1
Exhibit 1.1
ANNUITY AND LIFE RE (HOLDINGS), LTD.
17,078,765 Common Shares(1)
UNDERWRITING AGREEMENT
April __, 1998
Prudential Securities Incorporated
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
BT Alex. ▇▇▇▇▇ Incorporated
CIBC Oppenheimer Corp.
▇▇▇▇▇▇▇▇ & Co. Inc.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
Annuity and Life Re (Holdings), Ltd., a Bermuda corporation
(the "Company"), hereby confirms its agreement with the several underwriters
named in Schedule 1 hereto (the "Underwriters"), for whom you have been duly
authorized to act as representatives (in such capacities, the
"Representatives"), as set forth below. The Company's Common Shares, par value
$1.00 per share, are referred to herein as the "Common Shares."
1. Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the several Underwriters an
aggregate of 17,078,765 Common Shares (the "Firm Securities"). The Company also
proposes to issue and sell to the several Underwriters not more than 2,561,814
additional Common Shares if requested by the Representatives as provided in
Section 3 of this Agreement, solely to cover over-allotments. Any and all Common
Shares to be purchased by the Underwriters pursuant to such option are referred
to herein as the "Option Securities", and the Firm Securities and any Option
Securities are collectively referred to herein as the "Securities". It is
understood that the Company has
------------------------------------
1 Plus an option to purchase from Annuity and Life Re (Holdings), Ltd. up to
2,561,814 additional Common Shares to cover over-allotments.
2
agreed, concurrently with the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, to issue and sell
directly to The Prudential Insurance Company of America, EXEL Limited, Risk
Capital Reinsurance Company, Insurance Partners, L.P. and Insurance Partners
Offshore (Bermuda), L.P. (collectively, the "Strategic Investors") an aggregate
of 5,638,299 Common Shares (the "Strategic Securities") and Class B Warrants to
purchase an aggregate of 397,500 Common Shares (the "Class B Warrants", and
collectively with the Strategic Securities, the "Private Securities") and to
offer directly to its directors and officers (the "Affiliated Purchasers") an
aggregate of 221,121 Common Shares (the "Affiliated Securities", and
collectively with the Private Securities, the "Direct Securities") as set forth
in the Prospectus (as hereinafter defined) or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus (as hereinafter defined),
under the caption "Direct Sales".
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) A registration statement on Form S-1 (File No. 333-43301)
with respect to the Securities, including a prospectus subject to completion,
has been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and one
or more amendments to such registration statement may have been so filed. After
the execution of this Agreement, the Company will file with the Commission
either (i) if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (A) if the
Company relies on Rule 434 under the Act, a Term Sheet (as hereinafter defined)
relating to the Securities, that shall identify the Preliminary Prospectus that
it supplements containing such information as is required or permitted by Rules
434, 430A and 424(b) under the Act or (B) if the Company does not rely on Rule
434 under the Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment shall have
been filed, in such registration statement), with such changes or insertions as
are required by Rule 430A under the Act or permitted by Rule 424(b) under the
Act, and in the case of either clause (i) (A) or (i) (B) of this sentence as
have been provided to and approved by the Representatives prior to the execution
of this Agreement, or (ii) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under the Act,
an amendment to such registration statement, including a form of prospectus, a
copy of which amendment has been furnished to and approved by the
Representatives prior to the execution of this Agreement. The Company may also
file a related registration statement with the Commission pursuant to Rule
462(b) under the Act for the purpose of registering certain additional
Securities, which registration shall be effective upon filing with the
Commission. As used in this Agreement, the term "Original Registration
Statement" means the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and included
in the Prospectus; the term "Rule 462(b) Registration Statement" means any
registration statement filed with the Commission pursuant to Rule 462(b) under
the Act (including the Registration Statement and any Preliminary Prospectus or
Prospectus incorporated therein at the time such Registration Statement becomes
effective); the term "Registration Statement" includes both the Original
Registration Statement and any Rule
2
3
462(b) Registration Statement; the term "Preliminary Prospectus" means each
prospectus subject to completion filed with the Registration Statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the time it
was or is declared effective); the term "Prospectus" means:
(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the
Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending use of any Preliminary Prospectus. When the Preliminary Prospectus
included in Amendment No. 3 to the Registration Statement was filed with the
Commission it (i) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the requirements of,
the Act and the rules and regulations of the Commission thereunder and (ii) did
not include 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. When the
Registration Statement or any amendment thereto was or is declared effective, it
(i) contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any Term Sheet that is
a part thereof or any amendment or supplement to the Prospectus is filed with
the Commission pursuant to Rule 424(b) (or, if the Prospectus or any Term Sheet
that is a part thereof or such amendment or supplement is not required to be so
filed, when the Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was or is declared effective) and on
the Firm Closing Date and any Option Closing Date (both as hereinafter defined),
the Prospectus, as amended or supplemented at any such time, (i) contained or
will contain all statements required to be stated therein in accordance with,
and complied or will comply in all material respects with the requirements of,
the Act and the rules and regulations of the Commission thereunder and (ii) did
not or will not include 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. The
foregoing provisions of this paragraph (b) do not apply to statements or
omissions made in
3
4
any Preliminary Prospectus, the Registration Statement or any amendment thereto
or the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b) and the
Rule 462(b) Registration Statement has not been declared effective (i) the
Company has filed a Rule 462(b) Registration Statement in compliance with and
that is effective upon filing pursuant to Rule 462(b) and has received
confirmation of its receipt and (ii) the Company has given irrevocable
instructions for transmission of the applicable filing fee in connection with
the filing of the Rule 462(b) Registration Statement, in compliance with Rule
111 promulgated under the Act or the Commission has received payment of such
filing fee.
(d) The issuance, offering and sale of the Private Securities
to the Strategic Investors and of the Company's Class A Warrants (the "Class A
Warrants") to the holders thereof (the "Class A Warrant Holders") by the
Company, and the issuance of the Common Shares issuable upon exercise of the
Class A Warrants and the Class B Warrants, in the manner described in the
Registration Statement and the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus, were, are and will be exempt
from the registration and prospectus delivery requirements of the Act, subject
to the accuracy of the representations made by the purchasers thereof.
(e) Each of the Company and Annuity and Life Reassurance,
Ltd., a Bermuda corporation (the "Subsidiary"), has been duly organized and is
validly existing as a corporation in good standing under the laws of Bermuda and
is duly qualified to transact business as a foreign corporation and is in good
standing under the laws of all other jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified does not amount to a
material liability or disability to the Company and its Subsidiary, taken as a
whole.
(f) The Company has no subsidiary other than the Subsidiary.
(g) Except as disclosed in the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus, each of
the Company and its Subsidiary has full power (corporate and other) to own or
lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus; and the Company has full
power (corporate and other) to enter into this Agreement and to carry out all
the terms and provisions hereof to be carried out by it.
(h) Except as disclosed in the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus, the
issued shares of capital stock of the Subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and are owned beneficially by
the Company free and clear of any security interests, liens, encumbrances,
equities or claims.
4
5
(i) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus. All of the issued shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. The Firm Securities and the Option Securities
have been duly authorized and at the Firm Closing Date or the related Option
Closing Date (as the case may be), after payment therefor in accordance
herewith, will be validly issued, fully paid and nonassessable. The Strategic
Securities and the Affiliated Securities have been duly authorized and, after
payment therefor in accordance with the separate securities purchase agreements
entered or anticipated to be entered into by the Company with (i) each of the
Strategic Investors or (ii) each of the Affiliated Purchasers (such securities
purchase agreements, the "Direct Agreements"), will be validly issued, fully
paid and nonassessable. No holders of outstanding shares of capital stock of the
Company are entitled as such to any preemptive or other rights to subscribe for
any of the Securities or Direct Securities, and no holder of securities of the
Company has any right which has not been fully exercised or waived to require
the Company to register the offer or sale of any securities owned by such holder
under the Act in the public offering contemplated by this agreement.
