Exhibit 1.1
PLACEMENT AGREEMENT
among
CRM USA Holdings Trust I,
Issuer
CRM USA Holdings, Inc.,
Sponsor
CRM Holdings, Ltd.,
Parent Guarantor
and
COHEN & COMPANY
Placement Agent
Dated as of November 14, 2006
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PLACEMENT AGREEMENT, dated as of November 14, 2006 (this
"Agreement"),
among CRM USA Holdings Trust I, a statutory trust created under the
laws of the
State of Delaware (the "Issuer"), CRM Holdings, Ltd., an exempted
holding
company incorporated under the laws of Bermuda ("Parent
Guarantor"), CRM USA
Holdings, Inc., a Delaware corporation (the "Sponsor" and, together
with the
Parent Guarantor and Issuer, the "Trust Parties"), and Cohen &
Company, a
Delaware corporation, as placement agent (the "Placement
Agent").
WHEREAS, the Issuer proposes to issue at least U.S. $35,000,000
Trust
Preferred Securities due December 15, 2036 (the "Securities")
pursuant to a Term
Sheet and Letter of Intent dated September 28, 2006, attached
hereto as Annex D,
that, with the exception of the issuance amount, set forth the
proposed terms of
the transactions contemplated herein;
WHEREAS, the Securities will be issued to the purchasers
("Initial
Purchasers") pursuant to an Amended and Restated Declaration of
Trust (the
"Declaration") dated as of November 14, 2006 (the "Closing Date")
among the
Sponsor, the Parent Guarantor, The Bank of New York Trust Company,
National
Association, as Institutional Trustee, The Bank of New York
(Delaware), as
Delaware Trustee, and the Administrators named therein;
WHEREAS, the Issuer has agreed not later than the Closing Date
to
provide the Placement Agent with a copy of the Declaration and any
other
documents required to be delivered pursuant to the terms hereof or
the
Declaration;
WHEREAS, the Issuer will use the proceeds from the sale of the
Securities to purchase Debentures (as defined in the Declaration);
and
WHEREAS, capitalized terms used herein but not otherwise defined
herein
shall have the meaning ascribed thereto in the Declaration.
NOW IT IS HEREBY AGREED as follows:
1.
PLACEMENT OF SECURITIES; COMPENSATION.
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(a) On the
terms and subject to the conditions of this
Agreement and in reliance upon the representations and warranties
herein set
forth, the Issuer hereby appoints the Placement Agent as placement
agent to
place Securities, and the Placement Agent hereby accepts such
appointment. From
the date hereof until any termination of the Placement Agent's
obligations
hereunder, the Placement Agent shall use its reasonable efforts to
place
Securities with investors permitted by the terms hereof.
(b) The
Securities shall be issued and sold free from all
liens, charges and encumbrances, equities and other third party
rights of any
nature whatsoever, together with all rights of any nature provided
for therein.
(c) As
compensation for the placement services to be
provided by the Placement Agent hereunder, the Issuer shall pay to
the Placement
Agent a fee equal to 3% of the aggregate value of the Securities
issued pursuant
to the Declaration (the "Commission"). Following payment in full to
the
Placement Agent of the Commission, the Issuer shall have no further
obligation
hereunder to the Placement Agent with respect to any fee.
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The Commission shall be due and payable upon sale and issuance of
the
Securities. The Issuer shall have no obligation to pay the
Commission with
respect to any placement of the Securities which is not completed.
No fee
payable to any other placement agent by the Issuer or any other
entity (other
than any entity engaged by the Placement Agent) shall reduce or
otherwise affect
the fees payable hereunder to the Placement Agent.
2.
CLOSING. On the Closing Date, delivery of and payment
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for the Securities shall be made at the offices of The Bank of New
York Trust
Company, National Association or such other location or locations
as shall be
mutually acceptable to the parties hereto. Delivery of the
Securities shall be
made against payment of the purchase price therefor to the order of
the Issuer
in same day funds by wire transfer to an account designated by the
Sponsor. Such
payment shall be made upon authorization from the Placement Agent
(such
authorization to be given if the conditions to the Placement
Agent's obligations
set forth herein are either satisfied or waived) against delivery
of the
Securities. The Securities will be in the form requested by the
Placement Agent
in accordance with the terms of the Declaration.
3.
PAYMENT OF EXPENSES. The Sponsor agrees to pay all
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costs and expenses incident to the performance of the obligations
of the Trust
Parties under this Placement Agreement, whether or not the
transactions
contemplated herein are consummated or this Placement Agreement is
terminated,
including all costs and expenses incident to (i) the authorization,
issuance,
sale and delivery of the Securities and any taxes payable in
connection
therewith; (ii) the fees and expenses of qualifying the Securities
under the
securities laws of applicable jurisdictions, and (iii) the
reasonable fees and
expenses of the special counsel, the accountants and any other
experts or
advisors retained by the Trust Parties.
