Exhibit 1
---------
================================================================================
SECURITIES PURCHASE AGREEMENT
ANNUITY AND LIFE RE (HOLDINGS), LTD.
March 4, 1998
================================================================================
TABLE OF CONTENTS
-----------------
PAGE
SECTION 1. AUTHORIZATION OF SECURITIES.......................................1
SECTION 2. PURCHASE AND SALE OF SECURITIES...................................1
2.1. Issuance of Securities..........................................1
2.2. Closing of Issuance.............................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................2
3.1. Corporate Organization..........................................2
3.2. Subsidiaries....................................................2
3.3. Capitalization..................................................3
3.4. Corporate Proceedings, etc......................................4
3.5. Consents and Approvals..........................................4
3.6. Absence of Defaults, Conflicts, etc.............................4
3.7. Financial Statements............................................5
3.8. Absence of Certain Developments.................................5
3.9. Compliance with Law.............................................5
3.10. Litigation.....................................................6
3.11. Material Contracts.............................................6
3.12. Absence of Undisclosed Liabilities.............................6
3.13. Employees......................................................7
3.14. Tax Matters....................................................7
3.15. Employee Benefit Plans.........................................7
3.16. Patents, Licenses, etc.........................................8
3.17. Insurance......................................................9
3.18. Transactions with Related Parties..............................9
3.19. Private Offering...............................................9
3.20. Brokerage......................................................10
3.21. Illegal or Unauthorized Payments; Political Contributions......10
3.22. Material Facts.................................................10
3.23. Foreign Assets Control Regulations, etc........................11
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR....................11
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES...............................12
5.1. Resale of Securities............................................12
5.2. Covenants Pending Closing.......................................12
5.3. Further Assurance...............................................13
SECTION 6. INVESTOR'S CLOSING CONDITIONS.....................................13
6.1. Representations and Warranties..................................13
6.2. Compliance with Agreement.......................................13
-i-
6.3. Officer's Certificate...........................................13
6.4. Delivery of Shares and Warrants.................................13
6.5. Injunction......................................................13
6.6. Counsel's Opinions..............................................14
6.7. Consummation of Public Offering.................................17
6.8. Purchase by Other Investors.....................................17
6.9. Registration Rights Agreement...................................17
6.10. Process Agent..................................................17
6.11. Proceedings....................................................17
SECTION 7. COMPANY CLOSING CONDITIONS........................................17
7.1. Representations and Warranties..................................18
7.2. Compliance with Agreement.......................................18
7.3. Injunction......................................................18
7.4. Consummation of Public Offering.................................18
SECTION 8. LIMITATION ON DISPOSITION.........................................18
SECTION 9. COVENANTS.........................................................19
9.1. Financial and Business Information..............................19
9.2. Inspection......................................................20
9.3. Keeping of Books................................................20
9.4. Lost, etc. Certificates; Exchange...............................21
9.5. Review of Documents.............................................21
9.6. Confidential Information........................................21
SECTION 10. INTERPRETATION OF THIS AGREEMENT.................................21
10.1. Terms Defined..................................................21
10.2. Directly or Indirectly.........................................23
10.3. Section Headings...............................................23
SECTION 11. MISCELLANEOUS....................................................24
11.1. Notices........................................................24
11.2. Expenses and Taxes.............................................24
11.3. Reproduction of Documents......................................25
11.4. Termination and Survival.......................................25
11.5. Successors and Assigns.........................................25
11.6. Entire Agreement; Amendment and Waiver.........................26
11.7. Severability...................................................26
11.8. Governing Law; Submission to Jurisdiction......................26
11.9. Counterparts...................................................27
-ii-
Schedule 2.1 Investors
Schedule 3.1(a) Memorandum of Association
Schedule 3.1(b) Bye-Laws
Schedule 3.1(c) Contemplated Business
Schedule 3.3 Warrants, Options and Convertible Securities
Schedule 3.7 Financial Statements
Schedule 3.8 Certain Developments
Schedule 3.11 Material Contracts
Schedule 3.12 Certain Liabilities
Schedule 3.13 For Cause Employees
Schedule 3.15 Employee Benefit Arrangements
Schedule 3.16 Intellectual Property
Schedule 3.18 Transactions with Related Parties
EXHIBIT A Class B Warrant
EXHIBIT B Registration Rights Agreement
EXHIBIT C Lock-up Provisions
-iii-
ANNUITY AND LIFE RE (HOLDINGS), LTD.
SECURITIES PURCHASE AGREEMENT
Dated as of March 4, 1998
To the Investor executing
this Agreement on the
signature page hereof
Ladies and Gentlemen:
ANNUITY AND LIFE RE (HOLDINGS), LTD., a Bermuda corporation (the
"Company"), hereby agrees with you (the "Investor") as follows:
SECTION 1. AUTHORIZATION OF SECURITIES
The Company has duly authorized the issuance, sale and delivery
of its common shares, par value $1.00 per share (the "Common Shares") and its
Class B Warrants to purchase its Common Shares, the form of which is attached
hereto as Exhibit A (the "Class B Warrants").
SECTION 2. PURCHASE AND SALE OF SECURITIES
2.1. Issuance of Securities
Subject to the terms and conditions set forth in this Agreement
and in reliance upon the Company's and the Investor's representations set forth
below, on the Closing Date (as defined below) the Company shall sell to the
Investor, and the Investor shall purchase from the Company, the number of Common
Shares (the "Shares") and Class B Warrants (the "Warrants"), and at the
aggregate cash purchase price (the "Purchase Price"), set forth opposite its
name on Schedule 2.1. Such sale and purchase shall be effected on the Closing
Date by the Company executing and delivering to the Investor, duly registered in
its name (or that of its nominee), a duly executed stock certificate and warrant
certificate evidencing the Shares and the Warrants being purchased by it,
against delivery by the Investor to the Company of the Purchase Price by wire
transfer of immediately available funds to such account as the Company shall
designate, not less than three Business Days prior to the Closing Date. The
Company is entering into securities purchase agreements (the "Other Agreements")
substantially in the form of this Agreement with the other investors listed on
Schedule 2.1 ("Other Investors" and, collectively with the Investor, the
"Investors"). The Company's agreements with each of the Investors are separate
agreements, and the sales to each of the Investors are separate sales.