(j) The capital stock of the Company conforms to the
description thereof contained in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus.
(k) Except as disclosed in the Prospectus, or if the
Prospectus is not in existence, the most recent Preliminary Prospectus, there
are no outstanding (A) securities or obligations of the Company or its
Subsidiary convertible into or exchangeable for any capital stock of the Company
or its Subsidiary, (B) warrants, rights or options to subscribe for or purchase
from the Company or its Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (C) obligations of the
Company or its Subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any such warrants,
rights or options.
(l) The consolidated financial statements and schedules of the
Company and its Subsidiary included in the Registration Statement and the
Prospectus, or if the Prospectus is not in existence, the most recent
Preliminary Prospectus, fairly present the financial position of the Company and
its Subsidiary. Such 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).
(m) KPMG Peat Marwick, who have certified certain financial
statements of the Company and its Subsidiary and delivered their report with
respect to the audited consolidated financial statements and schedules included
in the Registration Statement and the Prospectus, or if the Prospectus is not in
existence, the most recent Preliminary Prospectus, are independent public
accountants as required by the Act and the applicable rules and regulations
thereunder.
(n) The execution and delivery of this Agreement have been
duly authorized by the Company and this Agreement has been duly executed and
delivered by the Company, and is
5
6
the valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(o) No legal or governmental proceedings are pending to which
the Company or its Subsidiary is a party or to which the property of the Company
or its Subsidiary is subject that are required to be described in the
Registration Statement or the Prospectus and are not described therein, or if
the Prospectus is not in existence, the most recent Preliminary Prospectus, and,
to the best of the Company's knowledge, no such proceedings have been threatened
against the Company or its Subsidiary or with respect to any of their respective
properties; and no contract or other document is required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that is not described therein, or if the Prospectus is
not in existence, the most recent Preliminary Prospectus, or filed as required.
(p) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement and of the Direct
Securities to the Strategic Investors and the Affiliated Purchasers by the
Company pursuant to the Direct Agreements and the issuance of Common Shares
issuable upon the exercise of the Class A Warrants and Class B Warrants, the
compliance by the Company with the other provisions of this Agreement, the
Direct Agreements and the Class A Warrants and Class B Warrants and the
consummation of the other transactions herein and therein contemplated do not
(i) require the consent, approval, authorization, registration or qualification
of or with any governmental authority, except such as have been obtained, such
as may be required under state securities or blue sky laws and, if the
registration statement filed with respect to the Securities (as amended) is not
effective under the Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under the Act, or
(ii) conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company or its
Subsidiary is a party or by which the Company or its Subsidiary or any of their
respective properties are bound, or the charter documents or bye-laws of the
Company or its Subsidiary, or any statute or any judgment, decree, order, rule
or regulation of any court or other governmental authority or any arbitrator
applicable to the Company or its Subsidiary.
(q) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, or if the Prospectus
is not in existence, the most recent Preliminary Prospectus, neither the Company
nor its Subsidiary has sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding and there has not been any material
adverse change, or any development involving a prospective material adverse
change, in the condition (financial or otherwise), management, business
prospects, net worth, or results of the operations of the Company or its
Subsidiary, except in each case as described in or contemplated by the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus.
6
7
(r) The Company has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company, except as
contemplated by this Agreement.
(s) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, or if the Prospectus
is not in existence, the most recent Preliminary Prospectus, (1) the Company and
its Subsidiary have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (2) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock; and (3) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
Subsidiary, except in each case as described in or contemplated by the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus.
(t) The Company and its Subsidiary have good and marketable
title in fee simple to all items of real property and marketable title to all
personal property owned by each of them, in each case free and clear of any
security interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not interfere with the use made or proposed to be made of such property
by the Company or its Subsidiary, and any real property and buildings held under
lease by the Company or its Subsidiary are held under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or its Subsidiary, in each case except as described in
or contemplated by the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus.
(u) The Company's Subsidiary is not currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on its capital stock, from repaying to the Company any
loans or advances to it from the Company or from transferring any of its
property or assets to the Company, except as described in or contemplated by the
Prospectus, or if the Prospectus is not in existence, the most recent
Preliminary Prospectus.
(v) The Company and its Subsidiary will conduct their
operations in a manner that will not subject either of them to registration as
an investment company under the Investment Company Act of 1940, as amended, and
this transaction will not cause the Company or its Subsidiary to become an
investment company subject to registration under such Act.
7
8
(w) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(x) The Company and its Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) The Company has not distributed and, prior to the later of
(i) the Firm Closing Date or the Option Closing Date and (ii) the completion of
the distribution of the Securities, will not distribute any offering material in
connection with the offering and sale of the Securities other than the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or other materials, if
any, permitted by the Act.
(z) Neither the Company nor its Subsidiary is (i) in violation
of its Memorandum of Association or Bye-Laws or other organizational documents,
(ii) in violation of any law, ordinance, administrative or governmental rule or
regulation applicable to it or any of its properties, except where any such
violation or violations in the aggregate would not reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
management, business prospects, net worth or results of the operations of the
Company and its Subsidiary, taken as a whole, (iii) in violation of any
judgment, injunction, order or decree of any court, governmental agency or body
(including, without limitation, any insurance regulatory agency or body) or
arbitrator having jurisdiction over it, except where any such violation or
violations in the aggregate would not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), management, business
prospects, net worth or results of the operations of the Company and its
Subsidiary, taken as a whole. No default exists, and no event has occurred
which, with notice or lapse of time or both, would constitute a default in the
due performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or instrument to
which the Company or its Subsidiary is a party or by which the Company or its
Subsidiary or any of their respective properties is bound or may be affected,
except where any such default or event or defaults or events in the aggregate
would not reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), management, business prospects, net worth or
results of the operations of the Company and its Subsidiary, taken as a whole.
(aa) The forms of certificate for the Securities conform to
the requirements of The Companies Act 1981 of Bermuda and the Nasdaq Stock
Market's National Market (the "Nasdaq National Market"), and the Securities have
been approved for quotation on the Nasdaq National Market, subject to official
notice of issuance.
8
9
(bb) No currency exchange control laws or withholding taxes of
Bermuda or elsewhere apply to the payment of dividends (i) on the Securities by
the Company or (ii) by the Subsidiary to the Company, except in each case as
described in or contemplated by the Prospectus, or if the Prospectus is not in
existence, the most recent Preliminary Prospectus.
(cc) The Subsidiary has been duly registered by the Bermuda
Minister of Finance as a long-term insurer under the Insurance ▇▇▇ ▇▇▇▇ of
Bermuda (the "Insurance Act") and is in compliance with the requirements of the
Insurance Act and any applicable rules and regulations thereunder and has filed
all statutory financial returns, reports, documents and other information
required to be filed thereunder, except where the failure to comply or to file
would not reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), management, business prospects, net worth,
or results of the operations of the Company and its Subsidiary, taken as a
whole. The Company is a holding company and is not subject to Bermuda insurance
regulations. The Company and its Subsidiary are in compliance with all other
insurance laws and regulations of the jurisdictions that apply to them,
including laws that relate to companies that control insurance companies, except
where the failure to comply would not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), management, business
prospects, net worth, or results of the operations of the Company and its
Subsidiary, taken as a whole. Neither the Company nor its Subsidiary has
received any notification from any insurance authority, commission or other
insurance regulatory body in Bermuda or elsewhere to the effect that the
Subsidiary is not in compliance with any insurance law or regulation.
