The Purchaser represents and warrants that it has full power and
authority to execute and deliver this Agreement, to make the representations and
warranties specified herein, and to consummate the transactions contemplated
herein and it has full right and power to subscribe for Capital Securities and
perform its obligations pursuant to this Agreement.
2.5. The Purchaser represents and warrants that no filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any governmental body, agency or court having jurisdiction over the
Purchaser, other than those that have been made or obtained, is necessary or
required for the performance by the Purchaser of its obligations under this
Agreement or to consummate the transactions contemplated herein.
2.6. The Purchaser represents and warrants that this Agreement has been
duly authorized, executed and delivered by the Purchaser.
2.7. The Purchaser represents and warrants that (i) the Purchaser is
not in violation or default of any term of its Memorandum of Association or
Articles of Association, of any provision of any mortgage, indenture, agreement,
instrument or contract to which it is a party or by which it is bound or of any
judgment, decree, order, writ or, to its knowledge, any statute, rule or
regulation applicable to the Purchaser which would prevent the Purchaser from
performing any material obligation set forth in this Agreement; and (ii) the
execution, delivery and performance of and compliance with this Agreement, and
the consummation of the transactions contemplated herein, will not, with or
without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or the suspension, revocation, impairment, forfeiture or non-renewal of any
permit, license, authorization or approval applicable to the Purchaser, its
business or operations or any of its assets or properties which would prevent
the Purchaser from performing any material obligations set forth in this
Agreement.
2.8. The Purchaser understands and acknowledges that the Company will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agrees that, if any of the
acknowledgments, representations, warranties or agreements deemed to have been
made by it by its purchase of the Capital Securities are no longer accurate, it
shall promptly notify the Company.
2.9. The Purchaser understands that no public market exists for any of
the Capital Securities, and that it is unlikely that a public market will ever
exist for the Capital Securities.
ARTICLE III
MISCELLANEOUS
3.1. Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, international courier or delivered by hand against written
receipt therefor, or by facsimile transmission and confirmed by telephone, to
the following addresses, or such other address as may be furnished to the other
parties as herein provided:
3
To the Offerors: Tower Group, Inc.
120 Broadway, 14th Floor
New York, New York 10271-1699
Attention: Francis M. Colalucci
Telecopier: 212-271-5492
To the Purchaser: Merrill Lynch International
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
250 Vesey Street
New York, New York 10080
Attention: Phil Kostrowicki
Telephone: (212) 449-5113
Fax: (212) 449-3695
Unless otherwise expressly provided herein, notices shall be deemed to
have been given on the date of mailing, except notice of change of address,
which shall be deemed to have been given when received.
3.2. This Agreement shall not be changed, modified or amended except by
a writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
3.3. Upon the execution and delivery of this Agreement by the
Purchaser, this Agreement shall become a binding obligation of the Purchaser
with respect to the purchase of Capital Securities as herein provided.
3.4. Notwithstanding anything expressed or implied to the contrary,
each Purchaser of Capital Securities (and each employee, representative, or
other agent of a Purchaser) may disclose to any and all persons, without
limitation of any kind, the U.S. tax treatment and U.S. tax structure of the
transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to the Purchaser
relating to such U.S. tax treatment and U.S. tax structure as such terms are
defined in Treasury Regulation Section 1.6011-4; provided, that any such
disclosure of the U.S. tax treatment and U.S. tax structure and materials
related thereto may not be made (i) in a manner that would constitute an offer
to sell or the solicitation of an offer to buy the Capital Securities offered
herein under applicable securities laws or (ii) when nondisclosure is reasonably
necessary to comply with applicable securities laws. This authorization of tax
disclosure is retroactively effective to the commencement of the first
discussions between the parties regarding the transactions contemplated herein.
3.5. PURSUANT TO SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH OF THE TRUST, THE
PURCHASER 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, THE PURCHASER 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.
4
3.6. The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
3.7. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
3.8. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of the Offerors' and the Purchaser's rights and
privileges shall be enforceable to the fullest extent permitted by law.
SIGNATURES APPEAR ON THE FOLLOWING PAGE
5
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed as of the day and year first written above.
MERRILL LYNCH INTERNATIONAL
By: /s/ William Berry
----------------------------------------------
Name: William Berry
Title: Managing Director
IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the
day and year first written above.
TOWER GROUP, INC.
By: /s/ Michael H. Lee
---------------------------------------------
Name: Michael H. Lee
Title: President and Chief Executive Officer
TOWER GROUP STATUTORY TRUST IV
By: /s/ MICHAEL H. LEE
---------------------------------------------
Name: Michael H. Lee
Title: Administrator
6