2.2. Closing of Issuance
The closing of such sale and purchase (the "Closing") shall take
place at 10:00 A.M., New York City time, on the IPO Closing Date or such other
date as the Investor and the Company agree in writing (the "Closing Date"), at
the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 153 East 53rd Street, New York, New
York, or such other location as the Investor and the Company shall mutually
select.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that:
3.1. Corporate Organization
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of Bermuda. True and complete copies of the
Memorandum of Association, Bye-Laws and other constitutive documents as amended
through the date hereof (collectively, the "Organizational Documents") have been
attached as Schedule 3.1(a) and Schedule 3.1(b) respectively.
(b) The Company has all requisite power and authority and has all
necessary approvals, licenses, permits and authorization to own its properties
and to carry on its business as presently contemplated to be conducted as
described in Schedule 3.1(c). The Company has all requisite power and authority
to execute and deliver the Transaction Documents and to perform its obligations
hereunder and thereunder.
(c) The Company has filed all necessary documents to qualify to
do business as a foreign corporation in, and the Company is in good standing
under the laws of, each jurisdiction in which the conduct of the Company's
business as presently contemplated as described in Schedule 3.1(c) or the nature
of the property owned by it or proposed to be owned requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the business, properties, prospects, profits or condition (financial or
otherwise) of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect").
3.2. Subsidiaries
Except for Annuity Life Reassurance Ltd., the Company has no
subsidiaries and no interests or investments in any partnership, trust or other
entity or organization. Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its properties and to conduct its business as
-2-
presently contemplated as described in Schedule 3.1(c) and is duly registered,
qualified and authorized to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the nature of its
properties requires such registration, qualification or authorization, except
where the failure to be so registered, qualified and authorized would not have a
Material Adverse Effect; all of the issued and outstanding capital stock of each
subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable, and is owned of record and beneficially by the Company free and
clear of any mortgage, pledge, lien, encumbrance, security interest, claim or
equity.
3.3. Capitalization
(a) On the Closing Date (i) the authorized capital stock of the
Company will consist of 100,000,000 Common Shares, par value $1.00 per share and
50,000,000 preferred shares, par value $1.00 per share, and (ii) the issued and
outstanding shares of capital stock of the Company will consist of Common Shares
which will, to the best knowledge of the Company, be held beneficially by the
persons and in the amounts set forth in Schedule 3.3.
(b) All the outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and non-assessable, and
were issued in accordance with the registration or qualification requirements of
the Securities Act and any other relevant securities laws or pursuant to valid
exemptions therefrom. The Company has authorized (or as of the Closing Date will
have authorized) the issuance, sale and delivery of the Shares and Warrants in
accordance with this Agreement and, subject to the issuance of the Warrants, the
Company has reserved (or as of the Closing Date will have reserved) for issuance
Common Shares initially issuable upon conversion of the Warrants. Upon issuance,
sale and delivery as contemplated by this Agreement, the Shares will be duly
authorized, validly issued, fully paid and non-assessable shares of the Company,
free of all preemptive or similar rights, and entitled to the rights described
in the Organizational Documents and in Schedule 3.3. Upon their issuance in
accordance with the terms of the Warrants, the Common Shares issuable upon
exercise of the Warrants will be duly authorized, validly issued, fully paid and
non-assessable Common Shares of the Company, free of all preemptive or similar
rights.
(c) Except for the rights which attach to the warrants, options
and convertible securities which are listed on Schedule 3.3 hereto and to the
Warrants referred to herein and in the Other Agreements, on the Closing Date
there will be no Common Shares or any other equity security of the Company
issuable upon conversion or exchange or exercise of any security of the Company
nor will there be any rights, options or warrants outstanding or
-3-
other agreements to acquire any Common Shares nor will the Company be
contractually obligated to purchase, redeem or otherwise acquire any of its
outstanding shares. No shareholder of the Company is entitled to any preemptive
or similar rights to subscribe for shares of capital stock of the Company.
3.4. Corporate Proceedings, etc.
The Company has duly authorized the execution, delivery, and
performance of the Transaction Documents and each of the transactions and
agreements contemplated hereby and thereby. No other corporate action (including
shareholder approval) is necessary to authorize such execution, delivery and
performance of the Transaction Documents, and upon such execution and delivery
each of the Transaction Documents shall constitute the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and general principles of equity.
3.5. Consents and Approvals
The execution and delivery by the Company of the Transaction
Documents, the performance by the Company of its obligations hereunder and
thereunder and the consummation by the Company of the transactions contemplated
hereby and thereby do not require the Company or any of its subsidiaries to
obtain any consent, approval or action of, or make any filing with or give any
notice to, any corporation, person or firm or any public, governmental or
judicial authority (except for filings in connection with the Public Offering,
all of which shall have been duly made as of the Closing Date).
3.6. Absence of Defaults, Conflicts, etc.
The execution and delivery of the Transaction Documents do not,
and the fulfillment of the terms hereof and thereof by the Company, and the
issuance of the Shares and Warrants (and the issuance of Common Shares issuable
upon exercise of the Warrants) will not, result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or permit the
acceleration of rights under or termination of, any Material Contract or the
Organizational Documents, or any order, rule or regulation of any court or
federal, state or foreign regulatory board or body or administrative agency
having jurisdiction over the Company or any of its subsidiaries or over their
respective properties or businesses. No event has occurred and no condition
exists which, upon notice or the passage of time (or both), would constitute a
default under any such Material Contract or in any license, permit or
authorization to which the Company or any subsidiary is a party or by which any
of them may be bound.
-4-
3.7. Financial Statements
The audited balance sheet of the Company as at December 22, 1997
set forth in Schedule 3.7, fairly presents the financial position of the Company
as at the date thereof. Such balance sheet, including the schedules and notes
thereto, was prepared in accordance with GAAP.
3.8. Absence of Certain Developments
Since December 22, 1997, except as described in Schedule 3.8,
there has been no (i) material adverse change in the condition, financial or
otherwise, of the Company and its subsidiaries taken as a whole or in their
assets, liabilities, properties, or business or prospects, (ii) declaration,
setting aside or payment of any dividend or other distribution with respect to
the capital stock of the Company, (iii) issuance of capital stock (other than
pursuant to the exercise of options, warrants, or convertible securities
outstanding on the date hereof or as contemplated by this Agreement and the
Other Agreements) or options, warrants or rights to acquire capital stock (other
than the rights granted to the Investors hereunder and under the Company's Stock
Option Plan, the Other Agreements), (iv) material loss, destruction or damage to
any property of the Company or any subsidiary, whether or not insured, (v)
acceleration or prepayment of any indebtedness for borrowed money or the
refunding of any such indebtedness, (vi) labor trouble involving the Company or
any subsidiary or any material change in their personnel or the terms and
conditions of employment, (vii) waiver of any valuable right, (viii) loan or
extension of credit to any officer or employee of the Company or any subsidiary
or (ix) acquisition or disposition of any material assets (or any contract or
arrangement therefor), or any other material transaction by the Company or any
subsidiary otherwise than for fair value in the ordinary course of business.