(dd) Each of the Company and its Subsidiary possess all
certificates, authorizations and permits issued by the appropriate Bermuda, U.S.
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor the Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would reasonably be
expected to result in a material adverse change in the condition (financial or
otherwise), management, business prospects, net worth or results of operations
of the Company and the Subsidiary, except as described in or contemplated by the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus.
(ee) Neither the Company nor its Subsidiary is required to be
licensed or admitted as an insurer or an insurance holding company, as
applicable, or to otherwise comply with the insurance laws and regulations of
any jurisdictions within the United States in order to conduct their respective
businesses as described in the Prospectus, or if the Prospectus is not in
existence, the most recent Preliminary Prospectus.
(ff) No relationship, direct or indirect, exists between or
among the Company or its Subsidiary on the one hand, and the directors,
officers, promoters, affiliates or shareholders of the Company or its Subsidiary
on the other hand, that is required to be described in the Registration
Statement or the Prospectus, or if the Prospectus is not in existence, the most
recent Preliminary Prospectus, which is not so described.
9
10
(gg) None of the Underwriters or any subsequent purchasers of
the Securities (other than purchasers resident in Bermuda for Bermuda exchange
control purposes) will be subject to any stamp duty, excise or similar tax
imposed in Bermuda in connection with the offering, sale or purchase of the
Securities.
(hh) To the knowledge of the Company and its Subsidiary, no
change in any insurance law or regulation is pending that would reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the condition (financial or otherwise), business prospects, net worth or results
of the operations of the Company and its Subsidiary, except as described in or
contemplated by the Prospectus, or if the Prospectus is not in existence, the
most recent Preliminary Prospectus.
(ii) Each of the Company and its Subsidiary has received from
the Bermuda Minister of Finance an assurance under The Exempted Undertakings Tax
Protection Act 1966 of Bermuda to the effect set forth in the Prospectus, or if
the Prospectus is not in existence, the most recent Preliminary Prospectus,
under the caption "Certain Tax Considerations--Taxation of the Company and
Annuity Reassurance--Bermuda."
(jj) The Company has duly and irrevocably appointed CT
Corporation System, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ as its agent to receive
service of process with respect to actions arising out of or in connection with
violations of United States federal securities laws relating to offers and sales
of the Securities.
(kk) The Bermuda Monetary Authority has designated the Company
and its Subsidiary as nonresident for exchange control purposes and has granted
permission for the issue and transfer of the Securities. The Company and its
Subsidiary are "exempted companies" under Bermuda law and have not (i) acquired
and do not hold any land in Bermuda, other than that held by way of lease or
tenancy for terms of not more than 21 years, without the express authorization
of the Bermuda legislature, (ii) taken mortgages on land in Bermuda to secure an
amount in excess of $50,000 without the consent of the Bermuda Minister of
Finance, (iii) acquired any bonds or debentures secured by any land in Bermuda
(other than certain types of Bermuda government securities), or (iv) conducted
their businesses in a manner that is prohibited for "exempted companies" under
Bermuda law. Neither the Company nor its Subsidiary has received notification
from the Bermuda Monetary Authority or any other Bermuda governmental authority
of proceedings relating to the modification or revocation of its designation as
nonresident for exchange control purposes, its permission to issue and transfer
the Securities, or its status as an "exempted company".
3. Purchase, Sale and Delivery of the Securities. (a) On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company, at
a purchase price of $_____ per share, the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule 1 hereto. One or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such
10
11
denomination or denominations and registered in such name or names as the
Representatives request upon notice to the Company at least 48 hours prior to
the Firm Closing Date, shall be delivered by or on behalf of the Company to the
Representatives for the respective accounts of the Underwriters, against payment
by or on behalf of the Underwriters of the purchase price therefor by wire
transfer in same-day funds (the "Wired Funds") to the account of the Company.
Such delivery of and payment for the Firm Securities shall be made at the
offices of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One Liberty Plaza, New York, New
York, at 9:30 A.M., New York time, on ____, 1998, or at such other place, time
or date as the Representatives and the Company may agree upon or as the
Representatives may determine pursuant to Section 9 hereof, such time and date
of delivery against payment being herein referred to as the "Firm Closing Date".
The Company will make such certificate or certificates for the Firm Securities
available for checking and packaging by the Representatives at the offices in
New York, New York of the Company's transfer agent or registrar or of Prudential
Securities Incorporated at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as contemplated
by the Prospectus, the Company hereby grants to the several Underwriters an
option to purchase, severally and not jointly, the Option Securities. The
purchase price to be paid for any Option Securities shall be the same price per
share as the price per share for the Firm Securities set forth above in
paragraph (a) of this Section 3. The option granted hereby may be exercised as
to all or any part of the Option Securities from time to time within thirty (30)
days after the date of the Prospectus (or, if such 30th day shall be a Saturday
or Sunday or a holiday, on the next business day thereafter when the New York
Stock Exchange is open for trading). The Underwriters shall not be under any
obligation to purchase any of the Option Securities prior to the exercise of
such option. The Representatives may from time to time exercise the option
granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate number of Option Securities
as to which the several Underwriters are then exercising the option and the date
and time for delivery of and payment for such Option Securities. Any such date
of delivery shall be determined by the Representatives but shall not be earlier
than two business days or later than five business days after such exercise of
the option and, in any event, shall not be earlier than the Firm Closing Date.
The time and date set forth in such notice, or such other time on such other
date as the Representatives and Company may agree upon or as the Representatives
may determine pursuant to Section 9 hereof, is herein called the "Option Closing
Date" with respect to such Option Securities. Subject to the terms and
conditions herein set forth, upon exercise of the option as provided herein, the
Company shall become obligated to sell to each of the several Underwriters, and
each of the Underwriters, severally and not jointly, shall become obligated to
purchase from the Company, the same percentage of the total number of the Option
Securities as to which the several Underwriters are then exercising the option
as such Underwriter is obligated to purchase of the aggregate number of Firm
Securities, as adjusted by the Representatives in such manner as they deem
advisable to avoid fractional shares. If the option is exercised as to all or
any portion of the Option Securities, one or more certificates in definitive
form for such Option Securities, and payment therefor, shall be delivered on the
related Option Closing Date in the manner, and upon the terms and conditions,
set forth in paragraph (a)
11
12
of this Section 3, except that reference therein to the Firm Securities and the
Firm Closing Date shall be deemed, for purposes of this paragraph (b), to refer
to such Option Securities and Option Closing Date, respectively.
(c) The Company hereby acknowledges that the wire transfer by
or on behalf of the Underwriters of the purchase price for any of the Securities
does not constitute closing of a purchase and sale of the Securities. Only
execution and delivery of a receipt for the Securities by the Underwriters
indicates completion of the closing of a purchase of the Securities from the
Company. Furthermore, in the event that the Underwriters wire funds to the
Company prior to the completion of the closing of a purchase of the Securities,
the Company hereby acknowledges that until the Underwriters execute and deliver
a receipt for the Securities, by facsimile or otherwise, the Company will not be
entitled to the Wired Funds and shall return the Wired Funds to the Underwriters
as soon as practicable (by wire transfer of same-day funds) upon demand. In the
event that the closing of a purchase of the Securities is not completed and the
Wired Funds are not returned by the Company to the Underwriters on the same day
the Wired Funds were received by the Company, the Company agrees to pay to the
Underwriters in respect of each day the Wired Funds are not returned by it, in
same-day funds, interest on the amount of such Wired Funds in an amount
representing the Underwriters' cost of financing as reasonably determined by
Prudential Securities Incorporated.
