<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 15, 1998
REGISTRATION NO. 333-43301
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ANNUITY AND LIFE RE (HOLDINGS), LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
BERMUDA 6311 NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OF ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
VICTORIA HALL, VICTORIA STREET CT CORPORATION SYSTEM
P.O. BOX HM1262 1633 BROADWAY
HAMILTON, HM FX, BERMUDA NEW YORK, NEW YORK 10019
(441) 295-3278 (212) 664-1666
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND
INCLUDING AREA CODE, OF REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE,
PRINCIPAL EXECUTIVE OFFICES) OF AGENT FOR SERVICE)
</TABLE>
COPIES TO:
<TABLE>
<S> <C> <C>
F. DOUGLAS RAYMOND, III, ESQ. CHARLES G. COLLIS, JR., ESQ. CRAIG B. BROD, ESQ.
DRINKER BIDDLE & REATH LLP CONYERS DILL & PEARMAN CLEARY, GOTTLIEB, STEEN & HAMILTON
1100 PHILADELPHIA NATIONAL BANK BUILDING CLARENDON HOUSE ONE LIBERTY PLAZA
1345 CHESTNUT STREET 2 CHURCH STREET, P.O. BOX HM666 NEW YORK, NEW YORK 10006
PHILADELPHIA, PENNSYLVANIA 19107-3496 HAMILTON, HM CX, BERMUDA (212) 225-2000
(215) 988-2700 (441) 295-1422
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable by the Registrant in
connection with this Registration Statement. All of such expenses are estimates,
other than the filing and quotation fees payable to the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. and The Nasdaq
National Market.
<TABLE>
<S> <C>
Filing Fee -- Securities and Exchange Commission................... $90,919
Filing Fee -- National Association of Securities Dealers, Inc...... 30,500
Quotation Fees -- The Nasdaq National Market....................... 50,000
Advisory Fees...................................................... *
Reimbursement to Inter-Atlantic Securities Corp.................... *
Fees and Expenses of Counsel....................................... *
Fees and Expenses of Accountants................................... *
Printing Expenses.................................................. *
Blue Sky Fees and Expenses......................................... *
Fees and Expenses of Transfer Agent................................ *
Miscellaneous Expenses............................................. *
-------
Total.................................................... $ *
=======
</TABLE>
- ---------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 31 of the Registrant's Bye-Laws provides that: (a) the directors
and officers of the Registrant shall be indemnified from and against all
actions, costs, charges, losses, damages and expenses which they shall incur by
reason of any act done in connection with their duty as a director or officer of
the Registrant (b) each director and officer of the Registrant shall be
indemnified out of the funds of the Registrant against all liabilities incurred
by him as such a director or officer of the Registrant in defending any
proceedings in which judgment is given in his favor or he is acquitted or
relieved from liability and (c) funds shall be advanced to each director or
officer of the Registrant on his incurring liability prior to judgment provided
that should he be found guilty of a criminal or other offense for which he
cannot by law be indemnified he shall reimburse the Registrant for the funds
advanced.
Section 32 of the Registrant's Bye-Laws provides that each shareholder
agrees to waive any claim or right of action such shareholder might have against
any director or officer on account of any action taken by such director or
officer, or the failure of such director or officer to take any action in the
performance of his or her duties with or for the Registrant, provided that such
waiver does not extend to any matter in respect of any fraud or dishonesty that
may attach to such director or officer.
Reference is made to the form of Underwriting Agreement to be filed as
Exhibit 1.1 hereto for provisions providing that the Underwriters are obligated,
under certain circumstances, to indemnify the directors, certain officers and
the controlling persons of the Registrant against certain liabilities under the
Securities Act of 1933, as amended (the "Securities Act").
Reference is made to the Agreement to be filed as Exhibit 10.4 hereto for
provisions providing that the Registrant and Inter-Atlantic Securities Corp. are
each obligated to indemnify the other for certain actions.
II-1
<PAGE> 3
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since its formation, the Registrant has issued the following securities
that were not registered under the Securities Act:
(a) On December 3, 1997, the Registrant sold 12,000 Common Shares to
the Annuity Re Purpose Trust, a Bermuda trust, for an aggregate price of
$12,000. The Registrant will repurchase these shares upon consummation of
the Offering and such shares will be cancelled.
(b) On December 9, 1997, the Registrant sold Class A Warrants for an
aggregate price of $238,000 to Frederick S. Hammer, Robert M. Lichten,
Michael P. Esposito, Jr., William S. Ogden, Jr., Andrew S. Lerner and
Arnold Welles to purchase up to an aggregate number of Common Shares equal
to 12% of the sum of (i) the Common Shares outstanding immediately
following the consummation of the Offering (but excluding any shares held
by the Annuity Re Purpose Trust) and (ii) the Common Shares issuable upon
exercise or conversion of any security outstanding immediately following
the consummation of the Offering, except for the Class A Warrants and any
options granted by the Company under its Initial Stock Option Plan at an
exercise price equal to the initial public offering price per share.
No underwriters were involved in the foregoing sales of securities. Such
sales were made in reliance upon an exemption from the registration provisions
of the Securities Act set forth in Section 4(2) thereof relative to sales by an
issuer not involving a public offering. All of the foregoing securities are
deemed restricted securities for purposes of the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ ----------------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1** Memorandum of Association, as amended.
3.2** Bye-Laws.
4.1* Specimen Common Share Certificate.
4.2** Form of Class A Warrant.
5.1*** Form of opinion of Conyers Dill & Pearman.
8.1*** Form of opinion of Conyers Dill & Pearman (included in Exhibit 5.1).
8.2** Form of opinion of Drinker Biddle & Reath LLP.
10.1** Employment Agreement, dated as of December 3, 1997, between Lawrence S. Doyle and
the Registrant.
10.2** Initial Stock Option Plan.
10.3** Insurance Management Agreement, dated as of December 22, 1997, between Marsh &
McLennan Management (Bermuda) Limited and the Registrant.
10.4** Agreement, dated as of December 23, 1997, between Inter-Atlantic Securities Corp.
and the Registrant.
10.5** Registration Rights Agreement dated January , 1998 between the Registrant and
the holders of the Class A Warrants.
21.1*** Subsidiaries of the Registrant.
23.1*** Consent of Conyers Dill & Pearman (included in Exhibit 5.1).
23.2** Consent of Drinker Biddle & Reath LLP (included in Exhibit 8.2).
23.3*** Consent of KPMG Peat Marwick.
24.1**** Powers of Attorney.
</TABLE>
II-2
<PAGE> 4
- ---------------
* To be filed by amendment.
** Filed herewith.
*** Previously filed.
**** Included on signature page to Company's Registration Statement on Form S-1
(333-43301) previously filed with the Securities and Exchange Commission on
December 24, 1997.
(b) Financial Statement Schedules
All schedules of the Registrant for which provision is made in the
applicable accounting regulations of the Commission are not required, are
inapplicable, or have been disclosed in the notes to the consolidated financial
statements and therefore have been omitted.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
2. For the purposes of determining any liability under the Securities
Act of 1933, each posteffective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Hamilton, Bermuda, on the 15th day of January, 1998.
ANNUITY AND LIFE RE (HOLDINGS), LTD.
By: /s/ LAWRENCE S. DOYLE
------------------------------------
Lawrence S. Doyle
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ ------------------
<C> <S> <C>
/s/ LAWRENCE S. DOYLE President, Chief Executive January 15, 1998
- ------------------------------------------ Officer and Director
Lawrence S. Doyle (Principal Executive
Officer)
/s/ ANDREW S. LERNER Interim Chief Financial January 15, 1998
- ------------------------------------------ Officer (Principal Financial
Andrew S. Lerner and Accounting Officer)
* Chairman and Director January 15, 1998
- ------------------------------------------
Frederick S. Hammer
* Director January 15, 1998
- ------------------------------------------
Michael P. Esposito, Jr.
* Deputy Chairman and Director January 15, 1998
- ------------------------------------------
Robert M. Lichten
Director January 15, 1998
- ------------------------------------------
Charles G. Collis, Jr.
</TABLE>
* Lawrence S. Doyle, pursuant to a Power of Attorney executed by each of the
directors and officers noted above and included in the signature page of the
initial filing of this Registration Statement, by signing his name hereto,
does hereby sign and execute this Amendment No. 1 to the Registration
Statement on behalf of each of the persons noted above, in the capacities
indicated, and does hereby sign and execute this Amendment No. 1 to the
Registration Statement on his own behalf, in the capacities indicated.
/s/ LAWRENCE S. DOYLE
--------------------------------------
Lawrence S. Doyle
II-4
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ---------------------------------------------------------------------------- -----
<S> <C> <C>
1.1* Form of Underwriting Agreement.
3.1** Memorandum of Association, as amended.
3.2** Bye-Laws.
4.1* Specimen Common Share Certificate.
4.2** Form of Class A Warrant.
5.1*** Form of opinion of Conyers Dill & Pearman.
8.1*** Form of opinion of Conyers Dill & Pearman (included in Exhibit 5.1).
8.2** Form of opinion of Drinker Biddle & Reath LLP.
10.1** Employment Agreement, dated as of December 3, 1997, between Lawrence S.
Doyle and the Registrant.
10.2** Initial Stock Option Plan.
10.3** Insurance Management Agreement, dated as of December 22, 1997, between Marsh
& McLennan Management (Bermuda) Limited and the Registrant.
10.4** Agreement, dated as of December 23, 1997, between Inter-Atlantic Securities
Corp. and the Registrant.
10.5** Registration Rights Agreement.
21.1*** Subsidiaries of the Registrant.
23.1*** Consent of Conyers Dill & Pearman (included in Exhibit 5.1).
23.2** Consent of Drinker Biddle & Reath LLP (included in Exhibit 8.2).
23.3*** Consent of KPMG Peat Marwick.
24.1**** Powers of Attorney.
</TABLE>
- ---------------
* To be filed by amendment.
** Filed herewith.
*** Previously filed.
**** Included on signature page to Company's Registration Statement on Form S-1
(333-43301) previously filed with the Securities and Exchange Commission on
December 24, 1997.
<PAGE> 1
EXHIBIT 3.1
Memorandum of Association, as amended
FORM NO. 2
[NATION OF BERMUDA SEAL]
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF ASSOCIATION OF
COMPANY LIMITED BY SHARES
(Section 7(1) and (2))
MEMORANDUM OF ASSOCIATION
OF
Annuity Re (Holdings), Ltd.
(hereinafter referred to as "the Company")
1. The liability of the members of the Company is limited to the amount (if
any) for the time being unpaid on the shares respectively held by them.
2. We, the undersigned, namely,
NAME ADDRESS BERMUDIAN NATIONALITY NUMBER OF
STATUS SHARES
(Yes/No) SUBSCRIBED
Anthony D. Whaley Clarendon House Yes British One
2 Church Street
Hamilton HM11
Bermuda
Edwin S. Mortimer " Yes British One
Donald H. Malcolm " Yes British One
do hereby respectively agree to take such number of shares of the Company as
may be allotted to us respectively by the provisional directors of the Company,
not exceeding the number of shares for which we have respectively subscribed,
and to satisfy such calls as may be made by the directors, provisional
directors or promoters of the Company in respect of the shares allotted to us
respectively.
<PAGE> 2
3. THE COMPANY IS TO BE AN EXEMPTED COMPANY AS DEFINED BY THE COMPANIES ACT
1981.
4. THE COMPANY HAS POWER TO HOLD LAND SITUATED IN BERMUDA NOT EXCEEDING IN ALL,
INCLUDING THE FOLLOWING PARCELS -
N/A
5. THE AUTHORISED SHARE CAPITAL OF THE COMPANY IS US$250,000 DIVIDED INTO SHARES
OF US$1.00 EACH. THE MINIMUM SUBSCRIBED SHARE CAPITAL OF THE COMPANY IS
US$12,000.
6. THE OBJECTS FOR WHICH THE COMPANY IS FORMED AND INCORPORATED ARE -
1. to act and to perform all the functions of a holding company in all its
branches and to co-ordinate the policy and administration of any
subsidiary company or companies wherever incorporated or carrying on
business or of any group of companies of which the Company or any
subsidiary company is a member or which are in any manner controlled
directly or indirectly by the Company.
2. to act as an investment company and for that purpose to acquire and hold
upon any terms and, either in the name of the Company or that of any
nominee, shares, stock, debentures, debenture stock, annuities, notes,
mortgages, bonds, obligations and securities, foreign exchange, foreign
currency deposits and commodities, issued or guaranteed by any company
wherever incorporated or carrying on business, or by any government,
sovereign, ruler, commissioners, public body or authority, supreme,
municipal, local or otherwise, by original subscription, tender,
purchase, exchange, underwriting, participation in syndicates or in any
other manner and whether or not fully paid up, and to make payments
thereon as called up or in advance of calls or otherwise and to
subscribe for the same, whether conditionally or absolutely, and to hold
the same with a view to investment, but with the power to vary any
investments, and to exercise and enforce all rights and powers conferred
by or incident to the ownership thereof, and to invest and deal with the
moneys of the Company not immediately required upon such securities and
in such manner as may be from time to time determined;
3. as set out in paragraphs (b) to (n) and (p) to (u) inclusive of the
Second Schedule to The Companies Act 1981.
7. POWERS OF THE COMPANY
1. The Company shall, pursuant to Section 42 of the Companies Act 1981,
have the power to issue preference shares which are, at the option of
the holder, liable to be redeemed.
<PAGE> 3
Signed by each subscriber in the presence of at least one witness attesting the
signature thereof.
- --------------------------------- -------------------------------
/s/ Anthony D. Whaley [Signature Illegible]
- --------------------------------- -------------------------------
/s/ Edwin S. Mortimer [Signature Illegible]
- --------------------------------- -------------------------------
/s/ Donald H. Malcolm [Signature Illegible]
- --------------------------------- -------------------------------
(Subscribers) (Witnesses)
SUBSCRIBED this 10th day of November, 1997
<PAGE> 4
FORM NO. 3a REGISTRATION NO. EC/24176
[LOGO]
BERMUDA
CERTIFICATE OF INCORPORATION
ON CHANGE OF NAME
I HEREBY CERTIFY that in accordance with section 10 of THE COMPANIES ACT 1981
ANNUITY RE (HOLDINGS), LTD. by resolution and with the approval of the Registrar
of Companies has changed its name and was registered as ANNUITY AND LIFE RE
(HOLDINGS), LTD. on the 17TH day of DECEMBER, 1997.
Given under my hand and the Seal of the REGISTRAR
OF COMPANIES this 31ST day of DECEMBER, 1997.
/s/[ILLEGIBLE]
---------------------------------
STAMP DUTY (To be affixed) FOR ACTING REGISTRAR OF COMPANIES
<PAGE> 5
FORM NO. 7
[LOGO]
BERMUDA
THE COMPANIES ACT 1981
MEMORANDUM OF INCREASE OF SHARE CAPITAL
OF
Annuity and Life Re (Holdings), Ltd.
---------------------------------------
(hereinafter referred to as "the Company")
DEPOSITED in the office of the Registrar of Companies on the 17 day of December,
1997, in accordance with the provisions of Section 45(3) of the Companies Act
1981.
Minimum Share Capital of the Company US$250,000.00
Authorised Share Capital of the Company US$250,000.00
Increase of Share Capital as authorised
by a resolution passed at a general
meeting of the Company on the 3rd US$149,750,000.00
day of December , 1997
-----------------
AUTHORISED SHARE CAPITAL AS INCREASED
US$150,000,000.00
-----------------
DULY STAMPED in the amount of BD$XXXXXXX being the stamp duly payable on the
amount of increase of share capital of the Company in accordance with the
provisions of the Stamp Duties Act, 1976.
/S/ May Coye
-----------------
Secretary
DATED THIS 17 day of December , 1997.
NOTE: This memorandum must be filed in the office of the Registrar of Companies
within thirty days after the date on which the resolution increasing the
share capital has effect and must be accompanied by a copy of the
resolution and the prescribed fee.
<PAGE> 6
Annuity and Life Re (Holdings), Ltd.
Clarendon House
2 Church Street
Hamilton HM11 Bermuda
I, May Coye, Secretary of Annuity and Life Re (Holdings), Ltd., DO HEREBY
CERTIFY that the following is a true copy of a Resolution adopted by the Members
of the Company at a Meeting thereof duly convened and held on the 3rd day of
December, 1997, at which Meeting a quorum was present and voting throughout and
that such Resolution is still in full force and effect as at the date hereof:
"RESOLVED that the authorised capital of the Company be increased from
US$250,000 to US$150,000,000 by the creation of an additional 99,750,000
common shares of a par value of US$1.00 and an additional 50,000,000
preferred shares of par value US$1.00, each with rights as set out in the
Bye-Laws of the Company."