3.9. Compliance with Law
(a) Neither the Company nor any of its subsidiaries is in
material violation of any laws, ordinances, governmental rules or regulations to
which it is subject, including without limitation laws or regulations relating
to the environment or to occupational health and safety, and no material
expenditures are or will be required in order to cause its currently
contemplated operations or properties to comply with any such law, ordinances,
governmental rules or regulations.
(b) The Company and its subsidiaries have all licenses, permits
(other than certain employee work permits), franchises or other governmental
authorizations necessary to the ownership of their property or to the conduct of
their respective businesses as presently contemplated as described in Schedule
3.1(c) (including, without limitation, such licenses and
-5-
permissions in Bermuda which are necessary to carry on the business of a
long-term insurer), all to the extent necessary to avoid a Material Adverse
Effect. Neither the Company nor any subsidiary has finally been denied any
application for any such licenses, permits, franchises or other governmental
authorizations necessary to its business.
3.10. Litigation
There is no legal action, suit, arbitration or other legal,
administrative or other governmental investigation, inquiry or proceeding
(whether federal, state, local or foreign) pending or, to the best of the
Company's knowledge, threatened against or affecting the Company or any
subsidiary or any of their respective properties, assets or presently
contemplated businesses. Neither the Company nor any subsidiary is subject to
any order, writ, judgment, injunction, decree, determination or award of any
court or of any governmental agency or instrumentality (whether federal, state,
local or foreign).
3.11. Material Contracts
Schedule 3.11 sets forth a true and complete list of each
material contract, agreement, instrument, commitment and other arrangement to
which the Company or any subsidiary is a party or otherwise relating to or
affecting any of their respective assets, including without limitation:
employment, severance or consulting agreements; loan, credit or security
agreements; joint venture agreements and distribution agreements (each, a
"Material Contract"). Each Material Contract is valid, binding and enforceable
against the Company or such subsidiary and, to the Company's best knowledge, the
other parties thereto, in accordance with its terms, and in full force and
effect on the date hereof.
3.12. Absence of Undisclosed Liabilities
Except as disclosed in Schedule 3.12, neither the Company nor any
of its subsidiaries has any debt, obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due,
whether or not known to the Company) arising out of any transaction entered into
at or prior to the Closing, or any act or omission at or prior to the Closing,
or any state of facts existing at or prior to the Closing, including taxes with
respect to or based upon the transactions or events occurring at or prior to the
Closing, and including, without limitation, unfunded past service liabilities
under any pension, profit sharing or similar plan, except current liabilities
incurred and obligations under agreements entered into, in the usual and
ordinary course of business, none of which (individually or in the aggregate)
would have a Material Adverse Effect.
-6-
3.13. Employees
(a) The Company and its subsidiaries are in full compliance with
all laws regarding employment, wages, hours, equal opportunity, collective
bargaining and payment of social security and other taxes (except that certain
employees may be required to obtain work permits under Bermuda law).
(b) Except as set forth on Schedule 3.13, the employment of all
Persons and officers employed by the Company or any of its subsidiaries is
terminable at will without any penalty or severance obligation of any kind on
the part of the employer. All sums due for employee compensation and benefits
and all vacation time owing to any employees of the Company or any of its
subsidiaries have been duly and adequately accrued on the accounting records of
the Company and its subsidiaries.
(c) To the best knowledge of the Company none of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interests of the Company or that would
conflict with the Company's business as proposed to be conducted.
(d) To the best knowledge of the Company no officer or key
employee, nor any group of key employees, intends to terminate their employment
with the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing (other than temporary employees who are also
employees of Inter-Atlantic Capital Partners, Inc. or ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇).
3.14. Tax Matters
There are no taxes due and payable by the Company or any of its
subsidiaries which have not been paid. The provisions for taxes on the audited
balance sheet described in Section 3.7 has been established in accordance with
GAAP. The Company and its subsidiaries have duly filed all tax returns required
to have been filed by it. Neither the Company nor any of its subsidiaries has
been subject to a tax audit of any kind.
3.15. Employee Benefit Plans
The Company and its subsidiaries have no employee benefit plans
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974) covering former and current employees of the Company or any of its
subsidiaries, or under which the Company or any of its subsidiaries has any
obligation or liability. Schedule 3.15 lists all material plans, contracts,
bonuses, commissions, profit-sharing, savings, stock options,
-7-
insurance, deferred compensation, or other similar fringe or employee benefits
covering former or current employees of the Company or any of its subsidiaries
or under which the Company or any of its subsidiaries has any obligation or
liability (each, a "Benefit Arrangement"). True and complete copies of all
Benefit Arrangements have been provided or made available to the Investor prior
to the date hereof. The Benefit Arrangements are and have been administered in
substantial compliance with their terms and with the requirements of applicable
law.
3.16. Patents, Licenses, etc.
Except as provided on Schedule 3.16, the Company or one of its
subsidiaries owns, free and clear of all encumbrances, restrictions, liens,
security interests and charges, and have good and marketable title to, or hold
adequate licenses or otherwise possess all such rights as are necessary to use
all patents (and applications therefor), patent disclosures, trademarks, service
marks, trade names, copyrights (and applications therefor), inventions,
discoveries, processes, know-how, scientific, technical, engineering and
marketing data, computer software, formulae and techniques used or proposed to
be used, in or necessary for the conduct of its business as now conducted or as
proposed to be conducted (collectively, "Intellectual Property").
Neither the Company nor any of its subsidiaries has received
notice nor otherwise has reason to know of any conflict or alleged conflict with
the rights of others pertaining to the Intellectual Property described in this
Section 3.16. The Company's business, as presently conducted and as proposed to
be conducted, does not infringe upon or violate any patent rights or trade
secrets of others. The Company and its subsidiaries have the unrestricted right
to use, free and clear of any rights or claims of others, all trade secrets,
processes, customer lists and other rights incident to their respective
businesses as now conducted or as proposed to be conducted.