(d) It is understood that any of you, individually and not as
one of the Representatives, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall relieve
such Underwriter or Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. Upon your authorization of
the release of the Firm Securities, the several Underwriters propose to offer
the Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
5. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto to become effective as promptly as
possible. If required, the Company will file the Prospectus or any Term Sheet
that constitutes a part thereof and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the rules and
regulations of the Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities in accordance with the
provisions hereof and of the Prospectus, as then amended or supplemented, and
(ii) will not file with the Commission the Prospectus, Term Sheet or the
amendment referred to in the second sentence of Section 2(a) hereof, any
amendment or supplement to such Prospectus, Term Sheet or any amendment to the
12
13
Registration Statement or any Rule 462(b) Registration Statement of which the
Representatives previously have been advised and furnished with a copy for a
reasonable period of time prior to the proposed filing and as to which filing
the Representatives shall not have given their consent (which consent will not
be unreasonably withheld or delayed). The Company will prepare and file with the
Commission, in accordance with the rules and regulations of the Commission,
promptly upon the reasonable request by the Representatives or counsel for the
Underwriters, any amendments to the Registration Statement or amendments or
supplements to the Prospectus that may be necessary or advisable in connection
with the distribution of the Securities by the several Underwriters, and will
use its best efforts to cause any such amendment to the Registration Statement
to be declared effective by the Commission as promptly as possible. The Company
will advise the Representatives, promptly after receiving notice thereof, of the
time when the Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectus or any amendment or supplement thereto has
been filed and will provide evidence satisfactory to the Representatives of each
such filing or effectiveness.
(b) The Company will advise the Representatives, promptly
after receiving notice or obtaining knowledge thereof, of (i) the issuance by
the Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
(ii) the suspension of the qualification of the Securities for offering or sale
in any jurisdiction, (iii) the institution, threatening or contemplation of any
proceeding for any such purpose or (iv) any request made by the Commission for
amending the Original Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing the Prospectus or for additional
information. The Company will use its best efforts to prevent the issuance of
any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the
Securities for offering and sale under the insurance and securities or blue sky
laws of such jurisdictions as the Representatives may designate and will
continue such qualifications in effect for as long as may be necessary to
complete the distribution of the Securities; provided, however, that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(d) If, at any time prior to the later of (i) the final date
when a prospectus relating to the Securities is required to be delivered under
the Act or (ii) the Option Closing Date, any event occurs as a result of which
the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Prospectus to comply with the Act or the
rules or regulations of the Commission thereunder, the Company will promptly
notify the Representatives thereof and, subject to Section 5(a) hereof, will
prepare and file with the Commission, at the Company's expense, an amendment to
the Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
13
14
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a signed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto) (ii) to each other
Underwriter, a conformed copy of such registration statement or any Rule 462(b)
Registration Statement and each amendment thereto (in each case without exhibits
thereto) and (iii) so long as a prospectus relating to the Securities is
required to be delivered under the Act, as many copies of each Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request; without limiting the application of
clause (iii) of this sentence, the Company, not later than (A) 6:00 P.M., New
York City time, on the date of determination of the public offering price, if
such determination occurred at or prior to 10:00 A.M., New York City time, on
such date or (B) 2:00 P.M., New York City time, on the business day following
the date of determination of the public offering price, if such determination
occurred after 10:00 A.M., New York City time, on such date, will deliver to the
Underwriters, without charge, as many copies of the Prospectus and any amendment
or supplement thereto as the Representatives may reasonably request for purposes
of confirming orders that are expected to settle on the Firm Closing Date.
(f) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representatives a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of
the Securities as set forth under the caption "Use of Proceeds" in the
Prospectus.
(h) The Company will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated and ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, on behalf of the Underwriters, offer, sell,
offer to sell, contract to sell, transfer, assign, pledge, hypothecate, grant
any option to purchase or otherwise sell or dispose (or announce any offer,
sale, offer of sale, contract of sale, transfer, assignment, pledge,
hypothecation, grant of any option to purchase or other sale or disposition) of
any Common Shares or any securities convertible into, or exchangeable or
exercisable for, any Common Shares for a period of one year after the date
hereof, except (i) pursuant to this Agreement, (ii) pursuant to the Direct
Agreements and (iii) the issuance of options pursuant to the Annuity and Life Re
(Holdings), Ltd. Initial Stock Option Plan adopted by the Company's Board of
Directors on December 3, 1997 and amended on February 19, 1998, which options
shall not be exercisable until one year after the date hereof, except as
otherwise provided in such plan upon the occurrence of certain events. The
Company will not file any registration statement on Form S-8 with respect to, or
otherwise register for resale with the Commission, the Private Securities or the
Common Shares underlying any options or warrants, including, without limitation,
the Class A Warrants or the Class B Warrants, issued by the Company for a period
of one year from the date hereof.
(i) The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or which would reasonably be expected
to constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the
14
15
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company, except as contemplated by this Agreement.
(j) The Company will obtain the agreements described in
Section 7(g) hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the
Registration Statement becomes effective or the period prior to the Option
Closing Date, any rumor, publication or event relating to or affecting the
Company or its Subsidiary shall occur as a result of which in your reasonable
opinion the market price of the Common Shares has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after notice from you advising the Company to the effect set forth above,
forthwith prepare, consult with you concerning the substance of, and disseminate
a press release or other public statement, reasonably satisfactory to you,
responding to or commenting on such rumor, publication or event.
(l) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 promulgated under the Act by the earlier of (i) 10:00 P.M. Eastern time on
the date of this Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
(m) The Company will cause the Securities to be duly included
for quotation on the Nasdaq National Market prior to the Firm Closing Date. The
Company will use its best efforts to ensure that the Securities remain included
for quotation on the Nasdaq National Market or listed on a nationally recognized
stock exchange for at least the first two fiscal years following the Firm
Closing Date.
6. Expenses. The Company will pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this Agreement and any blue
sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Securities, including transfer
agent's and registrar's fees, (v) the qualification of the Securities under
state insurance or securities and blue sky laws, including filing fees and
reasonable fees and disbursements of counsel for the Underwriters relating
thereto, (vi) the filing fees of the Commission and the National Association of
Securities Dealers,
15
16
Inc. relating to the Securities, (vii) any quotation of the Securities on the
Nasdaq National Market, (viii) any meetings with prospective investors in the
Securities (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters) and (ix) advertising
relating to the offering of the Securities (other than as shall have been
specifically approved by the Representatives to be paid for by the
Underwriters). If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied, because this Agreement is terminated
pursuant to Section 11 hereof or because of any failure, refusal or inability on
the part of the Company to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all reasonable out-of-pocket expenses (including
counsel fees and disbursements) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities. The Company
shall not in any event be liable to any of the Underwriters for the loss of
anticipated profits from the transactions covered by this Agreement.