/s/ May Coye
____________________________________
Secretary
Dated. This 23rd day of December, 1997.
<PAGE> 1
EXHIBIT 3.2
BYE-LAWS
B Y E - L A W S
of
ANNUITY AND LIFE RE (HOLDINGS), LTD.
[Adopted by resolution of the Members on January 15, 1998.]
<PAGE> 2
Exhibit 3.2
B Y E - L A W S
of
ANNUITY AND LIFE RE HOLDINGS, LTD.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Interpretation....................................................... 1
2. Board of Directors................................................... 6
3. Management of the Company............................................ 6
4. Power to appoint chief executive officer............................. 6
5. Power to appoint manager............................................. 6
6. Power to authorise specific actions.................................. 7
7. Power to appoint attorney............................................ 7
8. Power to appoint and dismiss employees............................... 7
9. Power to borrow and charge property.................................. 7
10. Power to purchase shares of the Company.............................. 7
11. Election of Directors................................................ 9
12. Defects in appointment of Directors.................................. 10
13. Alternate Directors.................................................. 10
14. Removal of Directors................................................. 11
15. Vacancies on the Board............................................... 11
16. Notice of meetings of the Board...................................... 12
17. Quorum at meetings of the Board...................................... 12
18. Meetings of the Board................................................ 13
19. Unanimous written resolutions........................................ 13
20. Contracts and disclosure of Directors' interests..................... 13
21. Remuneration of Directors............................................ 14
</TABLE>
-i-
<PAGE> 4
<TABLE>
<S> <C>
22. Other interests of Directors......................................... 14
23. Power to delegate to a committee..................................... 15
24. Officers of the Company.............................................. 15
25. Appointment of Officers.............................................. 15
26. Remuneration of Officers............................................. 15
27. Duties of Officers................................................... 15
28. Chairman of meetings................................................. 16
29. Register of Directors and Officers................................... 16
30. Obligations of Board to keep minutes................................. 17
31. Indemnification of Directors and Officers of the Company............. 17
32. Waiver of claim by Member............................................ 18
33. Notice of annual general meeting..................................... 18
34. Notice of special general meeting.................................... 19
35. Accidental omission of notice of general meeting..................... 19
36. Meeting called on requisition of Members............................. 19
37. Short notice......................................................... 19
38. Postponement of Meetings............................................. 20
39. Quorum For General Meeting........................................... 20
40. Adjournment of meetings.............................................. 20
41. Attendance at meetings............................................... 20
42. Written resolutions.................................................. 21
43. Attendance of Directors.............................................. 22
44. Voting at meetings................................................... 22
</TABLE>
-ii-
<PAGE> 5
<TABLE>
<S> <C>
45. Voting on show of hands.............................................. 22
46. Decision of chairman................................................. 22
47. Demand for a poll.................................................... 23
48. Seniority of joint holders voting.................................... 24
49. Instrument of proxy.................................................. 24
50. Representation of corporations at meetings........................... 24
51. Rights of shares..................................................... 25
52. Limitation on voting rights of Controlled Shares..................... 26
53. Power to issue shares................................................ 29
54. Variation of rights and alteration of share capital.................. 30
55. Registered holder of shares.......................................... 30
56. Death of a joint holder.............................................. 31
57. Share certificates................................................... 31
58. Calls on shares...................................................... 31
59. Contents of Register of Members...................................... 31
60. Inspection of Register of Members.................................... 32
61. Reserved............................................................. 32
62. Instrument of transfer............................................... 32
63. Restriction on transfer.............................................. 33
64. Transfers by joint holders........................................... 34
65. Lien on Shares....................................................... 35
66. Registration on bankruptcy........................................... 36
67. Declaration of dividends by the Board................................ 36
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C>
68. Other distributions.................................................. 36
69. Reserve fund......................................................... 37
70. Deduction of amounts due to the Company.............................. 37
71. Unclaimed dividends.................................................. 37
72. Interest on dividend................................................. 37
73. Issue of bonus shares................................................ 37
74. Records of account................................................... 37
75. Financial year end................................................... 38
76. Financial statements................................................. 38
77. Appointment of Auditor............................................... 38
78. Remuneration of Auditor.............................................. 38
79. Vacation of office of Auditor........................................ 39
80. Access to books of the Company....................................... 39
81. Report of the Auditor................................................ 39
82. Record dates......................................................... 39
83. Notices to Members of the Company.................................... 40
84. Notices to joint Members............................................. 40
85. Service and delivery of notice....................................... 40
86. The Seal............................................................. 41
87. Manner in which seal is to be affixed................................ 41
88. Determination to wind up Company..................................... 41
89. Winding-up/distribution by liquidator................................ 41
90. Alteration of Bye-laws............................................... 42
</TABLE>
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<PAGE> 7
B Y E - L A W S
of
ANNUITY AND LIFE RE (HOLDINGS), LTD.
INTERPRETATION
1. Interpretation
(1) In these Bye-laws the following words and expressions shall, where not
inconsistent with the context, have the following meanings respectively:-
(a) "Act" means the Companies Act 1981 of Bermuda as amended from
time to time;
(b) "Affiliate" has the meaning ascribed thereto in Rule 144
promulgated under the Securities Act;
(c) "Alternate Director" means an alternate Director;
(d) "Auditor" includes any individual or partnership;
(e) "Board" means the Board of Directors appointed or elected
pursuant to these Bye-laws and acting by resolution in
accordance with the Act and these Bye-laws or the Directors
present at a meeting of Directors at which there is a quorum;
(f) "Business Day" means any day, other than a Saturday, a Sunday
or any day on which banks in Hamilton, Bermuda or The City of
New York, United States are authorized or obligated by law or
executive order to close;
(g) "Code" means the United States Internal Revenue Code of 1986,
as amended from time to time, or any federal statute from time
to time in effect that has replaced such statute, and any
reference in these Bye-laws to a provision of the Code or a
rule or regulation promulgated thereunder means such
provision, rule or regulation as amended from time to time or
any provision of a federal law, or any federal rule or
regulation, from time to time in effect that has replaced such
provision, rule or regulation;
(h) "Common Shares" means the common shares, par value U.S.$1.00
per share, of the Company and includes a fraction of a Common
Share;
<PAGE> 8
(i) "Company" means the company for which these Bye-laws are
approved and confirmed;
(j) "Controlled Shares" of any Person means all Common Shares
owned by such Person, whether:
(i) directly;
(ii) with respect to Persons who are United States Persons,
by application of the attribution and constructive
ownership rules of Sections 958(a) and 958(b) of the
Code; or,
(iii) beneficially owned, directly or indirectly, within the
meaning of Section 13(d)(3) of the Exchange Act and the
rules and regulations thereunder;
(k) "debenture" means debenture stock, mortgages, bonds and any
other such debt securities of the Company whether constituting
a charge on the assets of the Company or not;
(l) "Director" means a director of the Company and shall include
an Alternate Director;
(m) "dividend" includes a bonus or capitalization issue of shares;
(n) "Exchange Act" means the United States Securities Exchange Act
of 1934 as amended from time to time or any federal statute
from time to time in effect that has replaced such statute,
and any reference in these Bye-laws to a provision of the
Exchange Act or a rule or regulation promulgated thereunder
means such provision, rule or regulation as amended from time
to time or any provision of a federal law, or any federal rule
or regulation, from time to time in effect that has replaced
such provision, rule or regulation;
(o) "Fair Market Value" means, with respect to a repurchase of any
shares of the Company in accordance with these Bye-laws, (i)
if such shares are listed on a securities exchange (or quoted
in a securities quotation system), the average closing sale
price of such shares on such exchange (or in such quotation
system), or, if such shares are listed on (or quoted in) more
than one exchange (or quotation system), the average closing
sale price of the shares on the principal securities exchange
(or quotation system) on which such shares are then traded,
or, if such shares are not then listed on a securities
exchange (or quotation system) but are traded in the
over-the-counter market, the average of the latest bid and
asked quotations for such shares in such market, in each case
for the last five trading days immediately preceding the day
on which notice of the repurchase of such
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<PAGE> 9
shares is sent pursuant to these Bye-laws or (ii) if no such
closing sales prices or quotations are available because such
shares are not publicly traded or otherwise, the fair value of
such shares as determined by one independent nationally
recognized investment banking firm chosen by the Company and
reasonably satisfactory to the Member whose shares are to be
so repurchased by the Company, provided that the calculation
of the Fair Market Value of the shares made by such appointed
investment banking firm (i) shall not include any discount
relating to the absence of a public trading market for, or any
transfer restrictions on, such shares, and (ii) such
calculation shall be final and the fees and expenses stemming
from such calculation shall be borne by the Company or its
assignee, as the case may be;
(p) "Formula" has the meaning ascribed thereto in Bye-law 52;
(q) "general meeting" means a meeting of the Members of the
Company;
(r) "Member" means the person registered in the Register of
Members as the holder of shares in the Company and, when two
or more persons are so registered as joint holders of shares,
means the person whose name stands first in the Register of
Members as one of such joint holders or all of such persons as
the context so requires;
(s) "notice" means written notice as further defined in these
Bye-laws unless otherwise specifically stated;
(t) "Officer" means any person appointed by the Board to hold an
office in the Company;
(u) "Person" means any individual, company, corporation, firm,
partnership, trust or any other business, entity or person,
whether or not recognized as constituting a separate legal
entity;
(v) "Preferred Shares" means the preferred shares, of the Company
and includes a fraction of a Preferred Share;
(w) "Register of Directors and Officers" means the Register of
Directors and Officers referred to in Bye-law 29;
(x) "Register of Members" means the Register of Members referred
to in Bye-law 59;
(y) "Secretary" means the person appointed to perform any or all
the duties of secretary of the Company and includes any deputy
or assistant secretary;
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(z) "Securities Act" means the United States Securities Act of
1933 as amended from time to time or any federal statute from
time to time in effect which has replaced such statute, and
any reference in these Bye-laws to a provision of the
Securities Act or a rule or regulation promulgated thereunder
means such provision, rule or regulation as amended from time
to time or any provision of a federal law, or any federal rule
or regulation, from time to time in effect that has replaced
such provision, rule or regulation;
(aa) "share" means a share of any class of shares in the capital of
the Company (including, where the context so admits, Common
Shares) and includes a fraction of a share;
(bb) "subsidiary", with respect to any Person, means a company,
more than fifty percent (50%) (or, in the case of a wholly
owned subsidiary, one hundred percent (100%)) of the
outstanding Voting Shares of which are owned, directly or
indirectly, by such Person or by one or more other
subsidiaries of such Person, or any such Person and one or
more other subsidiaries;
(cc) "10% Shareholder" means a Person who owns, in the aggregate,
(i) directly, (ii) with respect to Persons who are United
States Persons, by application of the attribution and
constructive ownership rules of Sections 958(a) and 958(b) of
the Code or (iii) beneficially, directly or indirectly, within
the meaning of Section 13(d)(3) of the Exchange Act, issued
Common Shares of the Company representing ten percent (10%) or
more of the total combined voting rights attaching to the
issued Common Shares and the issued shares of any other class
or classes of shares of the Company;
(dd) "Unadjusted Basis", when used with respect to the aggregate
voting rights held by any Member, refers to the determination
of such rights without reference to the provisions relating to
the adjustment of voting rights contained in Bye-law 52;
(ee) "United States" means the United States of America and
dependent territories or any part thereof;
(ff) "United States 25% Shareholder" means a United States Person
who owns, directly or by application of the attribution and
constructive ownership rules of Sections 958(a) and 958(b) of
the Code, issued shares representing either (i) more than
twenty-five percent (25%) of the total combined voting rights
attaching to the issued Common Shares and the issued shares of
any other class or classes of shares of the Company or (ii)
more than twenty-five percent (25%) of the total combined
value of the issued Common
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<PAGE> 11
Shares and any other issued shares of the Company, in each
case determined pursuant to Section 957 of the Code;
(gg) "United States Person" means (i) an individual who is a
citizen or resident of the United States, (ii) a corporation
or partnership that is, as to the United States, a domestic
corporation or partnership and (iii) an estate or trust that
is subject to United States Federal income tax on its income
regardless of its source; and
(hh) "Voting Share" of any Person means any share in such Person
conferring voting rights on the holder thereof (other than
such voting rights as would exist solely in relation to a
proposal to alter or vary the rights attaching to such shares
solely upon the future occurrence of a contingency or voting
rights attaching solely by virtue of the provisions of the
Act).
(2) In these Bye-laws, where not inconsistent with the context:
(a) words denoting the plural number include the singular number
and vice versa;
(b) words denoting the masculine gender include the feminine
gender;
(c) words importing persons include companies, associations or
bodies of persons whether corporate or not;
(d) the word:
(i) "may" shall be construed as permissive;
(ii) "shall" shall be construed as imperative; and
(e) unless otherwise provided herein words or expressions defined
in the Act shall bear the same meaning in these Bye-laws.
(3) Expressions referring to writing or written shall, unless the contrary
intention appears, include facsimile, printing, lithography, photography and
other modes of representing words in a visible form.
(4) Headings used in these Bye-laws are for convenience only and are not
to be used or relied upon in the construction hereof.
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BOARD OF DIRECTORS
2. Board of Directors
The business of the Company shall be managed and conducted by the Board.
3. Management of the Company
(1) In managing the business of the Company, the Board may exercise all
such powers of the Company as are not, by statute or by these Bye-laws, required
to be exercised by the Company in general meeting subject, nevertheless, to
these Bye-laws, the provisions of any statute, and to such regulations as may be
prescribed by the Company in general meeting.
(2) No regulation or alteration to these Bye-laws made by the Company in
general meeting shall invalidate any prior act of the Board which would have
been valid if that regulation or alteration had not been made.
(3) The Board may procure that the Company pays to Members or third
parties all expenses incurred in promoting and incorporating the Company.
4. Power to appoint chief executive officer
The Board may from time to time appoint one or more Persons to the office
of chief executive officer of the Company who shall, subject to the control of
the Board, supervise and administer all of the general business and affairs of
the Company.
5. Power to appoint manager
The Board may appoint a Person to act as manager of the Company's day to
day business, who may but need not be its chief executive officer, and may
entrust to and confer upon such manager such powers and duties as it deems
appropriate for the transaction or conduct of such business.
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<PAGE> 13
6. Power to authorise specific actions
The Board may from time to time and at any time authorise any Director,
Officer or other Person or body of Persons to act on behalf of the Company for
any specific purpose and in connection therewith to execute any agreement,
document or instrument on behalf of the Company.
7. Power to appoint attorney
The Board may from time to time and at any time by power of attorney
appoint any company, firm, Person or body of Persons, whether nominated directly
or indirectly by the Board, to be an attorney of the Company for such purposes
and with such powers, authorities and discretions (not exceeding those vested in
or exercisable by the Board) and for such period and subject to such conditions
as they may think fit and any such power of attorney may contain such provisions
for the protection and convenience of persons dealing with any such attorney as
the Board may think fit and may also authorise any such attorney to sub-delegate
all or any of the powers, authorities and discretions so vested in the attorney.
Such attorney may, if so authorised under the seal of the Company, execute any
deed or instrument under their personal seal with the same effect as the
affixation of the seal of the Company.
8. Power to appoint and dismiss employees
The Board may appoint, suspend or remove any officer, manager, secretary,
clerk, agent or employee of the Company and may fix their remuneration and
determine their duties.
9. Power to borrow and charge property
The Board may exercise all the powers of the Company to borrow money and
to mortgage or charge its undertaking, property and uncalled capital, or any
part thereof, and may issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of the
Company or any third party.
10. Power to purchase shares of the Company
(1) Exercise of Power to Repurchase Shares of the Company
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<PAGE> 14
The Board may exercise all the powers of the Company to purchase all
or any part of its own shares pursuant to Sections 42 and 42A of the Act or to
discontinue the Company to a named country or jurisdiction outside Bermuda
pursuant to Section 132G of the Act.
(2) Unilateral Repurchase Right
Subject to Section 42A of the Act, if the Board in its absolute and
unfettered discretion, on behalf of the Company, determines that share ownership
by any Member may result in adverse tax, regulatory or legal consequences to the
Company, any of its subsidiaries or any of the Members, the Company will have
the option, but not the obligation, to repurchase all or part of the shares held
by such Member (to the extent the Board, in the reasonable exercise of its
discretion, determines it is necessary to avoid or cure such adverse
consequences) for immediately available funds in an amount equal to the Fair
Market Value of such shares on the date the Company sends the Repurchase Notice
referred to below (the "Repurchase Price"); provided, that the Board will use
reasonable efforts to exercise this option equally among similarly situated
Members (to the extent possible under the circumstances). In that event, the
Company will also be entitled to assign its repurchase right to a third party or
parties including one or more of the other Members, with the consent of such
assignee. Each Member shall be bound by the determination by the Company to
repurchase or assign its right to repurchase such Member's shares and, if so
required by the Company, shall sell the number of shares that the Company
requires it to sell.