Except as provided for on Schedule 3.16, neither the Company nor
any of its subsidiaries is currently obligated or under any existing liability
to make royalty or other payments to any owner of, licensor of, or other
claimant to, any patent, trademark, service names, trade names, copyrights, or
other intangible asset, with respect to the use thereof or in connection with
the conduct of its business as now conducted or as proposed to be conducted, or
otherwise. To the Company's best knowledge, no employee of the Company or any of
its subsidiaries has violated any employment agreement or proprietary
information agreement which he had with a previous employer or any patent policy
of such employer, or is a party to or threatened by any litigation concerning
any patents, trademarks, trade secrets, service names, trade names, copyrights,
licenses and the like.
-8-
3.17. Insurance
The Company and its subsidiaries and their respective properties
are insured in such amounts, against such losses and with such insurers as are
prudent when considered in light of the nature of the properties and businesses
of the Company and its subsidiaries. The Company maintains (or as of the Closing
Date will maintain) directors and officers insurance (in customary form) in
amounts not less than $10,000,000.
3.18. Transactions with Related Parties
Except as disclosed on Schedule 3.18, neither the Company nor any
subsidiary is a party to any agreement with any of the Company's directors,
officers or shareholders (other than shareholders which become such as a result
of the Public Offering and other than the Investors) or any Affiliate or family
member of any of the foregoing under which it: (i) leases any real or personal
property (either to or from such Person), (ii) licenses technology (either to or
from such Person), (iii) is obligated to purchase any tangible or intangible
asset from or sell such asset to such Person, (iv) purchases products or
services from such Person or (v) has borrowed money from or loaned money to such
Person. Except as set forth in Schedule 3.18, neither the Company nor any
subsidiary employs as an employee or engages as a consultant any family member
of any of the Company's directors, officers or shareholders. To the best
knowledge of the Company, there exist no agreements among shareholders of the
Company to act in concert with respect to their voting or holding of Company
securities.
3.19. Private Offering
Neither the Company nor anyone acting on its behalf, directly or
indirectly, has sold or has offered any of the Shares or Warrants (or any
similar security) for sale to, or solicited offers to buy from, or otherwise
approached or negotiated with respect thereto with, any prospective purchaser,
other than the Investors and not more than 10 other institutional investors,
each of which was offered such securities for purposes of investment. Neither
the Company nor anyone acting on its behalf shall offer the Shares or Warrants
(or any similar security) for issue or sale to, or solicit any offer to acquire
any of the same from, anyone so as to bring the issuance and sale of such Shares
or Warrants or Common Shares issuable upon exercise of the Warrants, or any part
thereof, within the provisions of Section 5 of the Securities Act or in
violation of the provisions of any securities or Blue Sky law of any applicable
jurisdiction. Based upon the representations of the Investors set forth in
Section 4 hereof and of the Other Agreements, the offer, issuance and sale of
the Shares and the Warrants and the issuance of the Common Shares issuable upon
exercise of the Warrants are and will be exempt from the registration and
prospectus delivery requirements
-9-
of the Securities Act, and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all other applicable securities laws.
3.20. Brokerage
There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Company and the
Company agrees to indemnify and hold the Investor harmless against any costs
(including, without limitation, reasonable attorneys fees and disbursements for
the defense of any such claims) or damages incurred as a result of any such
claim.
3.21. Illegal or Unauthorized Payments; Political Contributions
Neither the Company or any of its subsidiaries nor, to the best
of the Company's knowledge (after reasonable inquiry of its officers and
directors), any of the officers, directors, employees, agents or other
representatives of the Company or any of its subsidiaries or any other business
entity or enterprise with which the Company or any subsidiary is or has been
affiliated or associated, has, directly or indirectly, made or authorized any
payment, contribution or gift of money, property, or services, whether or not in
contravention of applicable law, (a) as a kickback or bribe to any Person or (b)
to any political organization, or the holder of or any aspirant to any elective
or appointive public office except for personal political contributions not
involving the direct or indirect use of funds of the Company or any of its
subsidiaries.
3.22. Material Facts
This Agreement, the schedules hereto and the other agreements,
documents, certificates or written statements furnished or to be furnished to
the Investor through the Closing Date by or on behalf of the Company in
connection with the transactions contemplated hereby taken as a whole, do not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein or herein, in
light of the circumstances in which they were made, not misleading. There is no
fact which is known to the Company and which has not been disclosed herein or
otherwise by the Company to the Investor which may materially adversely affect
the business, properties, assets or condition, financial or otherwise, or
prospects of the Company and its subsidiaries taken as a whole.
-10-
3.23. Foreign Assets Control Regulations, etc.
Neither the sale of the Shares and Warrants by the Company
hereunder nor its use of the proceeds thereof will violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company as follows:
(a) It is acquiring the Shares and Warrants (and will acquire the
Common Shares issuable upon conversion of the Warrants) for its own account for
investment and not with a view towards the distribution thereof, nor with any
present intention of distributing the Shares or Warrants (or the Common Shares
acquired upon exercise of the Shares), but subject, nevertheless, to any
requirement of law that the disposition of the Investor's property shall at all
times be within the Investor's control, and without prejudice to the Investor's
right at all times to sell or otherwise dispose of all or any part of such
securities under a registration under the Securities Act or under an exemption
from said registration available under the Securities Act to the extent
permitted by the Transaction Documents.
(b) It is either (x) a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act or (y) an "accredited investor"
within the meaning of Rule 501(a)(3) under the Securities Act.
(c) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Company as contemplated by this Agreement, and is able to bear
the economic risk of such investment for an indefinite period of time. It has
been furnished access to such information and documents as it has requested and
has been afforded an opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Shares and Warrants contemplated hereby.
(d) It has all requisite power and authority to execute this
Agreement and the Registration Rights Agreement, to perform its obligations
hereunder and thereunder and to acquire and hold the Shares and Warrants.
-11-
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1. Resale of Securities
(a) The Investor covenants that it will not sell or otherwise
transfer (and the Company shall not be required to register the transfer of) any
Shares or Warrants (or any Common Shares acquired upon exercise of the Warrants)
except pursuant to an effective registration under the Securities Act or in a
transfer effected under the provisions of Rule 144(k) under the Securities Act
or in a transaction which, in the opinion of counsel (which may be in-house
counsel to the Investor), qualifies as an exempt transaction under the
Securities Act and the rules and regulations promulgated thereunder and any
applicable state securities laws and in a manner consistent with the Investor's
representations and warranties set forth in Section 4 and subject to the
provisions of the Transaction Documents.