7. Conditions of the Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay for the Firm
Securities shall be subject, in the Representatives' sole discretion, to the
accuracy of the representations and warranties of the Company contained herein
as of the date hereof and as of the Firm Closing Date, as if made on and as of
the Firm Closing Date, to the accuracy of the statements of the Company's
officers made pursuant to the provisions hereof, to the performance by the
Company of its covenants and agreements hereunder and to the following
additional conditions:
(a) If the Original Registration Statement or any amendment
thereto filed prior to the Firm Closing Date has not been declared effective as
of the time of execution hereof, the Registration Statement or such amendment
and, if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement, shall have been declared effective not later than the
earlier of (i) 11:00 A.M., New York time, on the date on which the amendment to
the registration statement originally filed with respect to the Securities or to
the Rule 462(b) Registration Statement, as the case may be, containing
information regarding the initial public offering price of the Securities has
been filed with the Commission and (ii) the time confirmations are sent or given
as specified by Rule 462(b)(2), or with respect to the Original Registration
Statement, or such later time and date as shall have been consented to by the
Representatives; if required, the Prospectus and any amendment or supplement
thereto shall have been filed with the Commission, or shall have been filed at
such later time and date as shall have been consented to by the Representatives;
if required, the Prospectus or any Term Sheet that constitutes a part thereof
and any amendment or supplement thereto shall have been filed with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
16
17
(b) The Representatives shall have received an opinion, dated
the Firm Closing Date, of Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, United States counsel for
the Company, substantially to the effect that:
(i) this Agreement has been duly executed and delivered by the
Company;
(ii) the form of certificates for the Securities conforms to
the requirements of the Nasdaq National Market, and the Securities have
been duly included for trading on the Nasdaq National Market subject to
official notice of issuance;
(iii) all of the issued shares of capital stock of the Company
have been issued in compliance with all applicable United States
federal securities laws; and, to the knowledge of such counsel, no
holders of securities of the Company are entitled to have such
securities registered under the Registration Statement, or such rights
have been waived;
(iv) the statements set forth under the headings, "Risk
Factors--Income Tax Risks", "Risk Factors--Shares Eligible for Future
Sale", "Management's Discussion and Analysis of Financial Condition and
Plan of Operations--Taxation", "Business--Legal Proceedings," "Direct
Sales", "Shares Eligible for Future Sale", "Certain Tax
Considerations--Taxation of the Company and Annuity Reassurance--United
States", and "Certain Tax Considerations--Taxation of
Shareholders--United States Taxation" in the Prospectus, insofar as
such statements constitute a summary of provisions of United States
federal law and the documents or proceedings referred to therein,
provide a fair summary of such legal matters, documents and
proceedings;
(v) to the best knowledge of such counsel, (A) no legal or
governmental proceedings are pending in the United States to which the
Company or its Subsidiary is a party or to which the property of the
Company or its Subsidiary is subject that are required to be described
in the Registration Statement or the Prospectus and are not described
therein, and no such proceedings have been threatened against the
Company or its Subsidiary or with respect to any of their respective
properties and (B) no contract or other document is required to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement that is not described
therein or filed as required;
(vi) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement and of the
Direct Securities to the Strategic Investors and the Affiliated
Purchasers by the Company pursuant to the Direct Agreements and the
issuance of Common Shares issuable upon the exercise of the Class A
Warrants and Class B Warrants, the compliance by the Company with the
other provisions of this Agreement, the Direct Agreements and the Class
A Warrants and Class B Warrants and the consummation of the other
transactions herein and therein contemplated do not (A) require the
consent, approval, authorization, registration or qualification of or
with any United States governmental authority, except such as have
17
18
been obtained, or (B) conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, lease or other agreement or
instrument, known to such counsel, to which the Company or its
Subsidiary is a party or by which the Company or its Subsidiary or any
of their respective properties are bound, or any United States statute
or any judgment, decree, order, rule or regulation of any United States
court or other United States governmental authority or any arbitrator
known to such counsel and applicable to the Company or its Subsidiary;
(vii) such counsel has been advised by the Commission that the
Registration Statement is effective under the Act; any required filing
of the Prospectus, or any Term Sheet that constitutes a part thereof,
pursuant to Rules 434 and 424(b) has been made in the manner and within
the time period required by Rules 434 and 424(b); and, to the best
knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any amendment thereto has been issued,
and no proceedings for that purpose have been instituted or threatened
or are contemplated by the Commission;
(viii) the Original Registration Statement, any Rule 462(b)
Registration Statement and the Prospectus, each as of their respective
effective or issue dates, (in each case, other than the financial
statements and the notes thereto and the schedules and other financial
and statistical information contained therein or omitted therefrom, as
to which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and the
rules and regulations of the Commission thereunder;
(ix) no registration of the Private Securities or the Class A
Warrants under the Act is required for the offer and sale of the
Private Securities to the Strategic Investors and of the Class A
Warrants to the Class A Warrant Holders by the Company, in the manner
described in the Registration Statement and the Prospectus;
(x) neither the Company nor its Subsidiary is required to be
licensed or admitted as an insurer or an insurance holding company, as
applicable, in Pennsylvania in order to conduct their respective
businesses as described in the Prospectus;
(xi) no authorization of, and no filing with or notice to, any
governmental or regulatory authority of Pennsylvania or the United
States federal government, or any self-regulatory organization or any
court or other tribunal of Pennsylvania or the United States federal
government is required by either the Company or the Subsidiary to own,
lease, license and operate its properties or to conduct its business as
described in the Prospectus;
(xii) each of the Company and its Subsidiary has validly and
irrevocably submitted to the jurisdiction of any federal or state court
sitting in the City of New York, has validly and irrevocably waived, to
the fullest extent permitted by law, any objections that it may now or
hereafter have to the laying of venue of any such suit, action or
proceeding brought in any such court based on or arising under this
Agreement or any
18
19
claims that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum, and has validly
appointed CT Corporation System as its authorized agent to receive
service of process in any such suit, action or proceeding; and the
choice of the law of New York as the governing law of this Agreement is
a valid and effective choice of law;
(xiii) neither the Company nor its Subsidiary is, nor will the
transactions contemplated by this Agreement cause either the Company or
its Subsidiary to be, an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company
Act of 1940, as amended; and
(xiv) to the best knowledge of such counsel, no relationship,
direct or indirect, exists between or among the Company or its
Subsidiary on the one hand, and the directors, officers, promoters,
affiliates or shareholders of the Company or its Subsidiary on the
other hand, that is required to be described in the Registration
Statement or the Prospectus which is not so described.
Such counsel shall also state that it has participated in the
preparation of the Registration Statement and the Prospectus and in conferences
with officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and your representatives and
your counsel at which the contents of the Registration Statement, the Prospectus
and related matters were discussed and, although such counsel has not passed
upon or assumed any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the Prospectus, and
although such counsel has not undertaken to verify independently the accuracy or
completeness of the statements in the Registration Statement and the Prospectus
and, therefore, would not necessarily have become aware of any material
misstatement of fact or omission to state a material fact, on the basis of and
subject to the foregoing, such counsel does not believe that either the
Registration Statement or the Prospectus (other than the financial statements
and the notes thereto and the schedules and other financial and statistical
information therein or omitted therefrom, as to which such counsel need not
express any opinion) contained as of its date or contains as of the date of such
opinion any untrue statement of a material fact or omitted as of its date or
omits as of the date of such opinion to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deem proper, on the accuracy of the
representations and warranties made by the parties to this Agreement and the
Direct Agreements and certificates of responsible officers of the Company and
public officials.
References to the Registration Statement and the Prospectus in
this paragraph (b) shall include any amendment or supplement thereto at the date
of such opinion.