Notwithstanding the foregoing, if the sale of the Securities
provided
for in this Placement Agreement is not consummated because (a) any
condition set
forth herein to be satisfied by the Trust Parties is not satisfied
in all
material respects, (b) because this Placement Agreement is
terminated pursuant
to Section 12 or (c) of any failure, refusal or inability on the
part of the
Trust Parties to perform all obligations and satisfy all conditions
on its part
to be performed or satisfied hereunder in all material respects
other than by a
reason of a default by the Placement Agent, the Sponsor or the
Parent Guarantor
will reimburse the Placement Agent upon demand for all
out-of-pocket expenses
(including the fees and all reasonable expenses of special counsel
retained by
the Placement Agent, which fees and expenses, whether or not the
sale
contemplated by this Agreement is consummated, shall not exceed
$30,000) that
shall have been incurred by the Placement Agent in connection with
the proposed
placement of the Securities.
4.
REPRESENTATIONS AND WARRANTIES. Each Trust Party
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hereby represents, warrants and agrees to and with the Placement
Agent, as of
the Closing Date that, and as to itself only and not as to any
other:
(a) with
respect to the Issuer, it is duly formed and
validly existing under the laws of the State of Delaware and, with
respect to
the Parent Guarantor and the Sponsor, and their significant
subsidiaries (as
defined in Rule 1-02 of Regulation S-X) (the "Significant
Subsidiaries"), each
is duly formed, validly existing and in good standing under the
laws of the
jurisdiction of its organization, in each case, to the extent
applicable with
all requisite power and authority to own or transfer, as
applicable, the
Debentures, to conduct its business as required under the
Declaration,
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this Agreement or any other documents entered into by the Trust
Parties in
connection with the issue and sale of the Securities (collectively,
the
"Transaction Documents") and to perform its obligations hereunder
and under each
Transaction Document, and is lawfully qualified to do business and
is in good
standing in those jurisdictions in which it conducts business and
where the
failure to be so qualified or in good standing would have a
material adverse
effect on the condition (financial or otherwise), earnings or
business of such
Trust Party, whether or not occurring in the ordinary course of
business, or
would otherwise be material in context of the issuance of the
Securities
("Material Adverse Effect");
(b) this
Agreement has been duly authorized, executed and
delivered by each Trust Party and constitutes, and each of the
Transaction
Documents to which such Trust Party is a party has been duly
authorized by such
Trust Party and, when duly executed and delivered by the Placement
Agent and the
other parties thereto (if any), on the Closing Date, will
constitute, legal,
valid and binding obligations of such Trust Party enforceable
against such Trust
Party in accordance with its terms, except as such obligations may
be limited by
bankruptcy, insolvency, reorganization and other similar laws
affecting the
rights of creditors generally and the application of general
equitable
principles (regardless of whether the issue of enforceability is
considered in a
proceeding in equity or at law);
(c) neither
the Parent Guarantor, Issuer nor the Sponsor
nor any of the Significant Subsidiaries is in breach or violation
of, or default
under, with or without notice or lapse of time or both, its
corporate charter,
operating agreement, bylaws or other governing documents (including
without
limitation, the Declaration);
(d) all of the
issued and outstanding capital stock of
the Sponsor and the Parent Guarantor has been duly authorized and
validly issued
and is fully paid and nonassessable;
(e) all of the
issued and outstanding membership interest
of each Significant Subsidiary has been duly authorized and validly
issued, is
fully paid and nonassessable and is owned by the Sponsor, directly
or through
subsidiaries, free of any security interest, mortgage, pledge,
lien,
encumbrance, claim or equitable right; and none of the issued and
outstanding
capital stock or membership interests, as applicable, of the Parent
Guarantor,
Sponsor or its Significant Subsidiaries was issued in violation of
any
preemptive or similar rights arising by operation of law, under the
charter,
by-laws, operating agreements or code of regulations, as
applicable, of the
Sponsor or any of its Significant Subsidiaries or under any
agreement to which
the Parent Guarantor, Sponsor or any of its Significant
Subsidiaries is a party
or is otherwise bound.