(b) The certificates evidencing the Shares and Warrants and
Common Shares issuable upon exercise of the Warrants will bear the following
legend reflecting the foregoing restrictions on the transfer of such securities:
"The securities evidenced hereby have
not been registered under the Securities Act of 1933,
as amended (the "Act"), and may not be transferred
except pursuant to an effective registration under the
Act or in a transaction which, in the opinion of
counsel, qualifies as an exempt transaction under the
Act and the rules and regulations promulgated
thereunder. The transfer of such securities is also
subject to certain limitations on transfer as set forth
in certain agreements between the Company and certain
institutional investors in the Company, copies of which
are available upon request of the Company."
5.2. Covenants Pending Closing
Pending the Closing the Company will not, without the Investor's
prior written consent, take any action which would result in any of the
representations or warranties contained in this Agreement not being true in all
material respects at and as of the time immediately after such action, or in any
of the covenants contained in this Agreement becoming incapable of performance
in all material respects. The Company will promptly advise the Investor in
writing of any action or event of which it becomes aware which has the effect of
making incorrect any of such representations or warranties in any material
respect or which has the effect of rendering any of such covenants incapable of
performance.
-12-
5.3. Further Assurance
Each of the parties shall execute such documents and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby. Each
such party shall use its reasonable efforts to fulfill or obtain the fulfillment
of the conditions to the Closing as promptly as practicable.
SECTION 6. INVESTOR'S CLOSING CONDITIONS
The obligation of the Investor to purchase and pay for the Shares
and Warrants on the Closing Date, as provided in Section 2 hereof, shall be
subject to the performance by the Company of its agreements theretofore to be
performed hereunder and to the satisfaction, prior thereto or concurrently
therewith, of the following further conditions:
6.1. Representations and Warranties
The representations and warranties of the Company contained in
this Agreement shall be true in all material respects on and as of the Closing
Date as though such warranties and representations were made at and as of such
date, except as otherwise affected by the transactions contemplated hereby.
6.2. Compliance with Agreement
The Company shall have performed and complied in all material
respects with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by the Company
prior to or on the Closing Date.
6.3. Officer's Certificate
The Investor shall have received a certificate, dated the Closing
Date, signed by each of the President and the Chief Operating Officer of the
Company, certifying that the conditions specified in the foregoing Sections 6.1
and 6.2 hereof have been fulfilled.
6.4. Delivery of Shares and Warrants
The Company shall have delivered to the Investor the certificates
evidencing the Shares and Warrants being purchased by it hereunder as provided
in Section 2.1.
6.5. Injunction
There shall be no injunction, writ, preliminary restraining order
or any order of any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.
-13-
6.6. Counsel's Opinions
The Investors shall have received (x) from the Company's counsel
delivering opinions to the Underwriters in connection with the Public Offering
on the IPO Closing Date, copies of such opinions together with letters from such
counsel allowing the Investor to rely thereon and (x) opinions, dated the
Closing Date, from counsel for the Company substantially to the effect that:
(i) Each of the Company and its subsidiaries is duly
organized and validly existing in good standing under
the laws of Bermuda, has the all requisite power and
authority and has all necessary approvals, licenses,
permits and authorization to own its properties and to
carry on its business as proposed to be conducted as
contemplated by the Registration Statement. The Company
has all requisite power and authority to execute and
deliver the Transaction Documents and to perform its
obligations thereunder.
(ii) Each of the Company and its subsidiaries are duly
qualified as a foreign corporation in every
jurisdiction in which such qualification is necessary,
except where the failure to so qualify would not have a
material adverse effect on the Company and its
subsidiaries taken as a whole.
(iii) Section 3.3(a) of this Agreement accurately
reflects the share records of the Company as to its
authorized and issued capital stock and the Company has
duly reserved for issuance such number of Common Shares
initially issuable upon exercise of the Warrants.
(iv) Except for the rights which attach to the Warrants
and to the warrants, options and convertible securities
listed on Schedule 3.3 hereto, to the best knowledge of
such counsel, there are no Common Shares issuable upon
conversion or exchange or exercise of any security of
the Company nor are there any rights, options or
warrants outstanding or other agreements to acquire
Common Shares from the Company nor is the Company
contractually obligated to purchase, redeem or
otherwise acquire any of its outstanding shares. Except
as disclosed in Schedule 3.3, no shareholder of the
Company is entitled to
-14-
any preemptive or similar right to subscribe for shares
of capital stock of the Company provided by statute or
the Organizational Documents or, to the best knowledge
of such counsel, by any other agreement or instrument.
(v) All the outstanding shares of capital stock of the
Company have been duly and validly issued and are fully
paid and non-assessable. When issued in accordance with
the terms of this Agreement, the Shares will be (and
upon their issuance the Common Shares issuable upon
exercise of the Warrants will be) (x) duly authorized,
validly issued, fully paid and non-assessable Common
Shares of the Company, free of all preemptive or
similar rights provided by statute or the
Organizational Documents or, to the best knowledge of
such counsel, any other agreement or instrument, and
(y) entitled to the rights described in Schedule 3.3.
(vi) The Company has duly authorized the execution,
delivery, and performance of the Transaction Documents
and each of the transactions and agreements
contemplated thereby, and no other corporate action is
necessary to authorize such execution, delivery or
performance. The Transaction Documents have been duly
executed and delivered on behalf of the Company and
constitute the valid and binding obligation of the
Company, enforceable against the Company in accordance
with their terms, except as such enforcement may be
subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and general
principles of equity.
(vii) The execution and delivery by the Company of the
Transaction Documents, the performance by the Company
of its obligations thereunder and the consummation by
the Company of the transactions contemplated thereby do
not require the Company to obtain any consent, approval
or action of, or make any filing with or give any
notice to, any corporation, person or firm or any
public, governmental or judicial authority except such
as have been duly obtained or made, as
-15-
the case may be, and are in full force and effect.
(viii) The execution and delivery of the Transaction
Documents do not, and the fulfillment of the terms
hereof and thereof by the Company and the issuance of
Common Shares upon conversion of the Warrants as herein
contemplated will not, (A) result in a breach of any of
the terms, conditions or provisions of, or constitute a
default under, any material indenture, mortgage, deed
of trust, credit agreement, note or other evidence of
indebtedness, or other material agreement to which the
Company or any of its subsidiaries is a party and which
is listed on Schedule 3.11, (B) violate the
Organizational Documents, or any law, rule or
regulation known to such counsel of any court or other
regulatory board or body or administrative agency
having jurisdiction over the Company or over its
properties or businesses or (C) conflict with or
constitute a default under any judgment, writ, decree
or order known to such counsel to be applicable by its
terms to the Company or any of its subsidiaries.
