TRIPLE - S MANAGEMENT CORPORATION
US$60,000,000
6.60% Senior Unsecured Notes due December 2020
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NOTE PURCHASE AGREEMENT
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Dated December 15, 2005
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TABLE OF CONTENTS Section Page
----- 1. AUTHORIZATION OF NOTES.................................................................................. 1
2. SALE AND PURCHASE OF NOTES.............................................................................. 1
3. CLOSING................................................................................................. 1
4. CONDITIONS TO CLOSING................................................................................... 2
4.1. Representations and Warranties................................................................. 2
4.2. Performance; No Default........................................................................ 2
4.3. Compliance Certificates and Organizational Documents........................................... 2
4.4. Opinions of Counsel............................................................................ 3
4.5. Purchase Permitted by Applicable Law, etc...................................................... 3
4.6. Private Placement Number....................................................................... 3
4.7. Changes in Corporate Structure................................................................. 3
4.8. Proceedings and Documents...................................................................... 3
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................... 3
5.1. Organization; Power and Authority.............................................................. 3
5.2. Authorization, etc............................................................................. 4
5.3. Financial Statements........................................................................... 4
5.4. Compliance with Laws, Other Instruments, etc................................................... 5
5.5. Governmental Authorizations, etc............................................................... 5
5.6. Litigation; Observance of Statutes and Orders.................................................. 5
5.7. Taxes.......................................................................................... 6
5.8. Title to Property; Leases...................................................................... 6
5.9. Licenses, Permits, etc......................................................................... 6
5.10. Compliance with ERISA.......................................................................... 6
5.11. Private Offering by the Company................................................................ 7
5.12. Use of Proceeds................................................................................ 7
5.13. Existing Indebtedness for Borrowed Money....................................................... 7
5.14. Investment Company Act......................................................................... 8
5.15. Disclosure..................................................................................... 8
5.16. Labor Disputes................................................................................. 8
5.17. Source of Income............................................................................... 8
6. REPRESENTATIONS OF THE PURCHASER........................................................................ 8
6.1. Purchase for Investment; Accredited Investor................................................... 8
6.2. Source of Funds................................................................................ 9
6.3. Anti-Money Laundering.......................................................................... 10
6.4. Transferee..................................................................................... 11
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7. INFORMATION AS TO THE COMPANY........................................................................... 11
7.1. Financial and Business Information............................................................. 11
7.2. Inspection..................................................................................... 12
8. PAYMENT OF INTEREST..................................................................................... 13
9. REDEMPTION OF THE NOTES PRIOR TO MATURITY............................................................... 13
9.1. Optional Redemption............................................................................ 13
9.2. Allocation of Partial Redemptions.............................................................. 13
9.3. Maturity; Surrender, etc....................................................................... 14
9.4. Purchase of Notes.............................................................................. 14
10. BUSINESS COVENANTS...................................................................................... 14
10.1. Compliance with Laws........................................................................... 14
10.2. Insurance...................................................................................... 14
10.3. Payment of Taxes............................................................................... 15
10.4. Use of Proceeds................................................................................ 15
10.5. Corporate Existence, etc....................................................................... 15
10.6. Source of Income............................................................................... 15
10.7. Lines of Business.............................................................................. 15
11. NEGATIVE COVENANTS...................................................................................... 16
11.1. Transactions with Affiliates................................................................... 16
11.2. Consolidation, Merger and Sale of Assets....................................................... 16
11.3. Limitation Upon Creation of Liens on Voting Stock of Significant Subsidiaries.................. 16
11.4. Limitation Upon Disposition of Voting Stock of, and Merger and Sale of Assets of,
Principal Insurance Subsidiary................................................................. 17
11.5. Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries.................. 18
11.6. Limitation on Additional Indebtedness.......................................................... 19
11.7. Waiver of Certain Covenants.................................................................... 19
12. EVENTS OF DEFAULT....................................................................................... 19
13. REMEDIES ON DEFAULT, ETC................................................................................ 21
13.1. Acceleration................................................................................... 21