(f) the
Securities have been duly authorized by the
Sponsor and the Issuer and, when duly executed, authenticated,
issued and
delivered in accordance with the Declaration against payment
therefor as
contemplated herein, will be validly issued and represent undivided
beneficial
interests in the assets of the Issuer, entitled to the benefits
provided by the
Declaration;
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(g) with
respect to the Trust Parties, no consent,
approval, authorization, order, registration or qualification of or
with any
court or governmental agency or body is required for the issue,
sale or delivery
of the Securities, except for those which have been obtained and
are in full
force and effect, and no consent, approval, authorization, order,
registration
or qualification of or with any court or governmental agency or
body is required
for the consummation of the other transactions contemplated by the
Transaction
Documents, except for those which have been obtained and are in
full force and
effect, and except where the failure to obtain such consent,
approval,
authorization, order, registration or qualification would not have
a Material
Adverse Effect;
(h) the
execution and delivery of the Transaction
Documents, the issue of the Securities and the consummation of the
other
transactions contemplated by the Transaction Documents (and
compliance with the
terms thereof) do not and will not conflict with or result in a
breach of any of
the terms or provisions of, or constitute a default under the
organizational
documents of such Trust Party; and the execution and delivery of
the Transaction
Documents, the issue of the Securities and the consummation of the
other
transactions contemplated by the Transaction Documents (and
compliance with the
terms thereof) do not and will not conflict with or result in a
breach of any
indenture, trust deed, mortgage or other agreement or instrument to
which such
Trust Party is a party or by which it or any of its properties is
bound, or
infringe any existing applicable law, rule, regulation, judgment,
order or
decree of any government, governmental body or court, domestic or
foreign,
having jurisdiction over such Trust Party or any of its properties,
except for
such conflicts, breaches, defaults or infringements that would not
have a
Material Adverse Effect;
(i) there are
no pending actions, suits or proceedings
against or affecting such Trust Party or any of its properties and,
to the best
of such Trust Party's knowledge, no such suits or proceedings are
threatened or
contemplated that individually or in aggregate could reasonably be
expected to
have a Material Adverse Effect on the Issuer's issuance of the
Securities;
(j) no event
has occurred which, had the Securities
already been issued, would reasonably be expected to (whether or
not with the
giving of notice and/or the passage of time and/or the fulfillment
of any other
requirement) constitute an Event of Default under the
Declaration;
(k) the
Declaration does not require qualification under
the U.S. Trust Indenture Act of 1939, as amended;
(l) neither
the Trust Parties nor any affiliate of the
Trust Parties nor any person acting on behalf thereof has made
offers or sales
of the Securities under circumstances that would require the
registration of the
Securities under the U.S. Securities Act of 1933, as amended (the
"Securities
Act");
(m) the Issuer
is not an "investment company" as defined
in the U.S. Investment Company Act of 1940, as amended;
(n) with
respect to the Trust Parties, any taxes, fees
and other governmental charges in connection with the execution and
delivery of
this Agreement and any Transaction Document or the execution,
delivery and sale
of the Securities have been or will be paid on or prior to the
Closing Date;
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(o) there are
no contracts, agreements or understandings
between any of the Trust Parties or any affiliate thereof and any
person
granting such person the right to require the Issuer to file a
registration
statement under the Securities Act, with respect to any Securities
owned or to
be owned by such person; and
(p)
subject to
compliance by the Placement Agent with the
relevant provisions of Section 8 hereof, the sale of the Securities
pursuant to
this Agreement is exempt from the registration and prospectus
delivery
requirements of the Securities Act. In the case of each offer or
sale of
Securities, no form of general solicitation or general advertising
was used by
the Issuer or its representatives, including, but not limited
to,
advertisements, articles, notices or other communications published
in any
newspaper, magazine or similar medium or broadcast over television
or radio, or
any seminar or meeting whose attendees have been invited by any
general
solicitation or general advertising. Neither the Issuer nor any
person acting on
its behalf (other than the Placement Agent) has offered or sold,
nor will the
Issuer or any person acting on its behalf (other than the Placement
Agent) offer
or sell directly or indirectly, any Securities or any other
security in any
manner that, assuming the accuracy of the representations and
warranties and the
performance of the covenants given by the Placement Agent, would
render the
issuance and sale of any of the Securities as contemplated hereby a
violation of
Section 5 of the Securities Act or the registration or
qualification
requirements of any state securities laws, nor has the Issuer
authorized, nor
will it authorize, any person to act in such manner.