(ix) To the best knowledge of such counsel, there is no
action, suit, investigation or proceeding pending or
threatened, against the Company or any of its
properties or assets by or before any court, arbitrator
or governmental body, department, commission, board,
bureau, agency or instrumentality, which questions the
validity of the Transaction Documents, the Shares or
the Warrants or any action taken or to be taken
pursuant hereto or thereto.
(x) The issuance and sale of the Shares and Warrants do
not (and the issuance of Common Shares issuable upon
exercise of the Warrants will not) require registration
under Section 5 of the Securities Act or qualification
under any state securities or Blue Sky laws.
(xi) The choice of New York law and the submission by
the Company to the jurisdiction of New York State
courts and federal courts sitting in New York as
provided in Section 10.04 are valid and enforceable in
New York and in Bermuda.
-16-
6.7. Consummation of Public Offering
The Company shall have consummated the Public Offering as
contemplated by the Registration Statement at a price to the public of at least
$15.00 per share and shall have received not less than $150,000,000 in net
proceeds (after underwriting discounts and commissions which shall not in any
event exceed 6%) therefrom (the "Public Offering Proceeds"). The Public Offering
Proceeds shall exceed Other Sale Proceeds by the ratio of at least 2.5 to 1.0.
"Other Sale Proceeds" means the net proceeds to the Company from (x) the sale of
the Shares and Warrants hereunder and under the Other Agreements and (y) all
other sales of Common Shares (except to the underwriters in the Public Offering)
and securities convertible into, or exchangeable or exercisable for, Common
Shares (herein called "Other Sales"). The Company agrees that on and prior to
the Closing Date it will not make or agree to make Other Sales on terms more
favorable to the purchasers involved in such Other Sales than the terms of the
Agreement relating to the Shares and Warrants unless such more favorable terms
are also extended to the Investor.
6.8. Purchase by Other Investors
Each of the Other Investors shall have purchased the Shares and
Warrants to be purchased by it under the Other Agreements and the Company shall
have received payment of the Purchase Price under such Other Agreements.
6.9. Registration Rights Agreement
The Company shall have executed and delivered to the Investor the
Registration Rights Agreement, the form of which is attached as Exhibit B hereto
(the "Registration Rights Agreement").
6.10. Process Agent
The Investor shall have received a copy of the acceptance by CT
Corporation System of its appointment under the provisions of Section 11.8(d).
6.11. Proceedings
The Investor shall have received copies of all documents or other
evidence which it and its special counsel, ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, may
reasonably request in connection with the transactions contemplated hereby and
of all records of corporate proceedings in connection therewith.
SECTION 7. COMPANY CLOSING CONDITIONS
The obligation of the Company to issue and deliver the Shares and
Warrants on the Closing Date, as provided in Section 2
-17-
hereof, shall be subject to the performance by the Investor of its agreements
theretofore to be performed hereunder and to the satisfaction, prior thereto or
concurrently therewith, of the following further conditions:
7.1. Representations and Warranties
The representations and warranties of the Investor contained in
this Agreement shall be true on and as of the Closing Date as though such
warranties and representations were made at and as of such date, except as
otherwise affected by the transactions contemplated hereby.
7.2. Compliance with Agreement
The Investor shall have performed and complied with all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by it prior to or on the Closing Date.
7.3. Injunction
There shall be no injunction, writ, preliminary restraining order
or any order of any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.
7.4. Consummation of Public Offering.
The Company shall have consummated the Public Offering as
contemplated by the Registration Statement at a price to the public of at least
$15.00 per share and shall have received not less than $150,000,000 in net
proceeds (after underwriting discounts and commissions) therefrom.
SECTION 8. LIMITATION ON DISPOSITION
The Investor will not, without the consent of the Company, sell,
transfer or otherwise dispose of the Shares or Warrants for a period of one year
after the Closing Date except (i) to one or more of its Affiliates, or (ii) to
any institutional investor purchasing all of the Shares and Warrants then held
by the Investor (or if not all such Shares and Warrants, Shares and/or Warrants
representing at least 1,000,000 Common Shares (assuming exercise of the
Warrants)); provided that any such transferee shall agree to be bound by the
provisions of this Section 8. The Investor will agree to execute a "lock-up"
agreement with the Underwriters in connection with the Public Offering in
customary form and as more particularly described in Exhibit C hereto.
-18-
SECTION 9. COVENANTS
9.1. Financial and Business Information
From and after the date hereof, the Company shall deliver to each
of the Investors so long as such Investor owns beneficially (within the meaning
of Rule 13d-3 under the Exchange Act) any Shares or Warrants or Common Shares
issuable upon exercise of the Warrants:
(a) Quarterly Statements - as soon as practicable, and in any
event within 45 days after the close of each of the first three fiscal quarters
of each fiscal year of the Company in the case of quarterly statements, a
consolidated balance sheet, statement of income and statement of cash flows of
the Company and any subsidiaries as at the close of such month or quarter and
covering operations for such month or quarter, as the case may be, and the
portion of the Company's fiscal year ending on the last day of such month or
quarter, all in reasonable detail and prepared in accordance with GAAP, subject
to audit and year-end adjustments, setting forth in each case in comparative
form the figures for the comparable period of the previous fiscal year.
(b) Annual Statements - as soon as practicable after the end of
each fiscal year of the Company, and in any event within 90 days thereafter,
duplicate copies of:
(1) consolidated balance sheet of the Company and any
subsidiaries at the end of such year; and
(2) consolidated statements of income, stockholders' equity and
cash flows of the Company and any subsidiaries for such year, setting
forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and accompanied by an opinion
thereon of independent certified public accountants of recognized
national standing selected by the Company, which opinion shall state
that such financial statements fairly present the financial position
of the Company and any subsidiaries on a consolidated basis and have
been prepared in accordance with GAAP (except for changes in
application in which such accountants concur) and that the examination
of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards,
and accordingly included such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances.
(c) Audit Reports - promptly upon receipt thereof, one copy of
each other financial report and internal control letter submitted to the Company
or any subsidiary by independent accountants in connection with any annual,
interim or special audit made by them of the books of the Company or any
subsidiary.
-19-
(d) Other Reports - promptly upon their becoming available, one
copy of each financial statement, report, notice or proxy statement sent by the
Company to shareholders generally, of each financial statement, report, notice
or proxy statement filed by the Company or any of its subsidiaries with the SEC
or any successor agency, if applicable, of each regular or periodic report and
any registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Company or any subsidiary
with, or received by such Person in connection therewith from, any domestic or
foreign securities exchange, the SEC or any successor agency or any foreign
regulatory authority performing functions similar to the SEC, of any press
release issued by the Company or any subsidiary, and of any material of any
nature whatsoever prepared by the SEC or any successor agency thereto or any
state blue sky or securities law commission which relates to or affects in any
way the Company or any subsidiary.