13.2. Other Remedies................................................................................. 21
13.3. Rescission..................................................................................... 21
13.4. No Waivers or Election of Remedies, Expenses, etc.............................................. 22
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................................................... 22
14.1. Registration of Notes.......................................................................... 22
14.2. Transfer and Exchange of Notes................................................................. 22
14.3. Replacement of Notes........................................................................... 23
15. PAYMENTS ON NOTES....................................................................................... 23
15.1. Place of Payment............................................................................... 23
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15.2. Home Office Payment............................................................................ 23
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT............................................ 24
17. AMENDMENT AND WAIVER.................................................................................... 24
17.1. Requirements................................................................................... 24
17.2. Solicitation of Holders of Notes............................................................... 25
17.3. Binding Effect, etc............................................................................ 25
17.4. Notes held by Company, etc..................................................................... 25
17.5. Consent of Majority Holders.................................................................... 25
18. NOTICES................................................................................................. 26
19. REPRODUCTION OF DOCUMENTS............................................................................... 26
20. CONFIDENTIAL INFORMATION................................................................................ 26
21. MISCELLANEOUS........................................................................................... 27
21.1. Successors and Assigns......................................................................... 27
21.2. Payments Due on Non-Business Days.............................................................. 28
21.3. Severability................................................................................... 28
21.4. Construction................................................................................... 28
21.5. Counterparts................................................................................... 28
21.6. Governing Law.................................................................................. 28
SCHEDULE A -- INFORMATION RELATING TO PURCHASER
SCHEDULE B -- DEFINED TERMS
SCHEDULE 5.3 -- Financial Statements of the Company
SCHEDULE 5.6 -- Litigation
SCHEDULE 5.13 -- Existing Indebtedness for Borrowed Money
EXHIBIT 1 -- Form of 6.60% Senior Unsecured Notes due December 2020
EXHIBIT 2-A -- Form of Opinion of Pietrantoni Mendez & Alvarez LLP
EXHIBIT 2-B -- Form of Opinion of Enrique R. Ubarri Baragano
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TRIPLE - S MANAGEMENT CORPORATION
6.60% Senior Unsecured Notes due December 2020
December 15, 2005
THE PURCHASERS NAMED IN THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Triple-S Management Corporation (the "COMPANY"), a corporation organized under the laws of the Commonwealth of Puerto Rico, agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company has authorized the issuance and sale of an aggregate principal amount of Sixty Million United States Dollars (US$60,000,000) of its 6.60% Senior Unsecured Notes due December 2020 (the "NOTES," such term to include each Note delivered pursuant to this Agreement and each Note delivered in substitution or exchange for any such Note pursuant to Section 14 of this Agreement). The Notes shall be substantially in the form of Exhibit 1 hereto and shall have the terms as herein and therein provided. Certain capitalized terms used in this Agreement are defined in Schedule B hereto; references to a "SCHEDULE" or an "EXHIBIT" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement and all Schedules and Exhibits are deemed to be a part of this Agreement. References herein to this "AGREEMENT" mean this Agreement as from time to time amended or supplemented or as the terms hereof may be waived, in accordance with Section 17 hereof.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company agrees to issue and sell to you and you agree to purchase from the Company, at the Closing provided for in Section 3, Notes in the aggregate principal amount specified opposite your name in Schedule A at the purchase price of one hundred percent (100%) of the principal amount thereof.
3. CLOSING.
The closing (the "CLOSING") of the sale and purchase of the Notes to be purchased by you shall occur at the offices of Pietrantoni Mendez & Alvarez LLP, Popular Center Building, 209 Munoz Rivera Avenue, 19th Floor, San Juan, Puerto Rico 00918, at 10:00 a.m., local time, on December 21, 2005. At the Closing, the Company will deliver to you the Notes to be purchased by you in the form of a single Note for each Purchaser (or such greater number of Notes in denominations of at least Five Hundred Thousand United States Dollars (US$500,000) as you may request) dated the date of the Closing (the "CLOSING DATE") and registered in your name (or in the name of your nominee), against delivery by you to the Company of immediately available
funds in the amount of the purchase price therefor by wire transfer to account number 10991506, maintained by the Company at Citibank, N.A., Puerto Rico Branch, ABA Number 02100089.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be delivered to you at the Closing is subject to the fulfillment, prior to or at the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in Section 5 of this Agreement shall have been true and correct in all material respects as of the date of this Agreement and shall be true and correct at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied in all material respects with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing and, after giving effect to the issuance and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.12), no Default or Event of Default shall have occurred and be continuing. The Company shall not have entered into any transaction since September 30, 2005, that would have been prohibited by Section 10 hereof had such Section applied since such date.
4.3. COMPLIANCE CERTIFICATES AND ORGANIZATIONAL DOCUMENTS.
(a) Officer's Certificate. The Company shall have delivered to you
an Officer's Certificate, dated as of the Closing Date,
certifying on behalf of the Company that the conditions
specified in Sections 4.1, 4.2 and 4.7 have been fulfilled.