19
20
(c) The Representatives shall have received an opinion, dated
the Firm Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda counsel for the
Company, substantially to the effect that:
(i) the Company and its Subsidiary have been duly
incorporated, are validly existing and in good standing (meaning that
they have not failed to make any filing with any Bermuda governmental
authority or to pay any Bermuda government fee or tax which might make
them liable to be struck off the Register of Companies and thereby
cease to exist under the laws of Bermuda) under the laws of Bermuda;
(ii) the Company has the necessary corporate power and
authority, pursuant to its Memorandum of Association, to own and hold
the issued shares in the Subsidiary; the Subsidiary has the necessary
corporate power and authority, pursuant to its Memorandum of
Association, to carry on insurance and reinsurance business as
described in the Prospectus, was registered as an insurer in terms of
the Insurance Act, effective as of December 24, 1997, and is authorized
to carry on business in that capacity as described in the Prospectus,
subject to the provisions of the Insurance Act and the regulations
promulgated thereunder and to the conditions set out in Schedule I to
the Certificate of Registration, issued by the Bermuda Registrar of
Companies to the Subsidiary, dated January 5, 1998, a copy of which,
together with the said Schedule I, shall be attached to such counsel's
opinion;
(iii) the authorized share capital of the Subsidiary
established under its Memorandum of Association is U.S.$250,000,
divided into 250,000 shares, par value U.S.$1.00 per share; based
solely on the review of the Register of Members, the Subsidiary has
issued 250,000 shares, par value U.S.$1.00 per share, to the Company
and all such shares have been duly authorized and validly issued, are
fully paid and nonassessable (meaning that no further sums are payable
with respect to the holding of shares now or in the future) and are
registered in the name of the Company;
(iv) the authorized share capital of the Company established
under its Memorandum of Association is U.S.$150,000,000, divided into
150,000,000 shares, par value U.S.$1.00 per share; based solely on the
review of the Register of Members, the Company has issued 12,000 Common
Shares, par value U.S.$1.00 per share, to the Annuity Re Purpose Trust
and all such Common Shares have been duly authorized and validly
issued, and are fully paid and nonassessable (meaning that no further
sums are payable with respect to the holding of such Common Shares now
or in the future);
(v) the Company has the necessary corporate power and
authority to enter into and perform its obligations under this
Agreement, the Direct Agreements, the Class A Warrants and the Class B
Warrants and to issue the Securities, the Direct Securities and the
Class A Warrants; the execution and delivery of this Agreement, the
Direct Agreements, the Class A Warrants and the Class B Warrants by the
Company, and the performance of its obligations thereunder, do not
violate, and are not subject to preemptive rights under, the Company's
Memorandum of Association or Bye-Laws or
20
21
any applicable law, regulation, order or decree in Bermuda, and the
Annuity Re Purpose Trust is not entitled to any preemptive or other
rights to subscribe for any of the Securities or the Direct Securities;
(vi) the Company has taken all corporate action required to
authorize its execution, delivery and performance of this Agreement,
the Direct Agreements, the Class A Warrants and the Class B Warrants;
this Agreement, the Direct Agreements, the Class A Warrants and the
Class B Warrants have been duly executed and delivered by or on behalf
of the Company and constitute the valid and binding obligations of the
Company in accordance with the terms thereof;
(vii) the Securities and Direct Securities have been duly
authorized, and upon payment for the Securities and Direct Securities
in accordance with this Agreement and the Direct Agreements, as
applicable, and registration in the Company's Register of Members, the
Securities and Direct Securities will be validly issued, fully paid and
nonassessable (meaning that no further sums are payable with respect to
the holding of such Securities or Direct Securities now or in the
future); upon issuance and payment for the Common Shares issued
pursuant to the Class A Warrants and the Class B Warrants, such Common
Shares will be validly issued, fully paid and nonassessable (meaning
that no further sums are payable with respect to the holding of such
Common Shares now or in the future);
(viii) no order, consent, approval, license, authorization or
validation of or exemption by any government or public body or
authority of Bermuda or any sub-division thereof is required to
authorize or is required in connection with the execution, delivery,
performance and enforcement of this Agreement, the Direct Agreements,
the Class A Warrants and the Class B Warrants, except such as have been
duly obtained in accordance with Bermuda law;
(ix) it is not necessary or desirable to ensure the
enforceability in Bermuda of this Agreement, the Direct Agreements, the
Class A Warrants or the Class B Warrants that they be registered in any
register kept by, or filed with, any governmental authority or
regulatory body in Bermuda;
(x) there are no Bermuda stamp, transfer or similar taxes
payable in respect of the issuance and delivery of the Securities, the
Direct Securities or the Class A Warrants to the Underwriters, the
Strategic Investors, the Affiliated Purchasers or the Class A Warrant
Holders (assuming that such each such Underwriter, Strategic Investor,
Affiliated Purchaser or Class A Warrant Holder is not resident in
Bermuda for exchange control purposes) pursuant to this Agreement, the
Direct Agreements, the Class A Warrants or the Class B Warrants, as the
case may be; this Agreement, the Direct Agreements, the Class A
Warrants and the Class B Warrants will not be subject to ad valorem
stamp duty in Bermuda, and no registration, documentary, recording,
transfer or other similar tax, fee or charge by any Bermuda Government
authority is payable in
21
22
connection with the execution, delivery, filing, registration or
performance of this Agreement, the Direct Agreements, the Class A
Warrants and the Class B Warrants;
(xi) no currency exchange control laws or withholding taxes of
Bermuda or elsewhere apply to the payment of dividends (a) on the
Securities by the Company or (b) by the Subsidiary to the Company,
except in each case as described in or contemplated by the Prospectus;
and the Subsidiary is not currently prohibited by any Bermuda law or
governmental authority, directly or indirectly, from paying any
dividends to the company, from making any other distributions on its
capital stock, from repaying to the Company any loans or advances to it
from the Company or from transferring any of its property or assets to
the Company, except as described or contemplated in the Prospectus;
(xii) at the date hereof, there is no Bermuda income,
corporation or profits tax, withholding tax, capital gains tax, capital
transfer tax, estate duty or inheritance tax payable by the Company and
its Subsidiary or by any Underwriter, Strategic Investor, Affiliated
Purchaser or Class A Warrant Holder, except where such Underwriter,
Strategic Investor, Affiliated Purchaser or Class A Warrant Holder is
ordinarily resident in Bermuda for exchange control purposes; each of
the Company and its Subsidiary has received, pursuant to the Exempted
Undertakings Tax Protection Act, 1966, an assurance from the Minister
of Finance of Bermuda that, in the event of there being enacted in
Bermuda any legislation imposing tax computed on profits or income, or
computed on any capital asset, gain or appreciation, or any tax in the
nature of estate duty or inheritance tax, such tax shall not be
applicable to it or to any of its operations or the shares, debentures
of other obligations of it except insofar as such tax applies to
persons ordinarily resident in Bermuda holding such shares, debentures
or other obligations of it or any land leased or let to it, which
assurance shall be in effect and apply to it until March 28, 2016;
(xiii) based solely on a search of the Register of Charges,
maintained by the Registrar of Companies pursuant to Section 55 of the
Companies ▇▇▇ ▇▇▇▇, conducted at [ ] on [ , 199 ], there are no
registered charges registered against the Company or its Subsidiary;
(xiv) based solely upon a search of the Cause Book of the
Supreme Court of Bermuda conducted at [ ] on [ , 199 ], there are no
judgments, nor legal or governmental proceedings pending in Bermuda to
which the Company or its Subsidiary is a party;
(xv) the Underwriters, Strategic Investors, Affiliated
Purchasers and Class A Warrant Holders will not be deemed to be
resident, domiciled or carrying on business in Bermuda by reason only
of the execution, performance and enforcement of this Agreement, the
Direct Agreements, the Class A Warrants or the Class B Warrants, as
applicable;
(xvi) each of the Underwriters, Strategic Investors,
Affiliated Purchasers and Class A Warrant Holders has standing to bring
an action or proceedings before the
22
23
appropriate courts in Bermuda for the enforcement of this Agreement,
the Direct Agreements, the Class A Warrants or the Class B Warrants, as
applicable; it is not necessary or advisable in order for any such
Underwriter, Strategic Investor, Affiliated Purchaser or Class A
Warrant Holder to enforce its rights under this Agreement, the Direct