(e) Requested Information - with reasonable promptness, the
Company shall furnish each of the Investors with such other data and information
as from time to time may be reasonably requested.
9.2. Inspection
As long as an Investor owns beneficially (within the meaning of
Rule 13d-3 under the Exchange Act) at least two percent (2%) of the outstanding
Common Shares, the Company shall permit such Investor, its nominee, assignee,
and its representative during normal business hours and upon reasonable advance
notice to visit and inspect any of the properties of the Company and its
subsidiaries, to examine all its books of account, records, reports and other
papers not contractually required of the Company to be confidential or secret,
to make copies and extracts therefrom, and to discuss its affairs, finances and
accounts with its officers, directors, key employees and independent public
accountants or any of them (and by this provision the Company authorizes said
accountants to discuss with such Investor, its nominees, assignees and
representatives the finances and affairs of the Company and any subsidiaries),
all at such reasonable times and as often as may be reasonably requested.
9.3. Keeping of Books
The Company will keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Company and its subsidiaries in accordance with
GAAP.
-20-
9.4. Lost, etc. Certificates; Exchange
Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of any certificate
evidencing any Shares or Warrants (or Common Shares issuable upon exercise of
the Warrants) owned by one of the Investors, and (in the case of loss, theft or
destruction) of an unsecured indemnity satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such certificate, if mutilated, the Company
will make and deliver in lieu of such certificate a new certificate of like
tenor and for the number of shares evidenced by such certificate which remain
outstanding. Such Investor's agreement of indemnity shall constitute indemnity
satisfactory to the Company for purposes of this Section 9.5. Upon surrender of
any certificate representing any Shares (or Common Shares issuable upon exercise
of the Warrants) for exchange at the office of the Company, the Company at its
expense will cause to be issued in exchange therefor new certificates in such
denomination or denominations as may be requested for the same aggregate number
of Shares, Warrants or Common Shares, as the case may be, represented by the
certificate so surrendered and registered as such holder may request. The
Company will also pay the cost of all deliveries of certificates for such
securities to the office of such Investor (including the cost of insurance
against loss or theft in an amount satisfactory to the holders) upon any
exchange provided for in this Section 9.5.
9.5. Review of Documents
The Investor shall have the right to review and approve all
statements or disclosures (in the Registration Statement or in press releases or
elsewhere) made by the Company in relation to the Investor's investment in and
relationship to the Company.
9.6. Confidential Information
The Investor acknowledges that its receipt of material non-public
information as a consequence of its exercise of its rights under Sections 9.1
and 9.2 may obligate it not to trade in securities of the Company which it may
hold so long as such information is not publicly disclosed by the Company. Such
information will be utilized by the Investor to analyze its investment in the
Company.
SECTION 10. INTERPRETATION OF THIS AGREEMENT
10.1. Terms Defined
As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Section hereof following
such term:
-21-
Affiliate: means any Person or entity, directly or indirectly,
controlling, controlled by or under common control with such Person or entity.
Business Day: shall mean a day other than a Saturday, Sunday or
other day on which banks in New York, New York and ▇▇▇▇▇▇▇▇, Bermuda are not
required or authorized by law to close.
Closing: shall have the meaning set forth in Section 2.2.
Closing Date: shall have the meaning set forth in Section 2.2.
Common Shares: shall have the meaning set forth in Section 1.
Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended.
GAAP: at any time shall mean United States generally accepted
accounting principles at the time in effect.
Intellectual Property: shall have the meaning set forth in
Section 3.16.
Investor: shall mean the Person executing this Agreement on the
signature page hereof and its successors and assigns as the holder of Shares,
Warrants or Common Shares issuable upon exercise of the Warrants.
IPO Closing Date: shall mean the date of the consummation of the
Public Offering.
Material Adverse Effect: shall have the meaning set forth in
Section 3.1(c).
Material Contract: shall have the meaning set forth in Section
3.11.
Other Agreements: shall have the meaning set forth in Section
2.1.
Organizational Documents: shall have the meaning set forth in
Section 3.1(a).
Person: shall mean an individual, partnership, joint-stock
company, corporation, limited liability company, trust or unincorporated
organization, and a government or agency or political subdivision thereof.
-22-
Public Offering: shall mean the sale by the Company of its Common
Shares to the underwriters as contemplated by the Registration Statement.
Registration Rights Agreement: shall have the meaning set forth
in Section 6.8.
Registration Statement: shall mean the Registration Statement
filed by the Company with the SEC on Form S-1 (No.333-43301) on December 24,
1997, as amended, in the form it becomes effective under the Securities Act.
SEC: shall mean the Securities and Exchange Commission.
Securities Act: shall mean the Securities Act of 1933, as
amended.
Shares: shall have the meaning set forth in Section 2.1.
subsidiary: shall mean a corporation of which a Person owns,
directly or indirectly, more than 50% of the Voting Stock.
Transaction Documents: shall mean this Agreement, the Other
Agreements, the Class B Warrants and the Registration Rights Agreement.
Voting Stock: shall mean securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
Warrants: shall have the meaning set forth in Section 2.1.
10.2. Directly or Indirectly
Where any provision in this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
10.3. Section Headings
The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
thereof.
-23-
SECTION 11. MISCELLANEOUS
11.1. Notices
(a) All communications under this Agreement shall be in writing
and shall be delivered by hand or facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(1) if to the Investor, at: the address specified in Schedule
2.1, or at such other address as the Investor may have furnished
the Company in writing, or
(2) if to the Company, at: ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ Street, P.O.
Box HM1262, ▇▇▇▇▇▇▇▇, ▇▇ FX, Bermuda, marked for the attention of
President, or at such other address as it may have furnished the
Investor in writing.
(b) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the date
of such mailing.
11.2. Expenses and Taxes
(a) Whether or not the issue and sale of the Shares and Warrants
contemplated hereby are consummated, the Company will pay all costs and expenses
(including attorneys' fees and disbursements of counsel) incurred by the
Investor in connection with such issue and sale and all costs and expenses
(including attorneys' fees and disbursements of counsel) incurred by the
Investor in connection with any amendments, waivers or consents under or in
respect of the Transaction Documents (whether or not such amendment, waiver or
consent becomes effective). In addition, the Company will pay the Investor the
costs and expenses (including attorneys' fees and disbursements) incurred by it
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under the Transaction Documents or in responding to any subpoena or
other legal process or informal investigative demand (which investigative demand
shall have been issued by a governmental agency or official) issued in
connection with the Transaction Documents or the Investor's investment in the
Company.