In the event that the Company or its assignee(s) determines to repurchase
any such shares, the Company shall provide each Member concerned with written
notice of such determination (a "Repurchase Notice") at least seven (7) calendar
days prior to such repurchase or such shorter period as each such Member may
authorize, specifying the date on which any such shares are to be repurchased
and the Repurchase Price. The Company may revoke the Repurchase Notice at any
time before it (or its assignee(s)) pays for the shares. Neither the Company nor
its assignee(s) shall be obliged to give general notice to the Members of any
intention to purchase or the conclusion of any purchase of shares. Payment of
the Repurchase Price by the Company or its assignee(s) shall be by wire transfer
or certified check and made
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<PAGE> 15
at a closing to be held no less than seven (7) calendar days after receipt of
the Repurchase Notice by the Member.
(3) Restrictions on repurchases
If the Company redeems or purchases shares pursuant to this Bye-law
10, it shall do so only in a manner the Board believes would not result, upon
consummation of such redemption or purchase, in the number of total Controlled
Shares of any Person, as a percentage of the shares of the Company, increasing
to ten percent (10%) or any higher percentage on an Unadjusted Basis.
11. Election of Directors
(1) The Board shall consist of a maximum of fourteen (14) Directors,
unless otherwise set by the Members, each having one vote, who shall be elected,
except in the case of casual vacancy, by the Members in the manner set forth in
paragraph (2) of this Bye-law 11 at the annual general meeting or any special
general meeting called for the purpose and who shall hold office for the term
set forth in paragraph (3) of this Bye-law 11.
(2) No person other than a Director retiring at the meeting shall, unless
recommended by the Directors for election, be eligible for election as a
Director at any general meeting unless not less than 120 days before the date
appointed for the meeting there shall have been lodged at the Company notice in
writing signed by Members holding 5% of the outstanding shares entitled to vote
at the meeting for which such notice is given of his intention to propose such
person for election and also notice in writing signed by the person to be
proposed of his willingness to be elected.
(3) The Board shall be divided into three classes of directors, each class
to have approximately the same number of directors as determined by the Board.
The initial term of the first class of directors shall expire at the first
annual meeting of the Company's shareholders following the completion of the
initial public offering of the Company's Common Shares. The initial term of the
second class of directors shall expire at the second annual meeting following
the completion of the initial public offering of the Company's Common Shares.
The initial term
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of the third class of directors shall expire at the third annual meeting
following the completion of the initial public offering of the Company's Common
Shares. Following their initial terms, all classes of directors shall be elected
to three-year terms.
12. Defects in appointment of Directors
All acts done bona fide by any meeting of the Board or by a committee of
the Board or by any person acting as a Director shall, notwithstanding that it
be afterwards discovered that there was some defect in the appointment of any
Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every person had been duly appointed and was
qualified to be a Director.
13. Alternate Directors
(1) Each Director may appoint an Alternate Director and such appointment
shall become effective upon the Secretary receiving written notice of such
appointment. Any person so appointed shall have all the rights and powers of the
Director or Directors for whom such person is appointed in the alternate,
provided that such person shall not be counted more than once in determining
whether or not a quorum is present. Any director may, upon notice to the
Secretary, remove or replace his or her alternate with or without cause.
(2) An Alternate Director shall be entitled to receive notice of all
meetings of the Board and to attend and vote at any such meeting at which a
Director for whom such Alternate Director was appointed in the alternative is
not personally present and generally to perform at such meeting all the
functions of such Director for whom such Alternate Director was appointed.
(3) An Alternate Director shall cease to be such if the Director for whom
such Alternate Director was appointed ceases for any reason to be a Director but
may be re-appointed by the Board as alternate to the person appointed to fill
the vacancy in accordance with these Bye-laws.
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<PAGE> 17
14. Removal of Directors
(1) Subject to any provision to the contrary in these Bye-laws, the
Members may, at any special general meeting convened for that purpose and held
in accordance with these Bye-laws, remove any Director provided that the notice
of any such meeting convened for the purpose of removing a Director shall
contain a statement of the intention so to do and be served on such Director not
less than 14 days before the meeting and at such meeting such Director shall be
entitled to be heard on the motion for such Director's removal.
(2) A vacancy on the Board created by the removal of a Director under the
provisions of subparagraph (1) of this Bye-law may be filled by the Members at
the meeting at which such Director is removed. A Director so appointed shall
hold office until the next annual general meeting or until such Director's
successor is elected or appointed or such Director's office is otherwise vacated
and, in the absence of such election or appointment, the Board may fill any such
vacancy in accordance with Bye-law 15.
15. Vacancies on the Board
(1) The Board shall have the power from time to time and at any time to
appoint any person as a Director to fill a vacancy on the Board occurring as the
result of the death, disability, disqualification or resignation of any Director
or if such Director's office is otherwise vacated. A Director so appointed by
the Board shall hold office until the next succeeding annual general meeting, at
which the Members vote on the election of such Director for the balance of the
term of such vacant Board position, or until such Director's successor is
elected or appointed or such Director's office is otherwise vacated.
(2) The Board may act notwithstanding any vacancy in its number but, if
and so long as its number is reduced below the number fixed by these Bye-laws,
or such greater number as may have been determined by the Members, as the quorum
necessary for the transaction of business at meetings of the Board, the
continuing Directors or Director may act only for the purpose of (i) summoning a
general meeting of the Company or (ii) preserving the assets of the Company.
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(3) The office of Director shall be vacated if the Director:
(a) is removed from office pursuant to these Bye-laws or is
prohibited from being a Director by law;
(b) is or becomes bankrupt or makes any arrangement or composition
with his creditors generally;
(c) is or becomes of unsound mind or dies;
(d) resigns his or her office by notice in writing to the Company.
16. Notice of meetings of the Board
(1) The Chairman or Deputy Chairman, or any two (2) Directors may, and the
Secretary on the requisition of the Chairman or Deputy Chairman, or any two (2)
Directors shall, at any time summon a meeting of the Board by at least three (3)
Business Days' notice to each Director and Alternate Director, unless such
Director or Alternate Director consents to shorter notice.
(2) Notice of a meeting of the Board shall specify the general nature of
the business to be considered at such meeting and shall be deemed to be duly
given to a Director if it is given to such Director in person or otherwise
communicated or sent to such Director by registered mail, courier service,
cable, telex, telecopier, facsimile or other mode of representing words in a
legible and non-transitory form at such Director's last known address or any
other address given by such Director to the Company for this purpose. If such
notice is sent by next-day courier, cable, telex, telecopier or facsimile, it
shall be deemed to have been given the Business Day following the sending
thereof and, if by registered mail, three (3) Business Days following the
sending thereof.
(3) Meetings of the Directors may be held within or outside of Bermuda.
17. Quorum at meetings of the Board
The quorum necessary for the transaction of business at a meeting of the
Board shall be a majority of the Directors then in office, present in person or
represented by proxy.
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18. Meetings of the Board
(1) The Board may meet for the transaction of business, adjourn and
otherwise regulate its meetings as it sees fit.
(2) Directors may participate in any meeting of the Board by means of such
telephone, electronic or other communication facilities as permit all persons
participating in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting.
(3) A resolution put to the vote at a duly constituted meeting of the
Board at which a quorum is present and acting throughout shall be carried by the
affirmative votes of a majority of the votes cast and in the case of an equality
of votes, the resolution shall fail.
19. Unanimous written resolutions
A resolution in writing signed by all the Directors which may be in
counterparts, shall be as valid as if it had been passed at a meeting of the
Board duly called and constituted, such resolution to be effective on the date
on which the last Director signs the resolution. For the purposes of this
Bye-law only, "Director" shall not include an Alternate Director.
20. Contracts and disclosure of Directors' interests
(1) Any Director, or any Director's firm, partner or any company with whom
any Director is associated, may act in a professional capacity for the Company
and such Director or such Director's firm, partner or such company shall be
entitled to remuneration for professional services as if such Director were not
a Director, provided that nothing herein contained shall authorise a Director or
Director's firm, partner or such company to act as Auditor of the Company.
(2) A Director who is directly or indirectly interested in a contract or
proposed contract or arrangement with the Company shall declare the nature of
such interest as required by the Act.
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(3) Following a declaration being made pursuant to this Bye-law, and
unless disqualified by the chairman of the relevant Board meeting, a Director
may vote in respect of any contract or proposed contract or arrangement in which
such Director is interested and may be counted in the quorum at such meeting.
21. Remuneration of Directors
(1) The remuneration, (if any) of the Directors shall be determined by the
Board of Directors of the Company and shall be deemed to accrue from day to day.
The Directors may also be paid all travel, hotel and other expenses properly
incurred by them in attending and returning from meetings of the Board, any
committee appointed by the Board, general meetings of the Company, or in
connection with the business of the Company or their duties as Directors
generally.
(2) A Director may hold any other office or place of profit under the
Company (other than the office of Auditor) in conjunction with his office of
Director for such period and on such terms as to remuneration and otherwise as
the Directors may determine.
22. Other interests of Directors
A Director may be or become a director or other officer of or otherwise
interested in any company promoted by the Company or in which the Company may be
interested as member or otherwise, and no such Director shall be accountable to
the Company for any remuneration or other benefits received by him as a director
or officer of, or from his interest in, such other company. The Board may also
cause the voting power conferred by the shares in any other company held or
owned by the Company to be exercised in such manner in all respects as the Board
thinks fit, including the exercise thereof in favour of any resolution
appointing the Directors or any of them to be directors or officers of such
other company, or voting or providing for the payment of remuneration to the
directors or officers of such other company.
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COMMITTEES
23. Power to delegate to a committee
Subject to the Act, the Board may delegate any of its powers to a
committee appointed by the Board which may consist partly or entirely of
non-Directors, and every such committee shall conform to such directions as the
Board shall impose on them.
OFFICERS
24. Officers of the Company
The Officers of the Company shall consist of a Chief Executive Officer, a
Chairman, a Deputy Chairman, a Secretary and such additional Officers as the
Board may from time to time determine all of whom shall be deemed to be Officers
for the purposes of these Bye-laws.
25. Appointment of Officers
(1) The Board shall, as soon as possible after each annual general meeting
elect one of its number to be Chairman of the Company and another of its number
to be Deputy Chairman.
(2) The Secretary, the Chief Executive Officer and any additional Officers
shall be appointed by the Board from time to time.
26. Remuneration of Officers
The Officers shall receive such remuneration as the Board may from time to
time determine.
27. Duties of Officers
The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them by
the Board from time to time.
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28. Chairman of meetings
The Chairman shall act as chairman at all meetings of the Members and of
the Board at which such person is present. In his absence the Deputy Chairman,
if present, shall act as chairman and in the absence of both of them a chairman
shall be appointed or elected by those present at the meeting and entitled to
vote.
29. Register of Directors and Officers
(1) The Board shall cause to be kept in one or more books at its
registered office a Register of Directors and Officers and shall enter therein
the following particulars with respect to each Director and the Chairman, Deputy
Chairman, provided each such person is a Director, and the Chief Executive
Officer and Secretary, that is to say:
(a) first name and surname; and
(b) address.
(2) The Board shall, within the period of fourteen days from the
occurrence of -
(a) any change among its Directors and in the Chairman, Deputy
Chairman, Chief Executive Officer or Secretary; or
(b) any change in the particulars contained in the Register of
Directors and Officers,
cause to be entered on the Register of Directors and Officers the particulars of
such change and the date on which such change occurred.
(3) The Register of Directors and Officers shall be open to inspection at
the office of the Company on every Business Day, subject to such reasonable
restrictions as the Board may impose, so that not less than two hours in each
Business Day be allowed for such inspection.
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MINUTES
30. Obligations of Board to keep minutes
The Board shall cause minutes to be duly entered in books provided for the
purpose:-
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting of the
Board and of any committee appointed by the Board; and
(c) of all resolutions and proceedings of general meetings of the
Members, meetings of the Board, meetings of managers and
meetings of committees appointed by the Board.
INDEMNITY
31. Indemnification of Directors and Officers of the Company
(a) The Directors, Secretary and other Officers for the time being of the
Company and the liquidator or trustees (if any) for the time being acting in
relation to any of the affairs of the Company and every one of them, and their
heirs, executors and administrators, shall be indemnified and secured harmless
out of the assets of the Company from and against all actions, costs, charges,
losses, damages and expenses which they or any of them, their heirs, executors
or administrators, shall or may incur or sustain by or by reason of any act
done, concurred in or omitted in or about the execution of their duty, or
supposed duty, or in their respective offices or trusts, including without
limitation any acts taken with regard to subsidiaries of the Company, and none
of them shall be answerable for the acts, receipts, neglects or defaults of the
others of them or for joining in any receipts for the sake of conformity, or for
the acts of or the solvency or honesty of any bankers or other persons with whom
any moneys or effects belonging to the Company shall or may be lodged or
deposited for safe custody, or for insufficiency or deficiency of any security
upon which any moneys of or belonging to the Company shall be placed out on or
invested, or for any other loss, misfortune or damage which may happen in the
execution of their respective offices or trusts, or in relation thereto,
PROVIDED THAT this indemnity shall not extend to any matter in respect of any
fraud or dishonesty which may attach to any of said persons.
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(b) Any person claiming indemnification within the scope of Bye-law 31(a)
shall be entitled to advances from the Company for payment of the expenses of
defending actions against such person in the manner and to the full extent
permissible under Bermuda law, provided that should he be found guilty of a
criminal or other offence for which he cannot by law be indemnified he shall
reimburse the Company the funds advanced.
(c) On the request of any person requesting indemnification under Bye-law
31(a), the Board or a committee thereof shall determine whether such
indemnification is permissible or such determination shall be made by
independent legal counsel if the Board or committee so directs or if the Board
or committee is not empowered by statute to make such determination.
(d) No amendment or repeal of any provision of this Bye-law 31 shall
alter, to the detriment of such person, the right of such person to the
advancement of expenses or indemnification related to a claim based on an act or
failure to act which took place prior to such amendment, repeal or termination.
32. Waiver of claim by Member
Each Member agrees to waive any claim or right of action such Member might
have, whether individually or by or in the right of the Company, against any
Director or Officer on account of any action taken by such Director or Officer,
or the failure of such Director or Officer to take any action in the performance
of his duties with or for the Company, PROVIDED THAT such waiver shall not
extend to any matter in respect of any fraud or dishonesty which may attach to
such Director or Officer.
MEETINGS
33. Notice of annual general meeting
The annual general meeting of the Company shall be held in each year at
such time and place as the Chairman or any two Directors or any Director and the
Secretary or the Board shall appoint. At least ten days' written notice of such
meeting shall be given to each Member stating
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the date, place and time at which the meeting is to be held, that the election
of Directors will take place thereat, and as far as practicable, the other
business to be conducted at the meeting.
34. Notice of special general meeting
The Chairman or any two Directors or any Director and the Secretary or the
Board may convene a special general meeting of the Company whenever in their
judgment such a meeting is necessary, upon not less than ten days' written
notice which shall state the time, place and the general nature of the business
to be considered at the meeting.
35. Accidental omission of notice of general meeting
The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a general meeting by, any person entitled to receive
notice shall not invalidate the proceedings at that meeting.
36. Meeting called on requisition of Members
Notwithstanding anything herein, the Board shall, on the requisition of
Members holding at the date of the deposit of the requisition not less than
one-tenth of such of the paid-up share capital of the Company as at the date of
the deposit carries the right to vote at general meetings of the Company,
forthwith proceed to convene a special general meeting of the Company and the
provisions of section 74 of the Act shall apply.
37. Short notice
A general meeting of the Company shall, notwithstanding that it is called
by shorter notice than that specified in these Bye-laws, be deemed to have been
properly called if it is so agreed by (i) all the Members entitled to attend and
vote thereat in the case of an annual general meeting; and (ii) by a majority in
number of the Members having the right to attend and vote at the meeting, being
a majority together holding not less than 95% in nominal value of the shares
giving a right to attend and vote thereat in the case of a special general
meeting.
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38. Postponement of Meetings
The Board may postpone any general meeting called in accordance with the
provisions of these Bye-laws (other than a meeting requisitioned under Bye-law
36) provided that notice of postponement is given to each Member before the time
for such meeting. Fresh notice of the date, time and place for the postponed
meeting shall be given to each Member in accordance with the provisions of these
Bye-laws.