(q) The
audited consolidated financial statements
(including the notes thereto) and schedules of the Parent
Guarantor, Sponsor and
consolidated subsidiaries for the year ended December 31, 2005 (the
"Financial
Statements") and the interim unaudited consolidated financial
statements of the
Parent Guarantor, Sponsor and consolidated subsidiaries for the
period ended
June 30, 2006 (the "Interim Financial Statements") provided to the
Placement
Agent are the most recent available audited and unaudited
consolidated financial
statements of the Parent Guarantor, Sponsor and consolidated
subsidiaries,
respectively, and fairly present in all material respects, in
accordance with
generally accepted accounting principles, the financial position of
the Sponsor
and its consolidated subsidiaries, and the results of operations
and changes in
financial condition as of the dates and for the periods therein
specified,
subject, in the case of Interim Financial Statements, to year-end
adjustments.
Such consolidated financial statements and schedules have been
prepared in
accordance with generally accepted accounting principles
consistently applied
throughout the periods involved (except as otherwise noted
therein). The
accountants who certified the Financial Statements are independent
public
accountants within the meaning of the Securities Act and the rules
and
regulations thereunder as in effect on the date of this Agreement.
The statutory
financial statements provided to the Placement Agent (the
"Statutory Financial
Statements") of each of the Parent Guarantor and Sponsor's
insurance company
subsidiaries have, for each relevant period, been prepared in
accordance with
statutory accounting principles ("SAP") prescribed or permitted by
the National
Association of Insurance Commissioners, and with respect to each
insurance
company subsidiary, the appropriate insurance department of the
state of
domicile of such insurance company subsidiary, and such accounting
practices
have been applied on a consistent basis throughout the periods
involved (whether
GAAP or SAP, as applicable, the "Applicable Accounting
Principles").
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(r) The
Statutory Financial Statements and reports (the
"Regulatory Reports") required by any federal or state agency, or
any court,
administrative agency or commission (including insurance
commissioners) or other
governmental agency, authority or instrumentality having
supervisory or
regulatory authority with respect to the Sponsor or its insurance
subsidiaries,
if any (collectively, any "Regulatory Agency"), provided to the
Placement Agent
are the most recently available Regulatory Reports, and the
information therein
fairly presents in all material respects the financial position of
the Parent
Guarantor, Sponsor and their subsidiaries. None of the Parent
Guarantor, Sponsor
or any of their subsidiaries has been requested by a Regulatory
Agency to
republish, restate, or refile any regulatory financial report.
(s) Since the
respective dates of the Financial
Statements, the Interim Financial Statements, the Statutory
Financial Statements
and the Regulatory Reports there has been no material adverse
change or
development with respect to the financial condition or earnings of
the Parent
Guarantor, Sponsor and their subsidiaries, taken as a whole.
(t)
Neither the Parent
Guarantor, Sponsor nor any of
their Significant Subsidiaries is subject to or party to, or has
received any
notice or advice that any of them may become subject to any
investigation with
respect to, any agreement, consent decree or other regulatory
enforcement
action, proceeding or order with or by, or is subject to any
directive by, any
Regulatory Agency (as defined above) that currently restricts in
any material
respect the conduct of their business or that in any material
manner relates to
their capital adequacy, their credit policies or the management or
their
business (each, a "Regulatory Agreement"), nor has the Parent
Guarantor, Sponsor
or any of their Significant Subsidiaries been advised by any
Regulatory Agency
that such Regulatory Agency is considering issuing or requesting
any such
Regulatory Agreement that, in the reasonable judgment of the Parent
Guarantor or
Sponsor, is expected to result in a Material Adverse Effect; and
there is no
unresolved violation or criticism by any Regulatory Agency with
respect to any
report or statement relating to any examinations of the Parent
Guarantor,
Sponsor or any of their Significant Subsidiaries which, in the
reasonable
judgment of the Parent Guarantor and Sponsor, is expected to result
in a
Material Adverse Effect.
(u) The
Sponsor has no present intention to exercise its
option to defer payments of interest on the Debentures as provided
in the
Indenture. On the date hereof, the Sponsor believes that the
likelihood that it
would exercise its right to defer payments of interest on the
Debentures as
provided in the Indenture at any time during which the Debentures
are
outstanding is remote.