(b) Secretary's Certificates. The Company shall have delivered to
you copies of the by-laws of the Company and each of its
Subsidiaries (collectively, the "GROUP MEMBERS") and of the
resolutions of the Board of Directors of the Company relating
to the authorization, execution and delivery of the Notes,
certified by the Secretary or Assistant Secretary of the
Company, and an incumbency certificate executed by such
Secretary or Assistant Secretary.
(c) Organizational Documents. The Company shall have delivered to
you copies of the articles of incorporation of each of the
Group Members, certified as of a recent date by the Secretary
of State of the Commonwealth of Puerto Rico or, if a copy
certified by the Secretary of State is unavailable on the
Closing Date, certified by the Secretary or Assistant
Secretary of each Group Member, and good standing certificates
for each Group Member from such Secretary of State or, in the
case of each Subsidiary that is an insurance company, from the
Commissioner of Insurance of Puerto Rico.
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4.4. OPINIONS OF COUNSEL.
You shall have received opinions from (a) Pietrantoni Mendez & Alvarez LLP, special counsel to the Company, and (b) Enrique R. Ubarri Baragano, Senior Vice President, Legal Affairs, of the Company, each dated as of the Closing Date, substantially in the respective forms set forth as Exhibits 2-A and 2-B. This Section 4.4 shall constitute direction by the Company to such counsel named in the foregoing clauses (a) and (b) to deliver the opinions specified to you at the Closing.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the Closing Date, your purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which you are subject, without recourse to provisions of law permitting limited investments by financial institutions without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation and (iii) not subject you to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.
4.6. PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP Service Bureau shall have been obtained for the Notes.
4.7. CHANGES IN CORPORATE STRUCTURE.
The Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation. The Company shall not have succeeded to all or any substantial part of the liabilities of any other entity following the date of the most recent financial statements referred to in Schedule 5.3.
4.8. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be reasonably satisfactory to you and your counsel, and you and your counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you as follows:
5.1. ORGANIZATION; POWER AND AUTHORITY.
Each Group Member is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Puerto Rico, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing
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would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and each Subsidiary has the corporate power and authority to conduct its business as presently conducted and as proposed to be conducted after the Acquisition. The Company has the corporate power and authority to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof.
5.2. AUTHORIZATION, ETC.
This Agreement has been, and on the Closing Date the Notes will be, duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof by the Company each Note issued to you will constitute, a legal, valid and binding obligation of the Company (assuming with respect to this Agreement and any Notes issued to you, the due authorization, execution and delivery of this Agreement by you), enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally from time to time in effect and (ii) the application of equitable principles and the availability of equitable remedies.
5.3. FINANCIAL STATEMENTS.
(a) The Company has delivered to you copies of the financial
statements of the Company listed on Schedule 5.3 (such
financial statements collectively the "FINANCIAL STATEMENTS").
(b) The Financial Statements (including in each case the related
schedules and notes) fairly present in all material respects
the consolidated financial position of the Company and its
Subsidiaries as of the respective dates specified in such
Financial Statements and the consolidated results of its
operations and cash flows for the respective periods so
specified in accordance with GAAP consistently applied
throughout such periods except as set forth in the notes
thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
(c) Since the date of the most recent Financial Statement, there
has been no material adverse change in the business,
operations or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, and no event
that could reasonably be expected to have a Material Adverse
Effect, and the Company has not incurred any material
Indebtedness for Borrowed Money or entered into any material
transaction other than as disclosed to the Purchasers.
(d) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's
general or specific authorization, (ii) transactions are
recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to
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maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability
for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
5.4. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this Agreement and the Notes will not (i) in any material respect contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any of its Significant Subsidiaries under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other material agreement or instrument to which the Company or any such Significant Subsidiary is bound or by which the Company or any such Significant Subsidiary or their respective properties may be bound or affected, (ii) conflict with or result in a material breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any of its Significant Subsidiaries, or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any of its Significant Subsidiaries.
5.5. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required for the due execution, delivery or performance by the Company of this Agreement or the Notes.
5.6. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.6, there are no actions,
suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of
its Significant Subsidiaries or any property of the Company or
of its Significant Subsidiaries in any court or before any
arbitrator or administrative agency of any kind or before or
by any Governmental Authority that, if determined adversely to
the Company or any of its Significant Subsidiaries,
individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.
(b) Neither the Company nor any of its Significant Subsidiaries is
in default under any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or in violation of
any applicable law, ordinance, rule or regulation of any
Governmental Authority, which default or violation,
individually or in the aggregate, would reasonably be expecte ...
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