39. Quorum For General Meeting
At any general meeting of the Company two or more persons present in
person and representing in person or by proxy in excess of 50% (on an Unadjusted
Basis) of the total issued and outstanding Common Shares throughout the meeting
shall form a quorum for the transaction of business; provided, that if the
Company shall at any time have only one Member, one Member present in person or
by proxy shall constitute a quorum. If within half an hour from the time
appointed for the meeting a quorum is not present, the meeting shall stand
adjourned to the same day two (2) weeks later, at the same time and place or to
such other day, time or place as the Chairman (if there be one) or failing him
the Deputy Chairman or any Director in attendance may determine. Unless the
meeting is adjourned to a specific date and time, fresh notice of the date, time
and place for the adjourned meeting shall be given to each Member in accordance
with the provisions of these Bye-laws.
40. Adjournment of meetings
The chairman of a general meeting may, with or without the consent of the
Members at any general meeting at which a quorum is present (and shall if so
directed), adjourn the meeting. Unless the meeting is adjourned to a specific
date and time, fresh notice of the date, time and place for the resumption of
the adjourned meeting shall be given to each Member in accordance with the
provisions of these Bye-laws.
41. Attendance at meetings
Unless the Board determines otherwise, Members may participate in any
general meeting by means of such telephone, electronic or other communication
facilities as permit all persons
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participating in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting.
42. Written resolutions
(1) Subject to subparagraph (6), anything which may be done by resolution
of the Company in general meeting or by resolution of a meeting of any class of
the Members of the Company, may, without a meeting and without any previous
notice being required, be done by resolution in writing signed by, or, in the
case of a Member that is a corporation whether or not a company within the
meaning of the Act, on behalf of, all the Members who at the date of the
resolution would be entitled to attend the meeting and vote on the resolution.
(2) A resolution in writing may be signed by, or, in the case of a Member
that is a corporation whether or not a company within the meaning of the Act, on
behalf of, all the Members, or any class thereof, in as many counterparts as may
be necessary.
(3) For the purposes of this Bye-law, the date of the resolution is the
date when the resolution is signed by, or, in the case of a Member that is a
corporation whether or not a company within the meaning of the Act, on behalf
of, the last Member to sign and any reference in any Bye-law to the date of
passing of a resolution is, in relation to a resolution made in accordance with
this Bye-law, a reference to such date.
(4) A resolution in writing made in accordance with this Bye-law is as
valid as if it had been passed by the Company in general meeting or by a meeting
of the relevant class of Members, as the case may be, and any reference in any
Bye-law to a meeting at which a resolution is passed or to Members voting in
favour of a resolution shall be construed accordingly.
(5) A resolution in writing made in accordance with this Bye-law shall
constitute minutes for the purposes of sections 81 and 82 of the Act.
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(6) This Bye-law shall not apply to:
(a) a resolution passed pursuant to section 89(5) of the Act; or
(b) a resolution passed for the purpose of removing a Director
before the expiration of his term of office under these
Bye-laws.
43. Attendance of Directors
The Directors of the Company shall be entitled to receive notice of and to
attend and be heard at any general meeting.
44. Voting at meetings
Subject to the provisions of the Act and these Bye-laws, any question
proposed for the consideration of the Members at any general meeting, including
but not limited to the approval of an amalgamation pursuant to Section 104 of
the Act, shall be decided by the affirmative votes of a majority of the votes
cast in accordance with the provisions of these Bye-laws and in the case of an
equality of votes the resolution shall fail.
45. Voting on show of hands
At any general meeting a resolution put to the vote of the meeting shall,
in the first instance, be voted upon by a show of hands and, subject to any
rights or restrictions for the time being lawfully attached to any class of
shares and subject to the provisions of these Bye-laws, every Member present in
person and every person holding a valid proxy at such meeting shall be entitled
to one vote and shall cast such vote by raising his or her hand.
46. Decision of chairman
At any general meeting a declaration by the chairman of the meeting that a
question proposed for consideration has, on a show of hands, been carried, or
carried unanimously, or by a particular majority, or lost, or an entry to that
effect in a book containing the minutes of the proceedings of the Company shall,
subject to the provisions of these Bye-laws, be conclusive evidence of that
fact.
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47. Demand for a poll
(1) Notwithstanding the provisions of the immediately preceding two
Bye-laws, at any general meeting of the Company, in respect of any question
proposed for the consideration of the Members (whether before or on the
declaration of the result of a show of hands as provided for in these Bye-laws),
a poll may be demanded by any of the following persons: -
(a) the chairman of such meeting; or
(b) at least two Members present in person or represented by
proxy; or
(c) any Member or Members present in person or represented by
proxy and holding between them not less than one-tenth of the
total voting rights of all the Members having the right to
vote at such meeting; or
(d) any Member or Members present in person or represented by
proxy holding Common Shares on which an aggregate sum has been
paid up equal to not less than one-tenth of the total sum paid
up on all Common Shares.
(2) Where, in accordance with the provisions of paragraph (1) of this
Bye-law, a poll is demanded, subject to any rights or restrictions for the time
being lawfully attached to any class of shares, including any limitation on the
voting power of any Controlled Shares pursuant to Bye-law 52, every Person
present at such meeting shall have one vote for each share of which such Person
is the holder or for which such person holds a proxy and such vote shall be
counted in the manner set out in paragraph (4) of this Bye-law or in the case of
a general meeting at which one or more Members are present by telephone in such
manner as the chairman of the meeting may direct and the result of such poll
shall be deemed to be the resolution of the meeting at which the poll was
demanded and shall replace any previous resolution upon the same matter which
has been the subject of a show of hands.
(3) A poll demanded in accordance with the provisions of paragraph (1) of
this Bye-law, for the purpose of electing a chairman or on a question of
adjournment, shall be taken forthwith and a poll demanded on any other question
shall be taken in such manner and at such time and place as the chairman may
direct and any business other than that upon which a poll has been demanded may
be proceeded with pending the taking of the poll.
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(4) Where a vote is taken by poll each person present and entitled to vote
shall be furnished with a ballot paper on which such person shall record his or
her vote in such manner as shall be determined at the meeting having regard to
the nature of the question on which the vote is taken, and each ballot paper
shall be signed or initialled or otherwise marked so as to identify the voter
and the registered holder in the case of a proxy. At the conclusion of the poll
the ballot papers shall be examined and counted by a committee of not less than
two Members or proxy holders appointed by the chairman for the purpose and the
result of the poll shall be declared by the chairman.
48. Seniority of joint holders voting
In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders, and for this purpose seniority shall be determined
by the order in which the names stand in the Register of Members.
49. Instrument of proxy
The instrument appointing a proxy shall be in writing in the form, or as
near thereto as circumstances admit, a Form "A" in the Schedule hereto, under
the hand of the appointor or of his attorney duly authorised in writing, or if
the appointor is a corporation, either under its seal, or under the hand of a
duly authorised officer or attorney. The decision of the chairman of any general
meeting as to the validity of any instrument of proxy shall be final.
50. Representation of corporations at meetings
A corporation which is a Member may by written instrument authorise such
person as it thinks fit to act as its representative at any meeting of the
Members and the person so authorised shall be entitled to exercise the same
powers on behalf of the corporation which such person represents as that
corporation could exercise if it were an individual Member. Notwithstanding the
foregoing, the chairman of the meeting may accept such assurances as he or she
thinks fit as to the right of any person to attend and vote at general meetings
on behalf of a corporation which is a Member.
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SHARE CAPITAL AND SHARES
51. Rights of shares
(1) The share capital of the Company shall initially be divided into two
classes of shares consisting of (i) 100,000,000 Common Shares and (ii)
50,000,000 Preferred Shares.
(2) The holders of Common Shares shall, subject to the provisions of these
Bye-laws:
(a) be entitled to one vote per Common Share or, in the case of
Controlled Shares, if applicable, a fraction of a vote per
Controlled Share as determined pursuant to Bye-law 52;
(b) be entitled to such dividends as the Board may from time to
time declare;
(c) in the event of a liquidation, winding-up or dissolution of
the Company, whether voluntary or involuntary or for the
purpose of a reorganisation or otherwise or upon any
distribution of capital, be entitled to share equally and
ratably in the assets of the Company, if any, remaining after
the payment of all debts and liabilities of the Company and
the liquidation preference of any outstanding Preferred
Shares; and
(d) generally be entitled to enjoy all of the rights attaching to
shares.
(3) The Board is authorised, subject to limitations prescribed by law, to
issue the Preferred Shares in series, to establish from time to time the number
of Preferred Shares to be included in each such series, and to fix the
designation, powers, preferences and rights to the Preferred Shares of each such
series and the qualifications, limitations or restrictions thereof. The terms of
any series of Preferred Shares shall be set forth in a Certificate of
Designation in the minutes of the Board.
The authority of the Board with respect to each series of Preferred Shares
shall include, but not be limited to, determination of the following:
(a) the number of Preferred Shares constituting that series and
the distinctive designation of that series;
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(b) the rate of dividend, and whether (and if so, on what terms
and conditions) dividends shall be cumulative (and if so,
whether unpaid dividends shall compound or accrue interest) or
shall be payable in preference or in any other relation to the
dividends payable on any other class or classes of shares or
any other series of the Preferred Shares;
(c) whether that series shall have voting rights in addition to
the voting rights provided by law and, if so, the terms and
extent of such voting rights, provided that if the Preferred
Shares shall have voting rights, such Preferred Shares shall
be included in the number of Controlled Shares held by any
Person;
(d) the par value of the Preferred Shares;
(e) whether the Preferred Shares may be redeemed and, if so, the
terms and conditions on which they may be redeemed (including,
without limitation, the dates upon or after which they may be
redeemed and the price or prices at which they may be
redeemed, which price or prices may be different in different
circumstances or at different redemption dates);
(f) whether the Preferred Shares shall be issued with the
privilege of conversion or exchange and, if so, the terms and
conditions of such conversion or exchange (including, without
limitation the price or prices or the rate or rates of
conversion or exchange or any terms for adjustment thereof);
(g) the amounts, if any, payable upon the Preferred Shares in the
event of voluntary liquidation, dissolution or winding up of
the Company in preference of shares of any other class or
series and whether the Preferred Shares shall be entitled to
participate generally in distributions on the Common Shares
under such circumstances;
(h) the amounts, if any, payable upon the Preferred Shares in the
event of involuntary liquidation, dissolution or winding up of
the Company in preference of shares of any other class or
series and whether the Preferred Shares shall be entitled to
participate generally in distributions on the Common Shares
under such circumstances;
(i) sinking fund provisions, if any, for the redemption or
purchase of the Preferred Shares (the term "sinking fund"
being understood to include any similar fund, however
designated); and
(j) any other relative rights, preferences, limitations and powers
of that series.
52. Limitation on voting rights of Controlled Shares
(1) Subject to any rights or restrictions for the time being attached to
any class or classes of shares, on a poll at a general meeting every Member of
record present in person or
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by proxy shall have one vote for each Common Share and such voting rights, if
any, for each Preferred Share registered in his name in the register; PROVIDED,
however, that, subject to the following provisions of this Bye-law 52, if and
for so long as the number of issued Controlled Shares of any Person would
constitute ten percent (10%) or more of the total combined voting rights
attaching to the issued shares of the Company (calculated after giving effect to
any prior reduction in voting rights attaching to Controlled Shares of other
Persons as provided in this Bye-law 52), each such issued Controlled Share,
regardless of the identity of the registered holder thereof, shall confer only a
fraction of a vote as determined by the following formula (the "Formula"):
(T - C) Divided By (9.1 x C)
Where: "T" is the aggregate number of votes conferred by all the issued
shares immediately prior to that application of the Formula with
respect to any particular Member, adjusted to take into account any
prior reduction taken with respect to any other Member pursuant to
Bye-law 52(4) as at the same date;
"C" is the number of issued Controlled Shares attributable to such
Person.
(2) The Directors may, by notice in writing, require any Member to provide
within not less than ten (10) Business Days, complete and accurate information
to the registered office or such other place as the Directors may designate in
respect of any or all of the following matters:
(a) the number of shares in which such Member is legally or
beneficially interested;
(b) the Persons who are beneficially interested in shares in
respect of which such Member is the registered holder;
(c) the relationship, association or affiliation of such Member
with any other Member or Person whether by means of common
control or ownership or otherwise; or
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(d) any other facts or matters which the Directors may consider
relevant to the determination of the number of Controlled
Shares attributable to any Person.
(3) If any Member does not respond to any notice given pursuant to Bye-law
52(2) above within the time specified therein or the Directors shall have reason
to believe that any information provided in relation thereto is incomplete or
inaccurate, the Directors may determine that the votes attaching to any Common
Shares registered in the name of such Member shall be disregarded for all
purposes until such time as a response (or additional response) to such notice
reasonably satisfactory to the Directors has been received as specified therein.
(4) The Formula shall be applied successively as many times as may be
necessary to ensure that no Person shall be a 10% Shareholder at any time. For
the purposes of determining the votes exercisable by Members as at any date, the
Formula shall be applied to the shares of each Member in declining order based
on the respective numbers of total Controlled Shares attributable to each
Member. Thus, the Formula will be applied first to the votes of shares held by
the Member to whom the largest number of total Controlled Shares is attributable
and thereafter sequentially with respect to the Member with the next largest
number of total Controlled Shares. In each case, calculations are made on the
basis of the aggregate number of votes conferred by the issued Common Shares as
of such date, as reduced by the application of the Formula to any issued Common
Shares of any Member with a larger number of total Controlled Shares as of such
date.
(5) Notwithstanding the provisions of paragraphs (1) and (2) of this
Bye-law 52 above, having applied the provisions thereof as best as they consider
reasonably practicable, the Directors may make such final adjustments to the
aggregate number of votes attaching to the Controlled Shares of any Member that
they consider fair and reasonable in all the circumstances to ensure that no
Person shall be a 10% Shareholder at any time.
(6) Notwithstanding anything in these Bye-laws, this bye-law shall not
apply for so long as the Company shall have only one Member.
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53. Power to issue shares
(1) Subject to the provisions of these Bye-laws and to any rights
attaching to issued shares of the Company, the unissued shares of the Company
(whether forming part of the original share capital or any increased share
capital) shall be at the disposal of the Board, which may issue, offer, allot,
exchange or otherwise dispose of shares or options, warrants or other rights to
purchase shares or securities convertible into or exchangeable for shares
(including any employee benefit plan providing for the issuance of shares or
options or rights in respect thereof), at such times, for such consideration and
on such terms and conditions as it may determine (including, without limitation,
such preferred or other special rights or restrictions with respect to dividend,
voting, liquidation or other rights of the shares as may be determined by the
Board).
(2) Notwithstanding the foregoing provisions of this Bye-law, the Company
shall not issue any shares in a manner that the Board believes would cause, by
reason of such issuance, the total Controlled Shares of any Person to equal or
exceed ten percent (10%) of the issued shares of the Company.
Notwithstanding the foregoing provisions of this Bye-law, the restrictions
of this Bye-law 53(2) shall not apply to any issuance of shares to a person
acting as an underwriter in the ordinary course of its business, purchasing such
shares pursuant to a purchase agreement to which the Company is a party, for
resale.
(3) The Board shall, in connection with the issue of any share, have the
power to pay such commission and brokerage as may be permitted by law.
(4) The Company shall not give, whether directly or indirectly, whether by
means of loan, guarantee, provision of security or otherwise, any financial
assistance for the purpose of or in connection with a purchase or subscription
made or to be made by any person of or for any shares in the Company, but
nothing in this Bye-law shall prohibit transactions permitted pursuant to
Sections 39A, 39B, and 39C of the Act.
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54. Variation of rights and alteration of share capital
(1) While the share capital is divided into different classes of shares,
the rights attached to any class (unless otherwise provided by the terms of
issue of the shares of that class) may, whether or not the Company is being
wound-up, be varied with the consent in writing of the holders of three-fourths
of the issued shares of that class or with the sanction of a resolution passed
by a majority of the votes cast at a separate general meeting of the holders of
the shares of the class in accordance with Section 47(7) of the Act. The rights
conferred upon the holders of the shares of any class issued with preferred or
other rights shall not, unless otherwise expressly provided by the terms of
issue of the shares of that class, be deemed to be varied by the creation or
issue of further shares ranking pari passu therewith.