Agreements, the Class A Warrants or the Class B Warrants, as
applicable, including the exercise of remedies thereunder, that it be
licensed, qualified or otherwise entitled to carry on business in
Bermuda;
(xvii) the statements set forth under the heading "Description
of Capital Stock" in the Prospectus, insofar as such statements purport
to summarize certain provisions of the capital stock of the Company,
the Class A Warrants and the Class B Warrants provide a fair summary of
such provisions, and the statements set forth under the headings
"Enforceability of Civil Liabilities Under United States Federal
Securities Laws", "Risk Factors - Start Up Operations; Reliance on
Service Providers", "Risk Factors - Regulation", "Risk Factors -
Holding Company Structure", "Risk Factors - Foreign Corporation,
Service of Process and Enforcement of Judgments", "Risk Factors -
Income Tax Risks - Bermuda Taxes", "Risk Factors - Limitations on
Ownership, Transfers and Voting Rights", "Management's Discussion and
Analysis of Financial Condition and Plan of Operations - Taxation",
"Business - Regulation - Bermuda", "Certain Tax Considerations -
Taxation of the Company and Annuity Reassurance - Bermuda" and "Certain
Tax Considerations - Taxation of Shareholders - Bermuda Taxation" in
the Prospectus, insofar as such statements constitute a summary of
provisions of Bermuda law or the Company's Memorandum of Association
and Bye-Laws, provide a fair summary of such legal matters or the
Memorandum of Association and Bye-Laws;
(xviii) each of the Company and its Subsidiary has validly and
irrevocably submitted to the nonexclusive jurisdiction of any federal
or state court sitting in the City of New York, has validly and
irrevocably waived, to the fullest extent permitted by law, any
objections that it may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in any such court based on
or arising under this Agreement or any claims that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum, and has validly appointed CT Corporation System as
its authorized agent to receive service of process in any such suit,
action or proceeding; and the choice of the law of New York as the
governing law of this Agreement is a valid and effective choice of law;
(xix) the courts of Bermuda would recognize as a valid
judgment, a final and conclusive judgment in personam obtained in any
federal or state court sitting in the State of New York against the
Company based upon this Agreement, the Direct Agreements, the Class A
Warrants or the Class B Warrants under which a sum of money is payable
(other than a sum of money payable in respect of multiple damages,
taxes or other charges of a like nature or in respect of a fine or
other penalty) and would give a judgment based thereon provided that
(a) such courts had proper jurisdiction over the parties subject to
such judgment, (b) such courts did not contravene the rules of natural
justice of Bermuda, (c) such judgment was not obtained by frauds, (d)
the enforcement of
23
24
the judgment would not be contrary to the public policy of Bermuda, (e)
no new admissible evidence relevant to the action is submitted prior to
the rendering of the judgment by the courts of Bermuda and (f) the due
compliance with the correct procedures under the laws of Bermuda; and
(xx) the restrictions on transfer of the Common Shares and the
requirements for compulsory surrender of the Common Shares provided in
the Company's Bye-Laws are valid and enforceable under Bermuda law.
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deem proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (c) shall include any amendment or supplement thereto at the date
of such opinion.
(d) The Representatives shall have received an opinion, dated
the Firm Closing Date, of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One Liberty Plaza,
New York, New York, counsel for the Underwriters, with respect to the issuance
and sale of the Securities, the Registration Statement and the Prospectus, and
such other related matters as the Representatives may reasonably require, and
the Company shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(e) The Representatives shall have received from KPMG Peat
Marwick a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representatives, to the
effect that:
(i) they are independent accountants with respect to the
Company and its Subsidiary within the meaning of the Act and the
applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules examined by them and included in the
Registration Statement and the Prospectus comply in form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
(iii) on the basis of carrying out certain specified
procedures (which do not constitute an examination made in accordance
with generally accepted auditing standards) that would not necessarily
reveal matters of significance with respect to the comments set forth
in this paragraph (iii), a reading of the minute books of the
shareholders, the board of directors and any committees thereof of the
Company and the Subsidiary, and inquiries of certain officials of the
Company and the Subsidiary who have responsibility for financial and
accounting matters, nothing came to their attention that caused them to
believe that at a specific date not more than five business days prior
to the date of such letter, there were any changes in the capital stock
or long-term debt of the Company and the Subsidiary or any decreases in
net current assets or stockholders'
24
25
equity of the Company and the Subsidiary, in each case compared with
amounts shown on the December 31, 1997 consolidated balance sheet
included in the Registration Statement and the Prospectus, except in
all instances for changes, decreases or increases set forth in such
letter.
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting
records of the Company and its Subsidiary and are included in the
Registration Statement and the Prospectus under the captions
"Prospectus Summary", "Risk Factors", "Capitalization", "Dilution",
"Management", "Certain Relationships and Related Party Transactions",
and "Description of Capital Stock", and have compared such amounts,
percentages and financial information with such records of the Company
and its Subsidiary and with information derived from such records and
have found them to be in agreement, excluding any questions of legal
interpretation.
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in
this paragraph (e) with respect to either letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
(f) The Representatives shall have received a certificate,
dated the Firm Closing Date, of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that:
(i) the representations and warranties of the Company
in this Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented as of the Firm Closing Date,
does not include 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; and the Company has performed all covenants and
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been
25
26
instituted or threatened or, to the best of the Company's knowledge,
are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor its Subsidiary has sustained any material loss
or interference with their respective businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal or
governmental proceeding, and there has not been any material adverse
change, or any development involving a prospective material adverse
change, in the condition (financial or otherwise), management, business
prospects, net worth or results of operations of the Company or its
Subsidiary, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto).
(g) The Representatives shall have received from each of the
Strategic Investors, each of the Affiliated Purchasers, and each person who is a
director or officer of the Company or who owns any outstanding Common Shares or
any securities convertible into, or exchangeable or exercisable for, any Common
Shares, including, without limitation, the Class A Warrants and the Class B
Warrants, an agreement to the effect that such person will not, directly or
indirectly, without the prior written consent of Prudential Securities
Incorporated and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, on behalf
of the Underwriters and, in the case of the Strategic Investors, the Company,
offer, sell, offer to sell, contract to sell, transfer, assign, pledge,
hypothecate, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, transfer, assignment,
pledge, hypothecation, grant of an option to purchase or other sale or
disposition) of any Common Shares or any securities convertible into, or
exchangeable or exercisable for, any Common Shares for a period of one year
after the date of this Agreement; provided however, that in the case of The
Prudential Insurance Company of America, such period shall continue for 180 days
after the date of this Agreement.
(h) On or before the Firm Closing Date, the Representatives
and counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(i) Prior to the commencement of the offering of the
Securities, the Securities shall have been included for trading on the Nasdaq
National Market.
(j) The Strategic Investors shall have purchased Common Shares
and Class B Warrants pursuant to certain of the Direct Agreements with an
aggregate purchase price of at least $50.0 million.
All opinions, certificates, letters and documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and
26
27
documents in such quantities as the Representatives and counsel for the
Underwriters shall reasonably request.