(v) Each of
the Trust Parties and their subsidiaries hold
all necessary approvals, authorizations, orders, licenses,
consents,
registrations, qualifications, certificates and permits (including,
without
limitation, insurance licenses from the insurance departments of
the various
states and jurisdictions where the insurance subsidiaries write
insurance
business or otherwise conduct insurance or reinsurance business, as
the case may
be, or as may be required by any applicable insurance statutes of
such states or
other jurisdictions (collectively, the "Insurance Licenses") of and
from the
Regulatory Agencies necessary to conduct their respective
businessess as now
being conducted, (collectively, including the Insurance Licenses,
the
"Governmental Licenses") and neither the Parent Guarantor, Issuer,
the Sponsor
nor any of their subsidiaries has received any notice of the
proceedings
relating to the revocation or modification of any such Governmental
License,
except where the failure to be so licensed or approved, or the
receipt of an
unfavorable decision, ruling or finding, would not, singly or in
the aggregate,
have a Material Adverse Effect;
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all of the Governmental Licenses are valid and in full force and
effect, except
where the invalidity or the failure of such Governmental Licenses
to be in full
force and effect, would not, singly or in the aggregate, have a
Material Adverse
Effect; and the Parent Guarantor, Sponsor and their subsidiaries
are in
compliance with all applicable laws, rules, regulations, judgments,
orders,
decrees and consents, except where the failure to be in compliance
would not,
singly or in the aggregate, have a Material Adverse Effect.
(w) The
written information provided by the Parent
Guarantor and Sponsor pursuant to this Placement Agreement does
not, as of the
date hereof, contain any untrue statement of a material fact or
omit to state
any material fact necessary to make the statements therein, in the
light of the
circumstances under which they were made, not misleading.
(x) All
obligations of the Parent Guarantor, the Sponsor
and Embarcadero Insurance Holdings, Inc., a California corporation
(the
"Seller") under the Stock Purchase Agreement dated September 8,
2006 (the
"Acquisition Agreement"), providing for the acquisition (the
"Acquisition") by
the Sponsor of all of the issued and outstanding stock of the
Seller, and the
other documents ancillary thereto required to consummate the
Acquisition and the
transactions contemplated thereby, have been satisfied or waived
and all
required approvals relating to the Acquisition have been obtained,
and the
Sponsor has acquired good title to all of the issued and
outstanding shares of
capital stock of the Seller, which such outstanding stock has been
transferred
to and is held as of the date hereof by the Sponsor.
5.
REPRESENTATIONS AND WARRANTIES OF THE PLACEMENT
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AGENT.
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(a) The
Placement Agent represents and warrants that it
is duly organized pursuant to and validly existing under the laws
of Delaware
and that the Placement Agent has full power and authority to engage
in the
activities described in this Agreement and the other Transaction
Documents.
(b) The
Placement Agent represents and warrants that it
has the right to enter into this Agreement and to perform its
obligations
hereunder; this Agreement has been duly and validly authorized,
executed and
delivered by the Placement Agent and this Agreement constitutes a
legal, valid
and binding obligation of the Placement Agent, enforceable against
the Placement
Agent in accordance with its terms.
(c) The
Placement Agent represents and warrants that the
execution and delivery of this Agreement, the incurrence of the
obligations set
forth herein and the consummation of the transactions contemplated
herein will
not constitute a material breach of or material default under any
material
instrument by which the Placement Agent is bound or violate, in any
material
respect, any order, rule or regulation applicable to it of any
court or any
governmental body or administrative agency having jurisdiction over
it.
(d) The
Placement Agent represents and warrants that it
has obtained all material required governmental, regulatory or
exchange
approvals or licenses, and has effected all filings or
registrations with any
governmental agencies necessary in order to conduct its business
and to act as
contemplated by this Agreement and the Transaction Documents.
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(e) The
Placement Agent represents and warrants to the
Trust Parties that all written information concerning the Placement
Agent
supplied to the Trust Parties by the Placement Agent will be true
and accurate
in all material respects and will not contain any untrue statement
of a material
fact or omit to state a material fact necessary in order to make
the statements
therein not misleading in light of the circumstances under which
such statements
are made.
(f) The
Placement Agent represents and warrants that it
has not been (i) subject to an order of the SEC issued under
Section 203(f) of
the Investment Advisers Act of 1940 (the "Adviser's Act"); (ii)
convicted within
the previous ten years of any felony or misdemeanor involving
conduct described
in Section 203(e)(2)(A)-(D) of the Advisers Act; (iii) found by the
SEC to have
engaged, or convicted of engaging, in any of the conduct specified
in paragraphs
(1), (5) or (6) of Section 203(e) of the Advisers Act; or (iv)
subject to an
order, judgment or decree described in Section 203(e)(4) of the
Advisers Act.
(g) The
Placement Agent represents and warrants that (i)
it is duly registered as a broker-dealer with the SEC pursuant to
the Securities
Exchange Act of 1934, as amended (ii) it is duly registered or
licensed as a
broker or dealer under the Blue Sky laws of each state or other
jurisdiction in
which it may offer and sell the Securities, to the extent required
by applicable
law; (iii) it is a member in good standing of the NASD; (iv) it has
full
corporate power and authority to perform its obligations under this
Agreement;
and (v) this Agreement has been d