(2) The Company may from time to time by resolution of the Members change
the currency denomination of, increase, alter or reduce its share capital in
accordance with the provisions of Sections 45 and 46 of the Act. Where, on any
alteration of share capital, fractions of shares or some other difficulty would
arise, the Board may deal with or resolve the same in such manner as it thinks
fit including, without limiting the generality of the foregoing, the issue to
Members, as appropriate, of fractions of shares and/or arranging for the sale or
transfer of the fractions of shares of Members.
55. Registered holder of shares
(1) The Company shall be entitled to treat the registered holder of any
share as the absolute owner thereof and accordingly shall not be bound to
recognise any equitable or other claim to, or interest in, such share on the
part of any other person.
(2) Any dividend, interest or other moneys payable in cash in respect of
shares may be paid by cheque or draft sent through the post directed to the
Member at such Member's address in the Register of Members or, in the case of
joint holders, to such address of the holder first named in the Register of
Members, or to such person and to such address as the holder or joint holders
may in writing direct. If two or more persons are registered as joint holders of
any shares any one can give an effectual receipt for any dividend paid in
respect of such shares.
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56. Death of a joint holder
Where two or more persons are registered as joint holders of a share or
shares then in the event of the death of any joint holder or holders the
remaining joint holder or holders shall be absolutely entitled to the said share
or shares and the Company shall recognise no claim in respect of the estate of
any joint holder except in the case of the last survivor of such joint holders.
57. Share certificates
(1) Every Member shall be entitled to a certificate under the seal of the
Company (or a facsimile thereof) specifying the number and, where appropriate,
the class of shares held by such Member and whether the same are fully paid up
and, if not, how much has been paid thereon. The Board may by resolution
determine, either generally or in a particular case, that any or all signatures
on certificates may be printed thereon or affixed by mechanical means.
(2) The Company shall be under no obligation to complete and deliver a
share certificate unless specifically called upon to do so by the person to whom
such shares have been allotted.
(3) If any such certificate shall be proved to the satisfaction of the
Board to have been worn out, lost, mislaid or destroyed the Board may cause a
new certificate to be issued and request an indemnity for the lost certificate
if they see fit.
58. Calls on shares
The Board may from time to time make such calls as it thinks fit upon the
Members in respect of any monies unpaid on the shares allotted to or held by
such Members.
REGISTER OF MEMBERS
59. Contents of Register of Members
The Board shall cause to be kept in one or more books a Register of
Members and shall enter therein the following particulars:
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(a) the name and address of each Member, the number and, where
appropriate, the class of shares held by such Member and the
amount paid or agreed to be considered as paid on such shares;
(b) the date on which each person was entered in the Register of
Members;
(c) the date on which any person ceased to be a Member for one
year after such person so ceased; and
(d) the country where such Member is resident.
60. Inspection of Register of Members
The Register of Members shall be open to inspection at the registered
office of the Company on every Business Day, subject to such reasonable
restrictions as the Board may impose, so that not less than two hours in each
business day be allowed for inspection. The Register of Members may, after
notice has been given by advertisement in an appointed newspaper to that effect,
be closed for any time or times not exceeding in the whole thirty days in each
year.
61. Reserved
TRANSFER OF SHARES
62. Instrument of transfer
(1) An instrument of transfer shall be in the form or as near thereto as
circumstances admit of Form "B" in the Schedule hereto or in such other common
form as the Board or any transfer agent appointed from time to time accepts.
Such instrument of transfer shall be signed by or on behalf of the transferor
and transferee provided that, in the case of a fully paid share, the Board may
accept the instrument signed by or on behalf of the transferor alone. The
transferor shall be deemed to remain the
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holder of such share until the same has been transferred to the transferee in
the Register of Members.
(2) The Board may refuse to recognise any instrument of transfer unless it
is accompanied by the certificate in respect of the shares to which it relates
and by such other evidence as the Board may reasonably require to show the right
of the transferor to make the transfer.
63. Restriction on transfer
(1) Subject to the Act, this Bye-law 63 and such other of the restrictions
contained in these Bye-laws and elsewhere as may be applicable, and except, in
the case of any shares other than the Common Shares, as may otherwise be
provided by the terms of issuance thereof, any Member may sell, assign, transfer
or otherwise dispose of shares of the Company at the time owned by it and, upon
receipt of a duly executed form of transfer in writing, the Directors shall
procure the timely registration of the same. If the Directors refuse to register
a transfer for any reason they shall notify the proposed transferor and
transferee within thirty days of such refusal.
(2) The Directors shall decline to register a transfer of shares if the
Directors have reason to believe that the effect of such transfer would be to
increase the number of total Controlled Shares of any Person to ten percent
(10%) or any higher percentage of the shares of the Company on an Unadjusted
Basis.
(3) The Directors may, in their absolute and unfettered discretion,
decline to register the transfer of any shares if the Directors have reason to
believe (i) that such transfer may expose the Company, any subsidiary thereof,
any Member or any Person ceding insurance to the Company or any such subsidiary
to adverse tax or regulatory treatment in any jurisdiction or (ii) that
registration of such transfer under the Securities Act or under any blue sky or
other United States state securities laws or under the laws of any other
jurisdiction is required and such registration has not been duly effected
(PROVIDED, however, that in this case (ii) the Directors shall be entitled to
request and rely on an opinion of counsel to the transferor or the
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transferee, in form and substance satisfactory to the Directors, that no such
approval or consent is required and no such violation would occur, and the
Directors shall not be obligated to register any transfer absent the receipt of
such an opinion).
(4) Without limiting the foregoing, the Board shall decline to approve or
register a transfer of shares unless all applicable consents, authorisations,
permissions or approvals of any governmental body or agency in Bermuda, the
United States or any other applicable jurisdiction required to be obtained prior
to such transfer shall have been obtained.
(5) The registration of transfers may be suspended at such time and for
such periods as the Directors may from time to time determine; PROVIDED that
such registration shall not be suspended for more than forty-five days in any
period of three hundred and sixty five (365) consecutive days.
(6) The Directors may require any Member, or any Person proposing to
acquire shares of the Company, to certify or otherwise provide information in
writing as to such matters as the Directors may request for the purpose of
giving effect to Bye-laws 10(2), 10(3), 53(2), 63(2) and 63(3), including as to
such Person's status as a United States Person, its Controlled Shares and other
matters of the kind contemplated by Bye-law 52(2). Such request shall be made by
written notice and the certification or other information requested shall be
provided to such place and within such period (not less than ten (10) Business
Days after such notice is given unless the Directors and such Member or proposed
acquiror otherwise agree) as the Directors may designate in such request. If any
Member or proposed acquiror does not respond to any such request by the
Directors as requested, or if the Directors have reason to believe that any
certification or other information provided pursuant to any such request is
inaccurate or incomplete, the Directors may decline to register any transfer or
to effect any issuance or purchase of shares to which such request relates.
64. Transfers by joint holders
The joint holders of any share or shares may transfer such share or shares
to one or more of such joint holders, and the surviving holder or holders of any
share or shares previously held
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by them jointly with a deceased Member may transfer any such share or shares to
the executors or administrators of such deceased Member.
65. Lien on Shares
(1) The Company shall have a first and paramount lien and charge on all
shares (whether fully paid-up or not) registered in the name of a Member
(whether solely or jointly with others) for all debts, liabilities or
engagements to or with the Company (whether presently payable or not) by such
Member or his estate, either alone or jointly with any other Person, whether a
Member or not, but the Directors may at any time declare any share to be wholly
or in part exempt from the provisions of this Bye-law. The registration of a
transfer of any such share shall operate as a waiver of the Company's lien (if
any) thereon. The Company's lien (if any) on a share shall extend to all
dividends or other monies payable in respect thereof.
(2) The Company may sell, in such manner as the Directors think fit, any
shares on which the Company has a lien, but no sale shall be made unless a sum
in respect of which the lien exists is then presently payable, nor until the
expiration of fourteen days after a notice in writing stating and demanding
payment of such part of the amount in respect of which the lien exists as is
presently payable, has been given to the relevant Member, or the Person, of
which the Company has notice, entitled thereto by reason of such Member's death
or bankruptcy. Effective upon such sale, any certificate representing such
shares prior to such sale shall become null and void, whether or not it was
actually delivered to the Company.
(3) To give effect to any such sale the Directors may authorize some
Person to transfer the shares sold to the purchaser thereof. The purchaser shall
be registered as the holder of the shares comprised in any such transfer, and he
shall not be bound to see to the application of the purchase money, nor shall
his title to the shares be affected by any irregularity or invalidity in the
proceedings in reference to the sale.
(4) The proceeds of such sale shall be received by the Company and applied
in payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums not presently payable as existed
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<PAGE> 42
upon the shares before the sale) be paid to the Person entitled to the shares at
the date of the sale.
TRANSMISSION OF SHARES
66. Registration on bankruptcy
Any person becoming entitled to a share in consequence of the bankruptcy
of any Member may be registered as a Member upon such evidence as the Board may
deem sufficient or may elect to nominate some person to be registered as a
transferee of such share, and in such case the person becoming entitled shall
execute in favour of such nominee an instrument of transfer in the form, or as
near thereto as circumstances admit, of Form "B" in the Schedule hereto or in
such other common form as the Board or any transfer agent appointed from time
to time accepts. On the presentation thereof to the Board, accompanied by such
evidence as the Board may require to prove the title of the transferor, the
transferee shall be registered as a Member but the Board shall, in either case,
have the same right to decline or suspend registration as it would have had in
the case of a transfer of the share by that Member before such Member's
bankruptcy.
DIVIDENDS AND OTHER DISTRIBUTIONS
67. Declaration of dividends by the Board
Subject to any rights or restrictions at the time lawfully attached to any
class of shares and subject to these Bye-laws, the Board may, in accordance with
Section 54 of the Act, declare a dividend to be paid to the Members, in
proportion to the number of shares held by them, and such dividend may be paid
in cash or wholly or partly in specie in which case the Board may fix the value
for distribution in specie of any assets.
68. Other distributions
The Board may declare and make such other distributions (in cash or in
specie) to the Members as may be lawfully made out of the assets of the Company.
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<PAGE> 43
69. Reserve fund
The Board may from time to time before declaring a dividend set aside, out
of the surplus or profits of the Company, such sum as it thinks proper as a
reserve fund to be used to meet contingencies or for equalising dividends or for
any other special purpose.
70. Deduction of amounts due to the Company
The Board may deduct from the dividends or distributions payable to any
Member all monies due from such Member to the Company on account of calls or
otherwise.
71. Unclaimed dividends
Any dividend unclaimed for a period of six (6) years from the date of
declaration of such dividend shall be forfeited and shall revert to the Company
and the payment by the Board of any unclaimed dividend, interest or other sum
payable on or in respect of the share into a separate account shall not
constitute the Company a trustee in respect thereof.
72. Interest on dividend
No dividend or distribution shall bear interest against the Company.
73. Issue of bonus shares
Subject to Bye-law 53(2), the Board may resolve to capitalise any part of
the amount for the time being standing to the credit of any of the Company's
share premium or other reserve accounts or to the credit of the profit and loss
account or otherwise available for distribution by applying such sum in paying
up unissued shares to be allotted as fully paid bonus shares pro rata to the
Members.
ACCOUNTS AND FINANCIAL STATEMENTS
74. Records of account
The Board shall cause to be kept proper records of account with respect to
all transactions of the Company and in particular with respect to:
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<PAGE> 44
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt and expenditure
relates;
(b) all sales and purchases of goods by the Company; and
(c) the assets and liabilities of the Company.
Such records of account shall be kept at the registered office of the
Company or, subject to Section 83 (2) of the Act, at such other place as the
Board thinks fit and shall be available for inspection by the Directors during
normal business hours.
75. Financial year end
The financial year end of the Company may be determined by resolution of
the Board and failing such resolution shall be 31st December in each year.
76. Financial statements
Subject to any rights to waive laying of accounts pursuant to Section 88
of the Act, financial statements as required by the Act shall be laid before the
Members in general meeting.
AUDIT
77. Appointment of Auditor
Subject to Section 88 of the Act, at the annual general meeting or at a
subsequent special general meeting in each year, an independent representative
of the Members shall be appointed by them as Auditor of the accounts of the
Company. Such Auditor may be a Member but no Director, Officer or employee of
the Company shall, during his or her continuance in office, be eligible to act
as an Auditor of the Company.
78. Remuneration of Auditor
The remuneration of the Auditor shall be fixed by the Company in general
meeting or in such manner as the Members may determine.
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<PAGE> 45
79. Vacation of office of Auditor
If the office of Auditor becomes vacant by the resignation or death of the
Auditor, or by the Auditor becoming incapable of acting by reason of illness or
other disability at a time when the Auditor's services are required, the Board
shall, as soon as practicable, convene a special general meeting to fill the
vacancy thereby created.
80. Access to books of the Company
The Auditor shall at all reasonable times have access to all books kept by
the Company and to all accounts and vouchers relating thereto, and the Auditor
may call on the Directors or Officers of the Company for any information in
their possession relating to the books or affairs of the Company.
81. Report of the Auditor
(1) Subject to any rights to waive laying of accounts or appointment of an
Auditor pursuant to Section 88 of the Act, the accounts of the Company shall be
audited at least once in every year.
(2) The financial statements provided for by these Bye-laws shall be
audited by the Auditor in accordance with generally accepted auditing standards.
The Auditor shall make a written report thereon in accordance with generally
accepted auditing standards and the report of the Auditor shall be submitted to
the Members in general meeting.
(3) The generally accepted auditing standards referred to in paragraph (2)
of this Bye-law shall be those of the United States of America and the financial
statements and the report of the Auditor shall disclose this fact.
82. Record dates
Notwithstanding any other provision of these Bye-laws the Company or the
Directors may fix any date as the date for:
(a) determining the Members entitled to receive any dividend,
distribution, allotment or issue and such record date may be
on, or at any time not
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<PAGE> 46
more than 30 days before or after, any date on which such
dividend, distribution, allotment or issue is declared, paid
or made;
(b) determining the Members entitled to receive notice of and to
vote at any general meeting of the Company.
NOTICES
83. Notices to Members of the Company
A notice may be given by the Company to any member either by delivering it
to such Member in person or by sending it to such Member's address in the
Register of Members or to such other address given for the purpose. For the
purposes of this Bye-law, a notice may be sent by mail, courier service, cable,
telex, telecopier, facsimile or other mode of representing words in a legible
and non-transitory form.
84. Notices to joint Members
Any notice required to be given to a Member shall, with respect to any
shares held jointly by two or more persons, be given to whichever of such
persons is named first in the Register of Members and notice so given shall be
sufficient notice to all the holders of such shares.
85. Service and delivery of notice
Any notice shall be deemed to have been served at the time when the same
would be delivered in the ordinary course of transmission and, in proving such
service, it shall be sufficient to prove that the notice was properly addressed
and prepaid, if posted, and the time when it was posted, delivered to the
courier or to the cable company or transmitted by telex, facsimile or other
method as the case may be.
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<PAGE> 47
SEAL OF THE COMPANY
86. The Seal
The seal of the Company shall be in such form as the Board may from time
to time determine. The Board may adopt one or more duplicate seals for use
outside Bermuda.
87. Manner in which seal is to be affixed
The seal of the Company shall not be affixed to any instrument except
attested by the signature of a Director and the Secretary or any two Directors,
or some other person appointed by the Board for the purpose, provided that any
Director, or Officer, may affix the seal of the Company attested by such
Director or Officer's signature only to any authenticated copies of these
Bye-laws, the incorporating documents of the Company, the minutes of any
meetings or any other documents required to be authenticated by such Director or
Officer.
88. Determination to wind up Company
The Company may be wound up voluntarily by resolution of the Members.
WINDING-UP
89. Winding-up/distribution by liquidator
If the Company shall be wound up the liquidator may, with the sanction of
a resolution of the Members, divide amongst the Members in specie or in kind the
whole or any part of the assets of the Company (whether they shall consist of
property of the same kind or not) and may, for such purpose, set such value as
he or she deems fair upon any property to be divided as aforesaid and may
determine how such division shall be carried out as between the Members or
different classes of Members. The liquidator may, with the like sanction, vest
the whole or any part of such assets in trustees upon such trusts for the
benefit of the Members as the liquidator shall think fit, but so that no Member
shall be compelled to accept any shares or other securities or assets whereon
there is any liability.
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<PAGE> 48
ALTERATION OF BYE-LAWS
90. Alteration of Bye-laws
No Bye-law shall be rescinded, altered or amended and no new Bye-law shall
be made until the same has been approved by a resolution of the Board and by a
resolution of the Members.