The respective obligations of the several Underwriters to
purchase and pay for any Option Securities shall be subject, in their
discretion, to each of the foregoing conditions to purchase the Firm Securities,
except that all references to the Firm Securities and the Firm Closing Date
shall be deemed to refer to such Option Securities and the related Option
Closing Date, respectively.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by
the Company in Section 2 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or (B) any application or other
document, or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the
Securities under the insurance and securities or blue sky laws thereof
or filed with the Commission or any securities association or
securities exchange (each an "Application");
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or
any Application a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(iv) the violation of any applicable laws or regulations of
jurisdictions where Affiliated Securities have been offered and any
untrue statement or alleged untrue statement of a material fact
included in any prospectus, supplement or other material distributed in
connection with the offer and sale of the Affiliated Securities to the
Affiliated Purchasers or the omission or alleged omission therefrom of
a material fact necessary to make the statements therein, when
considered in conjunction with the Prospectus (or the Preliminary
Prospectus), not misleading; or
(v) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials based upon
information provided by the
27
28
Company used in connection with the marketing of the Securities,
including without limitation, slides, videos, films and tape
recordings;
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto or any Application in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein; and
provided, further, that the Company will not be liable to any Underwriter or any
person controlling such Underwriter with respect to any such untrue statement or
omission or alleged untrue statements or omissions made in any Preliminary
Prospectus that is corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Section 5(d) and (e) of this
Agreement. This indemnity agreement will be in addition to any liability which
the Company may otherwise have. The Company will not, without the prior written
consent of the Underwriter or Underwriters purchasing, in the aggregate, more
than fifty percent (50%) of the Securities, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any such Underwriter or any person who controls any such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of all of the
Underwriters and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities to which
the Company or any such director, officer or controlling person may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus
28
29
or any amendment or supplement thereto, or any Application or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 8, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the consent
of the indemnifying party.
29
30
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 8 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect (i) the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party on the other from the offering of the Securities or
(ii) if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received by
the Underwriters. The relative fault of the parties 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 the Company or the Underwriters, the parties'
relative intents, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Underwriters agree that it
would not be equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to above in this paragraph
(d). Notwithstanding any other provision of this paragraph (d), no Underwriter
shall be obligated to make contributions hereunder that in the aggregate exceed
the total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Prudential Securities Incorporated Master Agreement Among Underwriters.
For purposes of this paragraph (d), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Company.
9. Default of Underwriters. If one or more Underwriters
default in their obligations to purchase Firm Securities or Option Securities
hereunder and the aggregate number
30
31
of such Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase is ten percent or less of the aggregate number of Firm
Securities or Option Securities to be purchased by all of the Underwriters at
such time hereunder, the other Underwriters may make arrangements satisfactory
to the Representatives for the purchase of such Securities by other persons (who
may include one or more of the non-defaulting Underwriters, including the
Representatives), but if no such arrangements are made by the Firm Closing Date
or the related Option Closing Date, as the case may be, the other Underwriters
shall be obligated severally in proportion to their respective commitments
hereunder to purchase the Firm Securities or Option Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If one or
more Underwriters so default with respect to an aggregate number of Securities
that is more than ten percent of the aggregate number of Firm Securities or
Option Securities, as the case may be, to be purchased by all of the
Underwriters at such time hereunder, and if arrangements satisfactory to the
Representatives are not made within 36 hours after such default for the purchase
by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters as
described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the several Underwriters set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, any Underwriter or any
controlling person referred to in Section 8 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6 and 8 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated with
respect to the Firm Securities or any Option Securities in the sole discretion
of the Representatives by notice to the Company given prior to the Firm Closing
Date or the related Option Closing Date, respectively, in the event that the
Company shall have failed, refused or been unable to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder at or
prior thereto or, if at or prior to the Firm Closing Date or such Option Closing
Date, respectively,
(i) the Company or its Subsidiary shall have, in the
sole judgment of the Representatives, sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or
31
32
not covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any material adverse
change, or any development involving a prospective material adverse
change (including without limitation a change in management or control
of the Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
Subsidiary, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto);
(ii) trading in the Common Shares shall have been suspended by
the Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or Nasdaq National Market
shall have been suspended or minimum or maximum prices shall have been
established on such exchange or market system;
(iii) a banking moratorium shall have been declared by New
York, United States or Bermuda authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by Underwriters. The statements set
forth in the last paragraph on the front cover page, the stabilization legend on
the inside cover page and under the heading "Underwriting" (to the extent such
statements relate to the Underwriters) or under the heading "Certain
Relationships and Related Party Transactions" (to the extent such statements
describe the relationship between The Prudential Insurance Company of America,
The Prudential Investment Corporation and Prudential Securities Incorporated) in
any Preliminary Prospectus or the Prospectus constitute the only information
furnished by any Underwriter through the Representatives to the Company for the
purposes of Sections 2(b) and 8 hereof. The Underwriters confirm that such
statements (to such extent) are correct.
13. Notices. All communications hereunder shall be in writing
and, if sent to any of the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission and confirmed in writing to Prudential
Securities Incorporated, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Equity Transactions Group; and if sent to the Company, shall be
delivered or sent by mail, telex or facsimile transmission and confirmed in
writing to the Company at ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ Street, P.O. Box HM1262,
▇▇▇▇▇▇▇▇, ▇▇ FX, Bermuda.
32
33
14. Successors. This Agreement shall inure to the benefit of
and shall be binding upon the several Underwriters, the Company and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 8 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation of this
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process. All
judicial proceedings arising out of or relating to this Agreement may be brought
in any state or federal court of competent jurisdiction in the State of New
York, and by execution and delivery of this Agreement, the Company irrevocably
accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably waives any defense of forum non conveniens and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with this
Agreement. The Company designates and appoints CT Corporation System, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, and such other persons as may hereafter be
selected by the Company irrevocably agreeing in writing to so serve, as its
agent to receive on its behalf service of all process in any such proceedings in
any such court, such service being hereby acknowledged by the Company to be
effective and binding service in every respect. A copy of any such process so
served shall be mailed by registered mail to the Company at its address provided
in Section 13 hereof; provided, however, that, unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity of
service of such process. If any agent appointed by the Company refuses to accept
service, the Company hereby agrees that service of process sufficient for
personal jurisdiction in any action against the Company in the State of New York
may be made by registered or certified mail, return receipt requested, to the
Company at its address provided in Section 13 hereof, and the Company hereby
acknowledges that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Underwriter to bring
proceedings against the Company in the courts of any other jurisdiction.
33
34
17. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute an agreement binding the Company
and each of the several Underwriters.
Very truly yours,
ANNUITY AND LIFE RE (HOLDINGS), LTD.
By
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PRUDENTIAL SECURITIES INCORPORATED
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
BT ALEX. ▇▇▇▇▇ INCORPORATED
CIBC ▇▇▇▇▇▇▇▇▇▇▇ CORP.
▇▇▇▇▇▇▇▇ & CO. INC.
By PRUDENTIAL SECURITIES INCORPORATED
By
Name: ▇▇▇▇-▇▇▇▇▇▇ Canfin
Title: Managing Director
For itself and on behalf of the Representatives.
34
35
SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- ------------
Prudential Securities Incorporated..............................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated..............
BT Alex. ▇▇▇▇▇ Incorporated.....................................
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. .........................................
▇▇▇▇▇▇▇▇ & Co. Inc. ............................................
------------------------------------------- ---------
Total......................................... 17,078,765
----------