(b) The Company will pay, and save and hold the Investor harmless
from, any and all claims arising out of or relating to the transactions
contemplated by the Transaction Documents or the performance thereof and all
liabilities (including interest and penalties) with respect to, or resulting
from any delay or failure in paying, stamp and other taxes (other
-24-
than income taxes), if any, which may be payable or determined to be payable on
the execution and delivery or acquisition of the Shares or Warrants or the
Common Shares issuable upon exercise of the Warrants.
11.3. Reproduction of Documents
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter
be executed, (b) documents received by the Investors on the Closing Date (except
for certificates evidencing the Shares themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to the Investors, may be reproduced by the Investors by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process and either Investor may destroy any original document so reproduced. All
parties hereto agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by an Investor in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
11.4. Termination and Survival
Unless the Closing has occurred prior thereto, this Agreement
and, except as herein provided, all the rights of the parties hereto, shall
terminate on June 30, 1998 (unless such date is extended by mutual written
consent). Notwithstanding the foregoing, Section 11.2 hereof shall survive the
termination of this Agreement. All warranties, representations, and covenants
made by the Investor and the Company herein or in any certificate or other
instrument delivered by the Investor or the Company under this Agreement shall
be considered to have been relied upon by the Company or the Investor, as the
case may be, regardless of any investigation made by the Investor and shall
survive all deliveries to the Investor of the Shares, or payment to the Company
for such Shares and Warrants, regardless of any investigation made by the
Company or the Investor, as the case may be, or on the Company's or the
Investor's behalf. All statements in any such certificate or other instrument
shall constitute warranties and representation by the Company hereunder, except
that the Investor shall not be required to purchase Shares or Warrants from any
Person other than the Company.
11.5. Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties.
-25-
11.6. Entire Agreement; Amendment and Waiver
This Agreement and the agreements attached as Exhibits hereto
constitute the entire understandings of the parties hereto and supersede all
prior agreements or understandings with respect to the subject matter hereof
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Company and the Investor.
11.7. Severability
In the event that any part or parts of this Agreement shall be
held illegal or unenforceable by any court or administrative body of competent
jurisdiction, such determination shall not effect the remaining provisions of
this Agreement which shall remain in full force and effect.
11.8. Governing Law; Submission to Jurisdiction
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
(b) Each of the Company and the Investor (each a "Party")
irrevocably submits to the non-exclusive in personam jurisdiction of any New
York State or United States federal court sitting in the Borough of Manhattan,
The City of New York, over any suit, action or proceeding arising out of or
relating to the Transaction Documents. To the full extent it may effectively do
so under applicable law, each Party irrevocably waives and agrees not to assert,
by way of motion, as a defense or otherwise, any claim that it is not subject to
the in personam jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
(c) Each Party agrees, to the full extent it may effectively do
so under applicable law, that a final judgment in any suit, action or proceeding
of the nature referred to in paragraph (b) of this Section 11.8 brought in any
such court shall be conclusive and binding upon such Party, subject to rights of
appeal and may be enforced in the courts of the United States or the State of
New York (or any other courts to the jurisdiction of which such Party is or may
be subject) by a suit upon such judgment.
(d) Each Party consents to process being served in any suit,
action or proceeding of the nature referred to in paragraph (b) of this Section
11.8 by mailing a copy thereof by registered or certified mail, postage prepaid,
return receipt requested, to
-26-
the address of such Party specified in Section 11.1 or at such other address of
which the other Party shall then have been notified pursuant to said Section.
Without limiting the foregoing, the Company hereby appoints, in the case of any
such suit, action or proceeding brought in the courts of or in the State of New
York, CT Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, to receive, for it and
on its behalf, service of process in the State of New York with respect thereto.
Each Party agrees that such service upon receipt by it or its agent, as the case
may be, (i) shall be deemed in every respect effective service of process upon
it in any such suit, action or proceeding and (ii) shall, to the full extent
permitted by applicable law, be taken and held to be valid personal service upon
and personal delivery to such Party. Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United
States Postal Service or the Bermuda Post or any reputable commercial delivery
service.
(e) Nothing in this Section 11.8 shall affect the right of any
Party to serve process in any manner permitted by law, or limit any right that
such Party may have to bring proceedings against the other Party in the courts
of any appropriate jurisdiction or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction.
(f) Each Party waives trial by jury in any action brought on or
with respect to the Transaction Documents or any other document executed in
connection therewith.
11.9. Counterparts
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
-27-
If you are in agreement with the foregoing please so indicate by
executing the acceptance set forth below and return a copy of this Agreement to
the Company, whereupon this Agreement shall be a binding agreement between us.
Very truly yours,
ANNUITY AND LIFE RE
(HOLDINGS), LTD.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
The foregoing Agreement is
hereby accepted:
EXEL LIMITED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: EVP & CFO
-28-
Schedule 2.1
Investors
---------
Number of
Shares and
Investor Name and Address Warrants* Purchase Price
------------------------------- ---------- --------------
Risk Capital Reinsurance 1,418,440 $20,000,000
Company Shares
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 100,000
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Warrants
ATTN: Managing Director
The Prudential Insurance 1,028,369 $14,500,000
Company of America Shares
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 72,500
Gateway Two Warrants
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇▇▇▇
EXEL Limited 1,418,440 $20,000,000
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shares
Hamilton, Bermuda 100,000
HM 11 Warrants
ATTN: Chief Financial Officer
-----------------------
* The number of Shares to be purchased by The Prudential Insurance Company of
America shall not exceed 4.9% of the outstanding Common Shares on the
Closing Date. To the extent the number of shares purchased is less than
that specified above, the Purchase Price shall be reduced by $14.10 for
each share not so purchased. The number of Warrants shall be reduced to the
number obtained by dividing the reduced Purchase Price by $200.
EXHIBIT C
---------
Lock-up Provisions
------------------
The Investor will agree with the Underwriters in connection with the Public
Offering not to offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose of (or announce any of the
foregoing) any of the Shares or Warrants or Common Shares issuable upon exercise
of the Warrants for a period of one year after the Closing Date (180 days if the
Investor is The Prudential Insurance Company of America) without, in any such
case, the consent of Prudential Securities Incorporated and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
on behalf of the Underwriters.