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<PAGE> 49
SCHEDULE - FORM A
(Bye-law 49)
PROXY
I/We
of
the holder(s) of share(s) in the above-named company hereby appoint
________________________ or failing him/her _______________________________ or
failing him/her ____________________________ as my/our proxy to vote on my/our
behalf at the general meeting of the Company to be held on the day of
, 19 , and at any adjournment thereof.
Dated this day of , 19
*GIVEN under the seal of the Company
*Signed by the above-named
____________________________________
____________________________________
Witness
*Delete as applicable.
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<PAGE> 50
SCHEDULE - FORM B
(Bye-law 62)
TRANSFER OF A SHARE OR SHARES
FOR VALUE RECEIVED .............................................[amount]
............................................................[transferor]
hereby sell assign and transfer unto........................[transferee]
of ............................................................[address]
......................................................[number of shares]
shares of .............................................[name of Company]
Dated ....................
...........................
(Transferor)
In the presence of:
..........................
(Witness)
............................
(Transferree)
In the presence of:
..........................
(Witness)
-44-
<PAGE> 1
Exhibit 4.2
Form of Class A Warrant
Class A Warrants have been purchased by the following individuals in
substantially the form attached hereto for a number of Common Shares equal to
the percentage set forth next to his name of the sum of (i) the Common Shares
outstanding immediately following the offering (but excluding any shares held by
the Annuity Re Purpose Trust) and (ii) the Common Shares issuable upon exercise
or conversion of any security outstanding immediately following the offering,
except for all Class A Warrants and any options granted by the Company pursuant
to its Initial Stock Option Plan:
<TABLE>
<CAPTION>
Name Applicable Percentage
- ------- ---------------------
<S> <C>
Frederick S. Hammer 2.575%
Robert M. Lichten 2.575%
Michael P. Esposito, Jr. 2.575%
William S. Ogden, Jr. 2.575%
Andrew S. Lerner 1.200%
Arnold Welles 0.500%
</TABLE>
<PAGE> 2
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW, AND THEY MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
APPLICABLE FEDERAL AND STATE SECURITIES LAWS AND THE
OTHER RESTRICTIONS ON TRANSFER SET FORTH HEREIN.
--------------------
Date: December 9, 1997
CLASS A WARRANT
TO PURCHASE COMMON SHARES OF
ANNUITY AND LIFE RE (HOLDINGS), LTD.
Void after 5:00 P.M. (United States Eastern Time),
January 15, 2008, as provided herein.
THIS CERTIFIES that, for value received, __________ (the
"Warrant Holder"), or registered assigns, is entitled to purchase from ANNUITY
AND LIFE RE (HOLDINGS), LTD. (the "Company"), a Bermuda corporation, upon the
satisfaction of the conditions stated herein and during the period (subject to
Section 2 hereof) from and after the first anniversary of the consummation of
the Company's initial public offering (the "IPO") of its common shares, par
value $1.00 per share (the "Common Shares"), to 5:00 p.m. (United States Eastern
Time) on January 15, 2008, a number of fully paid and nonassessable Common
Shares equal to ___% of the sum of (i) the Common Shares outstanding immediately
following the consummation of the Company's IPO (including all Common Shares
issued and sold by the Company upon exercise of any overallotment option granted
to the underwriters of the IPO and all Common Shares issued and sold by the
Company in any private placement consummated prior to or simultaneously with the
IPO, but excluding any shares held by the Annuity Re Purpose Trust) and (ii) the
Common Shares issuable upon exercise or conversion of any security outstanding
immediately following the consummation of the IPO, except for all Class A
Warrants and any options granted by the Company pursuant to its Initial Stock
Option Plan, subject to adjustment as provided herein, at a per share purchase
price equal to the sales price to the public of a Common Share in the IPO. The
Company acknowledges receipt from the initial Warrant Holder of _________
($_________) in full payment for the issuance of this warrant.
1. Definitions. For the purpose of this Warrant:
(a) "Capital Stock" shall mean the Company's Common
Shares and any other shares of any class, or series within a class, whether now
or hereafter authorized, which has the right to participate in the distribution
of earnings or assets of the Company without limit as to amount or percentage.
<PAGE> 3
(b) "Warrants" shall mean the original Warrant to
purchase Common Shares of the Company issued by the Company pursuant hereto and
any and all Warrants which are issued in exchange or substitution for any
outstanding Warrant pursuant to the terms of the Warrant.
(c) "Warrant Price" shall mean the price per share at
which Common Shares of the Company are purchasable hereunder, as such price may
be adjusted from time to time hereunder.
(d) "Warrant Shares" shall mean the Common Shares
purchasable upon exercise of Warrants.
(e) "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except:
(i) Common Shares issuable upon
exercise of the Warrant;
(ii) Common Shares
outstanding on the date hereof;
(iii) Common Shares
issued pursuant to the IPO;
(iv) Common Shares
issuable upon the exercise of options and warrants which are outstanding on the
date hereof; and
(v) Options to purchase Common Shares
granted by the Company as an incentive for performance to the Company's
officers, directors, employees and consultants after the date hereof, the Common
Shares issuable upon the exercise of such options, and the Common Shares awarded
to such persons as share grants by the Company as incentive for performance
after the date hereof.
2. Exercise of Warrants.
(a) This Warrant may be exercised at any time or from
time to time on or after (i) the first anniversary of the consummation of the
IPO for up to one-third of the number of Warrant Shares provided for on page 1
hereof, (ii) the second anniversary of the consummation of the IPO for up to an
additional one-third of the number of Warrant Shares provided for on page 1
hereof, and (iii) the third anniversary of the consummation of the IPO for up to
an additional one-third of the number of Warrant Shares provided for on page 1
hereof, in each case subject to adjustment as provided in Section 6. Subject to
the foregoing, this Warrant may be exercised at any time or from time to time in
whole or in part (but not as to fractional
-2-
<PAGE> 4
shares) prior to 5:00 p.m. United States Eastern Time on January 15, 2008, at
which time this Warrant and all of the Warrant Holder's rights hereunder shall
terminate, except as expressly provided herein. Notwithstanding the foregoing,
upon a Change in Control of the Company (as defined below) this Warrant shall
become immediately exercisable for the full number of Warrant Shares provided
for on page 1 hereof. For purposes of this Section 2(a), a "Change in Control"
of the Company shall be deemed to have occurred if:
(i) Any person, including a group of
persons acting in concert, becomes the beneficial owner of shares of the Company
having 50 percent or more of the total number of votes that may be cast for the
election of directors of the Company;
(ii) There occurs any cash tender or
exchange offer for shares of the Company, merger or other business combination,
or any combination of the foregoing transactions, and as a result of or in
connection with any such event, persons who were directors of the Company before
the event shall cease to constitute a majority of the board of directors of the
Company or any successor to the Company; or
(iii) The sale, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the assets of the
Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred by reason of a change in beneficial ownership occurring in connection
with the IPO.
(b) This Warrant may be exercised at the time(s) or
upon the occurrence of the event(s) specified in Subsection 2(a) hereof by the
surrender of this Warrant, with the Purchase Agreement attached hereto as Rider
A properly completed and duly executed, at the principal office of the Company
at Victoria Hall, Victoria Street, Hamilton, HM FX, Bermuda, or such other
location which shall at that time be the principal office of the Company and of
which the Company shall have notified the Warrant Holder in writing (the
"Principal Office"), or at the office of its stock transfer agent, and upon
payment to the Company of the Warrant Price for the Warrant Shares to be
purchased upon such exercise. The person entitled to the Warrant Shares so
purchased shall be treated for all purposes as the holder of such shares as of
the close of business on the date of exercise and certificates for the shares so
purchased shall be delivered to the person so entitled within a reasonable time,
not exceeding thirty (30) days, after such exercise. Certificates representing
the Warrant Shares issued upon exercise of this Warrant shall bear a legend
referring to the restrictions on transfer set forth herein.
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<PAGE> 5
Unless this Warrant has expired, a new Warrant of like tenor and for such number
of Common Shares as the holder of this Warrant shall direct, representing in the
aggregate the right to purchase the number of Common Shares with respect to
which this Warrant shall not have been exercised, shall also be issued to the
holder of this Warrant within such time.
(c) The Warrant Price shall be payable (i) in
cash or its equivalent, (ii) in Common Shares newly acquired upon exercise of
this Warrant, or (iii) in any combination of (i) and (ii). In the event the
Warrant Price is paid, in whole or in part, with Common Shares, the portion of
the Warrant Price so paid shall be equal to the current market value of the
Common Shares determined as follows:
If the Common Shares are listed on a national
securities exchange or listed for trading on The Nasdaq Stock
Market, the current market value shall be the closing price of
the Common Shares on such exchange or in such market on the
day this Warrant is exercised, or if there have been no sales
on such exchange or in such market, the average of the highest
bid and lowest asked prices on such exchange or in such market
at the end of such day.
If the Common Shares are not so listed, the current
market value of the Common Shares shall be an amount
determined in such reasonable manner as may be prescribed by
the Board of Directors of the Company.
3. Exchange. This Warrant is exchangeable, upon its surrender
by the Warrant Holder to the Company at its Principal Office, or to the
Company's stock transfer agent at its office, for new Warrants of like tenor
registered in the Warrant Holder's name and representing in the aggregate the
right to purchase the same number of Common Shares purchasable hereunder, each
of such new Warrants to represent the right to subscribe for and purchase such
number of Common Shares as shall be designated by the Warrant Holder at the time
of such surrender.
4. Transfer. Subject to restrictions on transfer set forth in
Section 11, this Warrant is transferable, in whole or in part, by the holder
thereof at the Principal Office of the Company or at the office of its stock
transfer agent, in person or by duly authorized attorney, upon presentation of
this Warrant properly endorsed for transfer, the Assignment attached hereto as
Rider A duly executed, and funds sufficient to pay any transfer tax (the
"Transfer Documents"). Within a reasonable time after receiving the Transfer
Documents, not exceeding thirty (30) days, the Company shall execute and deliver
a new Warrant in the name of the assignee named in the Assignment and this
Warrant shall be cancelled. Each holder of this Warrant, by holding it, agrees
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<PAGE> 6
that this Warrant, when endorsed in blank, may be deemed negotiable, and that,
when this Warrant shall have been so endorsed, the holder of this Warrant may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner of this Warrant for any purpose and as the person entitled to
exercise the rights represented by this Warrant, or to the transfer of this
Warrant on the books of the Company, any notice to the contrary notwithstanding.
5. Certain Covenants of the Company. The Company covenants and
agrees that all Common Shares which may be issued upon the exercise of this
Warrant, will, upon issuance, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof. The Company further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized, and reserved for the purpose of issue
upon exercise of the purchase rights evidenced by this Warrant, a sufficient
number of Common Shares to provide for the exercise of the rights represented by
this Warrant.
6. Adjustment of Purchase Price and Number of Shares. The
number and kind of securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any time
while this Warrant remains outstanding and unexpired, in case of any
reclassification or change of outstanding securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination of outstanding securities issuable upon the exercise of this
Warrant) or in case of any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination of outstanding securities issuable upon the exercise
of this Warrant), the Company, or such successor corporation, as the case may
be, shall, without payment of any additional consideration therefor, execute a
new Warrant providing that the Warrant Holder shall have the right to exercise
such new Warrant (upon terms not less favorable to the Warrant Holder than those
then applicable to this Warrant) and to receive upon such exercise, in lieu of
each Common Share theretofore issuable upon exercise of this Warrant, the kind
and amount of shares of stock, other securities, money or property receivable
upon such reclassification, change, consolidation or
-5-
<PAGE> 7
merger, by the holder of one Common Share issuable upon exercise of this Warrant
had it been exercised immediately prior to such reclassification, change,
consolidation or merger. Such new Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 6. Notwithstanding the foregoing, in the case of any
transaction which pursuant to this Section 6(a) would result in the execution
and delivery by the Company of a new Warrant to the Warrant Holder, and in which
the holders of Common Shares are entitled only to receive money or other
property exclusive of securities, then in lieu of such new Warrant being
exercisable as provided above, the Warrant Holder shall have the right, at its
sole option, to require the Company to purchase this Warrant (without prior
exercise by the Warrant Holder) at its fair value as of the day before such
transaction became publicly known, as determined by an unaffiliated
internationally recognized accounting firm or investment bank selected by the
Warrant Holder and reasonably acceptable to the Company. Any purchase and sale
of the Warrant pursuant to the immediately preceding sentence shall be
consummated as provided in Section 2(b), mutatis mutandi. The provisions of this
Subsection 6(a) shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales and transfers.
(b) Subdivision or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Capital Stock, the Warrant Price shall be proportionately reduced,
in case of subdivision of such shares, as of the effective date of such
subdivision, or, if the Company shall take a record of holders of its Capital
Stock for the purpose of so subdividing, as of such record date, whichever is
earlier, or shall be proportionately increased, in the case of combination of
such shares, as of the effective date of such combination, or, if the Company
shall take a record of holders of its Capital Stock for the purpose of so
combining, as of such record date, whichever is earlier.
(c) Certain Dividends and Distributions. If the Company at
any time while this Warrant remains outstanding and unexpired shall:
(i) Stock Dividends. Pay a dividend in shares of, or
make other distribution of shares of, its Capital Stock, then the Warrant Price
shall be adjusted, as of the date the Company shall take a record of the holders
of its Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as of the date of such payment or
other distribution), to that price determined by multiplying the Warrant Price
in effect immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of Capital Stock
outstanding immediately prior to such dividend or distribution,
-6-
<PAGE> 8
and (b) the denominator of which shall be the total number of shares of Capital
Stock outstanding immediately after such dividend or distribution; or
(ii) Liquidating Dividends, Etc. Make a distribution
of its assets to the holders of its Capital Stock as a dividend in liquidation
or by way of return of capital or other than as a dividend payable out of
earnings or surplus legally available for dividends under applicable law, the
Warrant Holder shall be entitled to receive upon the exercise hereof, in
addition to the number of Common Shares receivable thereupon, and without
payment of any additional consideration therefor, a sum equal to the amount of
such assets as would have been payable to him as owner of that number of Common
Shares receivable by exercise of the Warrant had he been the holder of record of
such Common Shares on the record date for such distribution, or if no such
record is taken, as of the date of such distribution, and an appropriate
provision therefor shall be made a part of any such distribution.
(d) Issuance of Additional Shares of Capital Stock. If the
Company at any time while the Warrant remains outstanding and unexpired shall
issue any Additional Shares of Capital Stock (otherwise than as provided in the
foregoing subsections (a) through (c) above) at a price per share less, or for
other consideration lower, than the Warrant Price, or without consideration,
then upon such issuance the Warrant Price shall be adjusted to that price
determined by multiplying the Warrant Price by a fraction (a) the numerator of
which shall be the number of shares of Capital Stock outstanding immediately
prior to the issuance of such Additional Shares of Capital Stock plus the number
of shares of Capital Stock which the aggregate consideration for the total
number of such Additional Shares of Capital Stock so issued would purchase at
the Warrant Price, and (b) the denominator of which shall be the number of
shares of Capital Stock outstanding immediately prior to the issuance of such
Additional Shares of Capital Stock plus the number of such Additional Shares of
Capital Stock so issued. The provisions of this subsection 6(d) shall not apply
under any of the circumstances for which an adjustment is provided in
subsections 6(a), 6(b), or 6(c). No adjustment of the Warrant Price shall be
made under this subsection 6(d) upon the issuance of any Additional Shares of
Capital Stock which are issued pursuant to the exercise of any warrants, options
or other subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any convertible securities if any such
adjustments shall previously have been made upon the issuance of any such
warrants, options or other rights or upon the issuance of any convertible
securities (or upon the issuance of any warrants, options or any rights
therefor) pursuant to subsections 6(e) or 6(f) hereof.
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<PAGE> 9
(e) Issuance of Warrants, Options or Other Rights. In case
the Company shall issue any warrants, options or other rights to subscribe for
or purchase any Additional Shares of Capital Stock and the price per share for
which Additional Shares of Capital Stock may at any time thereafter be issuable
pursuant to such warrants, options or other rights shall be less than the
Warrant Price, then upon such issuance the Warrant Price shall be adjusted as
provided in subsection 6(d) hereof on the basis that the aggregate consideration
for the Additional Shares of Capital Stock issuable pursuant to such warrants,
options or other rights, shall be deemed to be the consideration received by the
Company for the issuance of such warrants, options, or other rights plus the
minimum consideration to be received by the Company for the issuance of
Additional Shares of Capital Stock pursuant to such warrants, options, or other
rights.
