EXHIBIT 10.1
NOTE PURCHASE
AGREEMENT
This Note Purchase Agreement (this
“ Agreement ”) is entered into as of
May 29, 2009 by and between PMI Mortgage Insurance Co.
(“ PMI ”), an Arizona-domiciled mortgage
guaranty insurance company, and The PMI Group, Inc. (“
TPG ”), a Delaware corporation.
RECITALS
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A.
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PMI is a wholly-owned subsidiary of TPG, and
PMI’s primary regulator is the Arizona Department of
Insurance (the “ Department );
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B.
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PMI, as vendor (in such capacity, the “
Vendor ”), QBE Holdings (AAP) Pty Limited,
(“ QBE ”), as purchaser, and QBE Insurance Group
Limited, (the “ Issuer ”), as note issuer have
entered into that certain Share Sale Agreement, dated
August 14, 2008, as amended by the Amendment Agreement, dated
August 29, 2008, by the Second Amendment Agreement, dated
October 23, 2008, by the Third Amendment Agreement, dated
December 17, 2008 and by the Fourth Amendment Agreement, dated
May 29, 2009 (as may be further amended, modified, restated
and/or supplemented from time to time, the “ SSA
”). The SSA provided for the sale by PMI to QBE of all of
PMI’s shares of PMI Mortgage Insurance Australia (Holdings)
Pty Limited.
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C.
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TPG, as vendor, and QBE Lenders’
Mortgage Insurance Limited (“ QBE Lenders’
Mortgage ”), as purchaser, and the Issuer, as note
issuer, have entered into that certain Share Sale Deed, dated
December 17, 2008, as amended by the Amending Deed, dated
May 29, 2009 (as may be amended, modified, restated and/or
supplemented from time to time, the “ SSD ”).
The SSD provided for the sale by TPG to QBE of all of TPG’s
shares
of PMI Mortgage Insurance Asia Limited.
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D.
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PMI is the named noteholder (in such capacity,
the “ Noteholder ”) under a certain Note Deed,
dated October 23, 2008, as amended by the Amending Deed, dated
December 17, 2008 and by the Second Amending Deed, dated
May 29, 2009 (the “ QBE Note ”), issued to
PMI by the Issuer as part of the consideration under the SSA. For
the avoidance of doubt, all references to the QBE Note in this
Agreement include any and all amendments of, and supplements to,
the QBE Note, now existing or hereafter arising, no matter how
evidenced, and any extensions, renewals or modifications of the QBE
Note. For purposes of this Agreement, the defined terms
“Principal” and “Interest” shall have the
meanings as contemplated in the QBE Note.
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E.
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TPG has entered into a Revolving Credit
Agreement, dated as of October 24, 2006 (as amended, restated,
amended and restated, supplemented, refinanced or replaced from
time to time, the “ Credit Agreement ”), the
lenders referred to therein (the “ Lenders ”)
and Bank of America, N.A., as Administrative Agent (in such
capacity, together with any successor in such capacity, the “
Administrative Agent ”).
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F.
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The Principal amount of the QBE Note
outstanding on the date of this Agreement is US$186,505,850. The
QBE Note bears Interest at the rate of 3.7875% per annum, and such
Interest accrues and is capitalized into Principal, on a
semi-annual basis. The full value of the QBE Note (including
accrued Interest) shall be due and payable in full on its scheduled
redemption date of September 30, 2011.
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G.
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Pursuant to the QBE Note, the amount due
thereunder is subject to reduction under certain circumstances
specified therein.
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H.
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As of the date of this Agreement, the
Department is requiring PMI to treat the QBE Note as a non-admitted
asset for purposes of its statutory financial statements, due to
the contingencies related to the amount due from the Issuer under
the QBE Note, as described above.
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I.
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PMI wishes to sell and assign its interest in,
to and under the QBE Note to TPG and TPG wishes to purchase and
receive an assignment of PMI’s rights in, to and under the
QBE Note.
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TERMS
NOW THEREFORE, in consideration of
the premises, mutual promises, and other valuable consideration
described herein, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms, conditions and covenants
hereinafter set forth, the parties agree as follows:
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1.
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As consideration for the payment described in
paragraph 2 hereof, PMI hereby (i) sells, assigns and transfers to
TPG, effective on the Effective Date, the QBE Note and
(ii) consents to the vesting in TPG of the rights, privileges,
interests and powers (but not PMI’s obligations) granted to
TPG as set forth in Clause 2 of that certain Deed Poll (the “
Australian Deed Poll ”), dated as of May 29,
2009, by QBE in favor of the Noteholder from time to time,
including but not limited to, the related rights (but not
PMI’s obligations) under the SSA (such rights referred to
herein collectively, as the “ Granted Rights
”).
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2.
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As consideration for such sale, assignment and
transfer of the QBE Note hereunder, TPG shall pay to PMI, on or
before the Effective Date, the amount of US$75,000,000 in the form
of cash and/or readily marketable securities. In addition, as
additional consideration, TPG hereby agrees to pay PMI as
follows:
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(a)
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If TPG owns the QBE Note upon redemption
thereof, an additional payment equal to one hundred percent (100%)
of the aggregate amount by which the Principal and Interest paid at
redemption with respect to the QBE Note exceeds US$183,000,000;
or
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(b)
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If TPG sells the QBE Note prior to its
redemption, TPG will make an additional payment to PMI immediately
following such sale equal to fifty percent (50%) of the aggregate
amount by which the net proceeds realized in respect of such QBE
Note sale exceeds US$175,000,000.
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Any additional consideration due to
PMI hereunder shall be paid by TPG within ten (10) business days of
the date that TPG itself receives the proceeds described in
(a) or (b) of this paragraph (as applicable).
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3.
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As between PMI and TPG, TPG shall have the
sole power, exercisable at its discretion, to initiate or
participate in any proceedings for the enforcement of the QBE Note,
as well as the sole authority to exercise any of the Granted
Rights.
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4.
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PMI agrees that should any payments in respect
of the rights or amounts assigned hereunder be received by PMI,
such payments will be deemed to have been received in trust for TPG
(or any subsequent holder of the QBE Note, as the case may be) and
PMI shall forthwith deliver the same to TPG, or any subsequent
holder of the QBE Note, in the identical form received by PMI.
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5.
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PMI represents and warrants to TPG, as of the
Effective Date, that:
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(a)
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PMI (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Arizona and (ii) has all requisite power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby;
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(b)
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the execution and delivery of, and performance
by PMI of its obligations under, this Agreement and the
consummation of the transactions contemplated hereby, (i) have
been duly authorized by all requisite corporate action on the part
of PMI; and (ii) do not violate (x) any provision of any
statute, rule or regulation, or the organizational documents of
PMI, (y) any applicable order of any court or any rule,
regulation or order of any other agency of government, or
(z) the QBE Note, SSA, or SSD;
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(c)
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(i) no authorization or approval or other
action by, and no notice to or filing with, any governmental
authority that has not been obtained or made is required in
connection with t
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