(f) Issuance of Convertible Securities. In case the Company
shall issue any convertible securities and the consideration per share for which
Additional Shares of Capital Stock may at any time thereafter be issuable
pursuant to the terms of such convertible securities shall be less than the
Warrant Price, then upon such issuance the Warrant Price shall be adjusted as
provided in subsection 6(d) hereof on the basis that (i) the maximum number of
Additional Shares of Capital Stock necessary to effect the conversion or
exchange of all such convertible securities shall be deemed to have been issued
as of the date of issuance of such convertible securities, and (ii) the
aggregate consideration for such maximum number of Additional Shares of Capital
Stock shall be deemed to be the minimum consideration received by the Company
for the issuance of such Additional Shares of Capital Stock pursuant to the
terms of such convertible securities. No adjustment of the Warrant Price shall
be made under this subsection upon the issuance of any convertible securities
which are issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights pursuant to subsection
6(e) hereof.
(g) Adjustment of Number of Shares. Upon each adjustment in
the Warrant Price pursuant to any provision of this Section 6, the number of
Common Shares purchasable hereunder at the Warrant Price shall be adjusted, to
the nearest one hundredth of a whole share, to the product obtained by
multiplying such number of Common Shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which shall be
the Warrant Price immediately prior to such adjustment and the denominator of
which shall be the Warrant Price immediately thereafter.
(h) Other Provisions Applicable to Adjustments Under this
Section. The following provisions will be applicable
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<PAGE> 10
to the making of adjustments in the Warrant Price hereinabove provided in this
Section 6:
(i) Computation of Consideration. To the extent that
any Additional Shares of Capital Stock or any convertible securities or any
warrants, options or other rights to subscribe for or purchase any Additional
Shares of Capital Stock or any convertible securities shall be issued for a cash
consideration, the consideration received by the Company therefor shall be
deemed to be the amount of the cash received by the Company therefor, or, if
such Additional Shares of Capital Stock or convertible securities are offered by
the Company for subscription, the subscription price, or, if such Additional
Shares of Capital Stock or convertible securities are sold to underwriters or
dealers for public offering without a subscription offering, or through
underwriters or dealers for public offering without a subscription offering, the
initial public offering price, in any such case disregarding any amounts paid or
incurred by the Company for and in the underwriting of, or otherwise in
connection with the issue thereof. To the extent that such issuance shall be for
a consideration other than cash, then, except as herein otherwise expressly
provided, the amount of such consideration shall be deemed to be the fair value
of such consideration at the time of such issuance as determined in good faith
by the Company's Board of Directors. The consideration for any Additional Shares
of Capital Stock issuable pursuant to any warrants, options or other rights to
subscribe for or purchase the same shall be the consideration received by the
Company for issuing such warrants, options or other rights, plus the additional
consideration payable to the Company upon the exercise of such warrants, options
or other rights. The consideration for any Additional Shares of Capital Stock
issuable pursuant to the terms of any convertible securities shall be the
consideration paid or payable to the Company in respect of the subscription for
or purchase of such convertible securities, plus the additional consideration,
if any, payable to the Company upon the exercise of the right of conversion or
exchange in such convertible securities. In case of the issuance at any time of
any Additional Shares of Capital Stock or convertible securities in payment or
satisfaction of any dividends in a fixed amount, the Company shall be deemed to
have received for such Additional Shares of Capital Stock or convertible
securities a consideration equal to the amount of such dividend so paid or
satisfied.
(ii) Readjustment of Warrant Price. Upon the
expiration of the right to convert or exchange any convertible securities, or
upon the expiration of any rights, options or warrants, the issuance of which
convertible securities, rights, options or warrants effected an adjustment in
the Warrant Price, if any such convertible securities shall not have been
converted or exchanged, or if any such rights, options or warrants shall not
have been exercised, the number of shares
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<PAGE> 11
of Capital Stock deemed to be issued and outstanding by reason of the fact that
they were issuable upon conversion or exchange of any such convertible
securities or upon exercise of any such rights, options, or warrants shall no
longer be computed as set forth above, and the Warrant Price shall forthwith be
readjusted and thereafter be the price which it would have been (but reflecting
any other adjustments in the Warrant Price made pursuant to the provisions of
this Section 6 after the issuance of such convertible securities, rights,
options or warrants) had the adjustment of the Warrant Price made upon the
issuance or sale of such convertible securities or issuance of rights, options
or warrants been made on the basis of the issuance only of the number of
Additional Shares of Capital Stock actually issued upon conversion or exchange
of such convertible securities, or upon the exercise of such rights, options or
warrants, and thereupon only the number of Additional Shares of Capital Stock
actually so issued shall be deemed to have been issued and only the
consideration actually received by the Company (computed as in subsection (h)(i)
hereof) shall be deemed to have been received by the Company.
(iii) Treasury Shares. The number of shares of
Capital Stock at any time outstanding shall not include any shares thereof then
directly or indirectly owned or held by or for the account of the Company or any
subsidiary of the Company.
(iv) Other Action Affecting Capital Stock. In case
after the date hereof the Company shall take any action affecting the Capital
Stock, other than an action described in any of the foregoing subsection (a) to
(f) hereof, inclusive, which in the opinion of the Company's Board of Directors
would have a materially adverse effect upon the rights of the holders of the
Warrant, the Warrant Price shall be adjusted in such manner and at such time as
the Board of Directors on the advice of the Company's independent public
accountants may in good faith determine to be equitable in the circumstances.
(v) Limitation or Adjustment of Warrant Price.
Notwithstanding any other provision of this Warrant, no adjustment of the
Warrant Price shall be made which would reduce such Warrant Price below the par
value of the Warrant Shares.
7. Notice of Adjustments. Whenever the Warrant Price or the
number of Common Shares purchasable under the terms of this Warrant at that
Warrant Price shall be adjusted pursuant to Section 6 hereof, the Company shall
prepare a certificate signed by its President or a Vice President and by its
Treasurer or Assistant Treasurer or its Secretary or Assistant Secretary,
setting forth in reasonable detail the event requiring the adjustment, the
amount of the adjustment, the method by which
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<PAGE> 12
such adjustment was calculated (including a description of the basis on which
the Company's Board of Directors made any determination hereunder), and the
Warrant Price and number of Common Shares purchasable at that Warrant Price
after giving effect to such adjustment, and shall promptly cause copies of such
certificate to be mailed (by first class and postage prepaid) to the registered
holder of this Warrant.
In the event the Company shall, at a time when this Warrant is
exercisable, take any action which pursuant to Section 6 may result in an
adjustment of any of the Warrant Price or the number of Common Shares
purchasable at that Warrant Price upon exercise of this Warrant, the Company
will give to the registered holder of this Warrant at such holder's last address
known to the Company written notice of such action ten (10) days in advance of
its effective date in order to afford to such holder of this Warrant an
opportunity to exercise this Warrant and to purchase Common Shares prior to such
action becoming effective.
8. Payment of Taxes. All Common Shares issued upon the
exercise of this Warrant shall be validly issued, fully paid and nonassessable,
and the Company shall pay all taxes and other governmental charges that may be
imposed in respect of the issue or delivery thereof. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for Common Shares in any name
other than that of the registered holder of the Warrant surrendered in
connection with the purchase of such shares, and in such case the Company shall
not be required to issue or deliver any share certificate until such tax or
other charge has been paid or it has been established to the Company's
satisfaction that no tax or other charge is due.
9. Fractional Shares. No fractional Common Shares will be
issued in connection with any purchase hereunder but in lieu of such fractional
shares, the Company shall make a cash refund therefor equal in amount to the
product of the applicable fraction multiplied by the Warrant Price paid by the
holder for its Warrant Shares upon such exercise.
10. Loss, Theft, Destruction or Mutilation. Upon receipt by
the Company of evidence reasonably satisfactory to it that this Warrant has been
mutilated, destroyed, lost or stolen, and in the case of a destroyed, lost or
stolen Warrant, a bond of indemnity reasonably satisfactory to the Company, or
in the case of a mutilated Warrant, upon surrender and cancellation of this
Warrant, the Company will execute and deliver in the Warrant Holder's name, in
exchange and substitution for the Warrant so mutilated, destroyed, lost or
stolen, a new Warrant of like tenor substantially in the form hereof with
appropriate insertions and variations.
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<PAGE> 13
11. Securities Laws Representations and Warranties; Transfer
to Comply with Securities Laws.
(a) The Warrant Holder, by acceptance of this Warrant,
represents and warrants to the Company that this Warrant is being, and any
Warrant Shares acquired on exercise of this Warrant will be, acquired by the
Warrant Holder for his own account, not as nominee or agent, and not with a view
to resale or distribution within the meaning of the Securities Act of 1933, as
amended (the "1933 Act") and the Warrant Holder will not distribute this Warrant
or any Warrant Shares in violation of the 1933 Act or any applicable state or
foreign law.
(b) The Warrant Holder, by acceptance of this Warrant, (i)
acknowledges that this Warrant and the Warrant Shares are not registered under
the 1933 Act or any state securities laws and that this Warrant and any Warrant
Shares to be issued to it upon the exercise of this Warrant must be held
indefinitely by it unless they are subsequently registered under the 1933 Act
and all applicable state securities laws or an exemption from registration is
available, (ii) is aware that any routine sales under Rule 144 of the Securities
and Exchange Commission under the 1933 Act of this Warrant and the Warrant
Shares may be made only in limited amounts and in accordance with the terms and
conditions of that Rule and that in such cases where the Rule is not applicable,
compliance with some other registration exemption will be required, (iii) is
aware that Rule 144 is not presently available for use by the Warrant Holder for
resale of such Warrant and Warrant Shares, and (iv) is aware that the Company is
not obligated to register under the 1933 Act any sale, transfer or other
disposition of this Warrant or the Warrant Shares, except pursuant to the terms
and conditions of that certain Registration Rights Agreement by and between the
Company, the Warrant Holder and certain other persons.
(c) The Warrant Holder, by acceptance of this Warrant,
confirms that the Company has made available to him the opportunity to ask
questions of and receive answers from the Company's officers and directors
concerning the terms and conditions of the offering and the business and
financial condition of the Company, and to acquire, and the Warrant Holder has
received to his satisfaction, such additional information about the business and
financial condition of the Company and the terms and conditions of the offering
as it has requested.
(d) The Warrant Holder, by acceptance of this Warrant,
represents that (i) he is an "accredited investor" as such term is defined in
Rule 501 promulgated under the 1933 Act, (ii) his financial situation is such
that he can afford to bear the economic risk of holding this Warrant and the
Warrant Shares for an indefinite period of time and suffer complete loss of his
investment in this Warrant and the Warrant Shares, and (iii) his
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<PAGE> 14
knowledge and experience in financial and business matters are such that he is
capable of evaluating the merits and risks of his purchase of this Warrant and
the Warrant Shares as contemplated by this Agreement.
(e) The certificate representing any Warrant Shares
acquired upon exercise of this Warrant, and any Common Shares or other
securities issued in respect of such Warrant Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event, shall be
stamped or otherwise imprinted with the following legend (unless such a legend
is no longer required under the 1933 Act):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE SOLD EXCEPT IN A TRANSACTION WHICH IS
EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT. IN ADDITION, THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH IN A
WARRANT OF THE COMPANY DATED DECEMBER 9, 1997."
(f) The Company shall not be required to register the
transfer of this Warrant or any Warrant Shares on the books of the Company
unless the Company shall have been provided with an opinion of counsel
satisfactory to it or no-action letters from the Securities and Exchange
Commission and the appropriate state regulatory agencies prior to such transfer
to the effect that registration under the 1933 Act and any applicable state
securities law is not required in connection with the transaction resulting in
such transfer; provided, however, that no such opinion of counsel or no-action
letter shall be necessary in order to effectuate a transfer in accordance with
the provisions of Rule 144(k) promulgated under the 1933 Act. Each Warrant or
certificate for Warrant Shares issued upon any transfer as above provided shall
bear the restrictive legend set forth in Subsection 11(e) above, except that
such restrictive legend shall not be required if the opinion of counsel
satisfactory to the Company or no-action letters referred to above are to the
further effect that such legend is not required in order to establish compliance
with the provisions of the 1933 Act and any applicable state securities law, or
if the transfer is made in accordance with the provisions of Rule 144(k) under
the 1933 Act. The cost of obtaining any legal opinion or no-action letter
required under this Section shall be borne by the Warrant Holder.
12. Survival. The provisions of Section 11 shall survive any
expiration, cancellation or exercise of this Warrant.
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<PAGE> 15
13. Headings. The descriptive headings of the several sections
of this Warrant are inserted for convenience only and do not constitute a part
of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer under its corporate seal, attested by its
duly authorized officer, on the date of this Warrant.
ANNUITY AND LIFE RE (HOLDINGS), LTD.
By:_________________________________
Attest:_____________________________
ACCEPTED, ACKNOWLEDGED
AND AGREED
By:________________________
Attest:____________________
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<PAGE> 16
Rider A
PURCHASE AGREEMENT
Date: __________________________
TO:
The undersigned, pursuant to the provisions set forth in the
attached Warrant, hereby agrees to purchase _________________ Common Shares
covered by such Warrant, and makes payment herewith in full therefor at the
price per share provided by this Warrant.
Signature: _______________________
Address: _______________________
* * * *
ASSIGNMENT
For Value Received, ________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
within Warrant, with respect to the number of Common Shares covered by such
Warrant, to:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
Dated: Signature: _______________________
Address: _______________________
<PAGE> 1
Exhibit 8.2
Form of opinion
January , 1998
Annuity and Life Re (Holdings), Ltd.
Victoria Hall, Victoria Street
P.O. Box HM1262
Hamilton, HM FX, Bermuda
RE: Annuity and Life Re (Holdings), Ltd.
Registration Statement on Form S-1
Gentlemen:
As your counsel, we have assisted in certain aspects of the preparation
and filing with the Securities and Exchange Commission (the "SEC"), under the
Securities Act of 1933, as amended (the "Act"), of the Company's Registration
Statement on Form S-1 (No. 333-43301)(the "Registration Statement") and the
Prospectus contained therein relating to the proposed registration of
19,262,500 shares of the Company's Common Stock.
We have made such examinations as we have deemed relevant and necessary as
a basis for the opinion hereinafter expressed. In such examinations, we have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as conformed or photostatic copies.
Based on and subject to the assumptions and limitations contained herein,
we are of the opinion that the statements as to United States Federal income
tax law set forth under the headings "Risk Factors -- United States Federal
Income Tax Risks" and "Certain Tax Considerations" in the Registration
Statement are accurate in all material respects. This opinion is based upon
provisions of the Internal Revenue Code of 1986, as amended, applicable
Treasury Department regulations in effect as of the date hereof, current
published administrative positions of the Internal Revenue Service contained in
revenue rulings and procedures, and judicial decisions.
This opinion represents our best legal judgment, but has no binding effect
or official status of any kind, and no
<PAGE> 2
Annuity and Life Re (Holdings), Ltd.
January , 1998
Page 2
assurance can be given that contrary positions may not be taken by the Internal
Revenue Service or a court concerning the issues. As noted in the Prospectus,
the statements therein as to the Company's beliefs and conclusions as to the
application of such tax law to the Company and its operations represent the
views of the Company's management as to the application of such law and do not
represent our legal opinion. We also express no opinion as to any tax
consequences under any foreign, state or local laws. In issuing our opinion, we
have relied solely upon existing provisions of the Code, existing proposed
regulations thereunder, and current administrative positions and judicial
decision. Such laws, regulations, administrative positions and judicial
decisions are subject to change at any time. Also, future changes in Federal
income tax laws and the interpretation thereof can have retroactive effect. Any
such changes could affect the validity of the opinion set forth above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm in the Prospectus
under the headings "Risk Factors -- United States Federal Income Tax Risks,"
"Certain Tax Considerations" and "Legal Matters." This does not constitute a
consent under Section 7 of the Act, and in consenting to such references to our
firm we have not certified any part of the Registration Statement and do not
otherwise come within the categories of persons whose consent is required under
Section 7 or under the rules and regulations of the SEC issued thereunder.
Very truly yours,
WMG:SDDH
<PAGE> 1
EXHIBIT 10.1
Employment Agreement with
Lawrence S. Doyle
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of December 5, 1997, by and between
Annuity and Life Re (Holdings), Ltd., a Bermudian corporation (the "Company"),
Annuity and Life Reassurance, Ltd., a subsidiary of the Company organized under
the laws of Bermuda to engage in worldwide life and annuity reinsurance (the
"Operating Company"), and LAWRENCE S. DOYLE (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company is contemplating an initial public
offering or a private placement of its Common Shares in excess of $100 million
(the "IPO"); and
WHEREAS, the Company and the Operating Company desire that the
Employee serve as President and Chief Executive Officer of the Company and the
Operating Company and the Employee is willing to serve in such capacities; and
WHEREAS, if the IPO has not been completed prior to May 31,
1998, both Company and the Employee desire the option to terminate this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the parties hereto
agree as follows:
Section: 1. Employment.
Effective as of January 1, 1998, the Company and the Operating
Company will employ the Employee and the Employee will perform services for the
Company and the Operating Company on the terms and conditions set forth in this
Agreement and for the period ("Term of Employment") specified in Section 3
hereof.
Section: 2. Duties.
The Employee, during the Term of Employment, shall serve the
Company as its President and Chief Executive Officer. The Employee shall also
serve as President and Chief Executive Officer of the Operating Company. The
Employee shall be based at the Operating Company's headquarters in Bermuda,
other than for periodic travel in the ordinary course of business. The Employee
shall have such duties and responsibilities as are assigned to him by the Boards
of Directors of the Company and the Operating Company commensurate with his
positions as President and Chief Executive Officer of the Company and the
Operating Company.
<PAGE> 2
The Employee shall perform his duties hereunder faithfully and
to the best of his abilities and in furtherance of the business of the Company,
and shall devote his full business time, energy, attention and skill to the
business of the Company and to the promotion of its interests except as
otherwise agreed by the Company.
The Employee warrants and represents that he is free to enter
into this Agreement and is not restricted by any prior or existing agreement and
the Company and the Operating Company may rely on such representation in
entering into this Agreement.
Section: 3. Term of Employment.
The initial Term of Employment of this Agreement shall be the
period commencing on January 1, 1998 and ending on the third anniversary of the
IPO. At the end of the initial Term of Employment, and on each anniversary
thereof, the Term of Employment shall automatically be extended for one
additional year, unless the Company or the Employee shall have given written
notice to the other that it does not wish to extend this Agreement at least
three months in advance.
Section: 4. Salary.
The Employee shall receive, as compensation for his duties and
obligations to the Company and the Operating Company, a salary at the annual
rate of $350,000, payable in substantially equal installments in accordance with
the Operating Company's payroll practice. It is agreed between the parties that
the Company shall review the base annual salary annually and in light of such
review may, in the discretion of the Board of Directors of the Company (but
shall not be obligated to), increase such base annual salary taking into account
any change in the Employee's then responsibilities, increases in the cost of
living, performance by the Employee, and other pertinent factors.
Notwithstanding anything in this Agreement to the contrary, until the
consummation of the IPO, the Company shall pay the Employee at the annual rate
of $240,000, which shall be in lieu of any base salary and any other amounts and
benefits payable hereunder.
Section: 5. Bonus.
During the Term of Employment, the Employee shall, subject to
and effective upon the consummation of the IPO, participate in the Company's
Incentive Compensation Plan, a summary of which is attached hereto as Exhibit A,
and will be eligible for an annual cash bonus based on performance targets as
determined in accordance with the terms of the Plan.
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<PAGE> 3
Section: 6. Options.
(a) Initial Options. The Company shall grant to the Employee,
subject to and effective as of the consummation of the IPO, options (the
"Initial Options") to purchase at a price per share equal to the price per share
in the IPO, three percent of the Company's ordinary shares issued in the IPO
(the "Ordinary Shares"), but not to exceed an aggregate value of $12.0 million
(valued at the IPO per share price). Thirty three and one-thirds percent
(33 1/3%) of the Initial Options shall become exercisable after the first
anniversary of the IPO, 33 1/3% of the Initial Options shall become exercisable
after the second anniversary of the IPO, and an additional 33 1/3% of the
Initial Options shall become exercisable after the third anniversary thereof. No
Initial Option may be exercised after the earlier of (A) the date that is (i)
ninety (90) days following the termination of the Employee's employment for any
reason other than death, disability or Serious Cause (as defined in Section 11),
or (ii) six (6) months after the termination of the Employee's employment by
reason of death or disability or (iii) the date upon which the Employee's
employment is terminated for Serious Cause; or (B) the tenth anniversary of the
IPO date.
The consideration for the Ordinary Shares purchased upon
exercise of the Initial Options may be paid in cash or by any other method
permitted by the terms of the Company's Initial Option Plan. The issuance of any
Ordinary Shares pursuant to the Initial Options shall in all events be subject
to all applicable securities laws and the Employee shall enter into any
agreement reasonably requested by the Company in order to ensure that all such
issuances are in full compliance therewith. The Employee shall not have any of
the rights and privileges of a shareholder of the Company with respect to the
Ordinary Shares issuable upon any exercise of Initial Options unless and until
his name is entered into the register of members of the Company in respect of
such Ordinary Shares. If there is any change in the number or nature of
outstanding shares of the Company's capital stock by reason of a share dividend,
recapitalization, merger, consolidation, scheme of arrangement, share split,
combination or exchange, share repurchase or otherwise, which in any such case
has a dilutive or anti-dilutive effect on the Ordinary Shares, the number of
Ordinary Shares subject to each outstanding Initial Option, the exercise price
thereof and/or other terms thereof shall be appropriately adjusted by the Board
of Directors of the Company (or any committee thereof), whose determination
shall be conclusive, so as to restore the option holder to his rights
thereunder.
(b) Other Options. During the Term of Employment, the Employee
shall, subject to the consummation of the IPO, be eligible to be granted options
(in addition to the Initial Options) to purchase Ordinary Shares at such price
and subject to
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<PAGE> 4
such terms as provided by the Company's Initial Stock Option Plan, in the sole
discretion of the Board of Directors of the Company.
Section: 7. Employee Benefits.
During the Term of Employment the Employee shall, subject to
the consummation of the IPO, be entitled to participate in all employee benefit
programs of the Company, as such programs may be in effect from time to time,
including without limitation, pension and other retirement plans, profit sharing
plans, group life insurance, accidental death and dismemberment insurance,
hospitalization, surgical and major medical coverage, sick leave (including
salary continuation arrangements), long term disability, holidays and vacations.
Section: 8. Business Expenses.
All reasonable travel and other expenses incidental to the
rendering of services by the Employee hereunder shall be paid by the Company and
if expenses are paid in the first instance by the Employee, the Company will
reimburse him therefor upon presentation of proper invoices; subject in each
case to compliance with the Company's reimbursement policies and procedures.
Section: 9. Housing and Travel Expenses.
Effective upon consummation of the IPO, the Company shall
provide to the Employee the sum of $8,333.00 monthly as an allowance to cover
the expenses of housing in Bermuda and for his personal travel including spouse
and immediate family (2 daughters), to and from Bermuda.
Section: 10. Vacations and Sick Leave.
The Employee shall be entitled to reasonable vacation and
reasonable sick leave each year (beginning with 1998), in accordance with
policies of the Company, as determined by the Board of Directors, provided,
however, that the Employee shall be entitled to a minimum of 4 weeks vacation
per year.
Section: 11. Termination.
(a) In the event of Serious Cause, as defined below, the
Company may terminate the Employee's employment and the Term of Employment upon
written notice of such termination stating the Serious Cause upon which the
Company relies for its termination. The Employee's employment and the Term of
Employment shall be terminated effective as of the date specified in such
notice, which shall in no event be earlier than the effective date of such
notice as provided in Section 20.
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<PAGE> 5
"Serious Cause" shall mean (i) the willful and continued
failure by the Employee to perform substantially his duties hereunder, other
than by reasons of health, after demand for substantial performance is delivered
by the Company that identifies the manner in which the Company believes the
Employee has not substantially performed his duties, (ii) the Employee shall
have been indicted by any federal, state or local authority in any jurisdiction
for, or shall have pleaded guilty or nolo contendere to, an act constituting a
felony, (iii) the Employee shall have habitually abused any substance (such as
narcotics or alcohol), or (iv) the Employee shall have (A) engaged in acts of
fraud, material dishonesty or gross misconduct in connection with the business
of the Company or (B) committed a material breach of this Agreement.
(b) The Employee may terminate his employment and the Term of
his Employment in the event of Good Reason, as defined below, upon 30 days'
prior written notice of such termination stating the Good Reason upon which the
Employee relies for his termination. The Employee's employment and the Term of
Employment shall be terminated effective as of the date specified in such
notice, which in no event shall be earlier than the effective date of such
notice as provided in Section 20.
"Good Reason" shall mean (i) a substantial reduction in the
Employee's salary, (ii) the demotion of the Employee, (iii) a material reduction
of the Employee's duties hereunder, or (iv) a material breach of this Agreement
by the Company.
(c) In the event of termination of the Employee's employment
and the Term of Employment by the Company for Serious Cause or by the Employee
without Good Reason, the Employee shall forfeit all bonus amounts for the then
current fiscal year, and the Company shall be liable to the Employee only for
(i) any accrued but unpaid salary, (ii) any accrued but unpaid bonus from a
prior fiscal year, and (iii) reimbursement of business expenses incurred prior
to the date of termination.
(d) In the event of the death, retirement or disability of the
Employee, the Employee's employment and Term of Employment shall be terminated
as of the date of such death, retirement or disability and the Company shall pay
the Employee, or the Employee's estate or legal representative, as appropriate,
(i) any accrued but unpaid salary, (ii) any earned but unpaid bonus from a prior
fiscal year, (iii) reimbursement of business expenses incurred prior to the date
of termination, (iv) travel and housing allowances under Section 9 for six
months after the date of termination, and (v) reasonable relocation expenses
from Bermuda to the United States. The date of the Employee's disability shall
be deemed to be the last day of the sixth month during which the Employee has
been unable to carry out his position as provided below.
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<PAGE> 6
"Disability" shall mean the Employee's inability, for reasons
of health, to carry out the functions of his position for a total of 6 months
during any 12 month period of this Agreement. "Retirement" shall mean retirement
from employment upon attaining age 65 or such earlier age agreed to by the
Company.
In addition, in such event, if the Company's Ordinary Shares
are not then publicly traded, the Company shall have the right to call any or
all of the Ordinary Shares of the Company owned by the Employee within six (6)
months of death, retirement or disability, and the Employee, the Employee's
estate or legal representative, whichever is appropriate, shall have the right
to put any or all of the Employee's Ordinary Shares to the Company within twelve
(12) months after death or within six (6) months after retirement or disability.
The price at which such put or call is exercisable shall be equal to the
appraised value, in each case measured as of the date of termination. The
appraised value formula of evaluation will be agreed upon by June 1, 1998 if the
Company is not then publicly traded.
(e) If the Company should (i) terminate the Term of Employment
and the Employee's employment herein without Serious Cause; or (ii) if the
Employee should terminate the Term of Employment and his employment hereunder
for Good Reason, the Company shall continue to pay the Employee his base salary
for a period of 18 months from such termination. In addition, the Employee shall
be entitled to (A) any accrued but unpaid salary, (B) any earned but unpaid
bonus from a prior fiscal year, (C) reimbursement of business expenses incurred
prior to the date of termination, and (D) travel and housing allowances under
Section 9 for six months after the date of termination, and (E) reasonable
relocation expenses from Bermuda to the United States.
(f) In the event of the liquidation of the Company or in the
event that the Board of Directors elects to discontinue permanently operating
the Company, the Term of Employment and the Employee's employment herein shall
be terminated as of the date of such liquidation or discontinuance and the
Company shall pay the Employee within 30 days of the day liquidation or
discontinuance is determined (i) any accrued but unpaid salary, (ii) any earned
but unpaid bonus from a prior fiscal year, (iii) unreimbursed business expenses
incurred prior to the date of termination, (iv) travel and housing allowances
under Section 9 for two months after the date of termination, and (v) reasonable
relocation expenses from Bermuda to the United States. In addition, the Employee
shall be entitled to receive one year's base salary from the date on which the
Employee's employment is terminated.
(g) Notwithstanding any other provision of this
Agreement, if the IPO has not been consummated by May 31, 1998,
either the Employee or Company may terminate the Employee's
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<PAGE> 7
employment and the Term of Employment upon 30 days' written notice, in which
event the Company shall be liable to the Employee only for such amounts as would
be payable upon a termination described in Section 11(c).
Section: 12. Change of Control.
(a) Notwithstanding any other provision contained herein, the
Employee's Initial Options and other options issued under the Company's share
option plans that are not then exercisable shall become exercisable (and be
deemed to be vested) on the date on which a Change of Control of the Company
occurs. In addition, restricted Ordinary Shares granted under any of the
Company's share option plans shall immediately vest upon a Change of Control of
the Company.
(b) If (i) the employment of the Employee is terminated by the
Company (or successor thereto) without Serious Cause or (ii) the Employee
terminates employment with the Company (or successor thereto) for Good Reason,
within the period commencing on the date that a Change of Control is formally
proposed to the Company's Board of Directors and ending on the first anniversary
of the date on which such Change of Control occurs, then the Employee shall be
entitled to receive (in lieu of the benefits described in Section 11): (1) any
accrued but unpaid salary, (2) a lump sum payment equal to two times such
Employee's annual base salary as of the date of termination, (3) any accrued but
unpaid bonus from a prior fiscal year, (4) reimbursement of business expenses
incurred prior to the date of termination, (5) travel and housing allowances
under Section 9 for one year following the date of termination, (6) reasonable
relocation expenses from Bermuda to the United States, together with (7) a
gross-up of any income taxes payable by the Employee by reason of such payments
occurring in connection with a change of control.
The Employee shall not be entitled to any benefits or other
entitlements under this section unless a Change of Control actually occurs.
(c) A "Change of Control" of the Company shall be deemed to
have occurred if, following consummation of the IPO (i) any "person" (as such
term is defined in Section 3(a)(9) and as used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act"), excluding the Company
or any of its subsidiaries, a trustee or any fiduciary holding securities under
an employee benefit plan of the Company or any of its subsidiaries, an
underwriter temporarily holding securities pursuant to an offering of such
securities or a corporation owned, directly or indirectly, by shareholders of
the Company in substantially the same proportion as their ownership of the
Company, is or becomes the "beneficial owner" (as defined in rule
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<PAGE> 8
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding securities ("Voting Securities"); (ii) during any period of not
more than two years, individuals who constitute the Board of Directors of the
Company (the "Board") as of the beginning of the period and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (i) or (iii) of
this sentence) whose election by the Board or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at such time or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; (iii) the shareholders of the
Company approve a merger, consolidation or reorganization or a court of
competent jurisdiction approves a scheme of arrangement of the Company, other
than a merger, consolidation, reorganization or scheme of arrangement which
would result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at least 50% of
the combined voting power of the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger, consolidation,
reorganization or scheme of arrangement; or (iv) the shareholders of the Company
approve a plan of complete liquidation of the Company or any agreement for the
sale of substantially all of the Company's assets.
(d) The provisions of this Section 12 shall only apply
following the consummation of an IPO.
Section: 13. Agreement Not to Compete.
(a) The Employee hereby covenants and agrees that at no time
during the Term of Employment nor for a period of (i) one year immediately
following the termination of the Employee's employment by the Company without
Serious Cause or by the Employee for Good Reason or (ii) two years following the
termination of the Employee's employment for any other reason, will he for
himself or on behalf of any other person, partnership, company or corporation,
directly or indirectly, acquire any financial or beneficial interest in (except
as provided in the next sentence), provide consulting or other services to, be
employed by, or own, manage, operate or control any entity engaged in the
annuity or life reinsurance business similar to the business engaged in by the
Company or the Operating Company at the time of such termination of employment.
Notwithstanding the preceding sentence, the Employee shall not be prohibited
from owing less than one (1%) percent of any publicly
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<PAGE> 9
traded corporation, whether or not such corporation is in competition with the
Company or the Operating Company.
(b) The Employee hereby covenants and agrees that, at all
times during the Term of Employment and for a period of two years immediately
following the termination thereof, the Employee shall not directly or indirectly
employ or seek to employ any person or entity employed at that time by the
Company or any of its subsidiaries, or otherwise encourage or entice such person
or entity to leave such employment.
(c) This Section 13 shall be null and void if the Board of
Directors elects to discontinue permanently Company operations or if the IPO has
not been consummated by May 31, 1998.
Section: 14. Confidential Information.
(a) The Employee agrees to keep secret and retain in the
strictest confidence all confidential matters which relate to the Company or any
affiliate of the Company, including, without limitation, customer lists, client
lists, trade secrets, pricing policies and other business affairs of the Company
and any affiliate of the Company learned by him from the Company or any such
affiliate or otherwise before or after the date of this Agreement, and not to
disclose any such confidential matter to anyone outside the Company or any of
its affiliates, whether during or after his period of service with the Company,
except as may be required in the course of a legal or governmental proceeding.
Upon request by the Company, the Employee agrees to deliver promptly to the
Company upon termination of his services for the Company, or at any time
thereafter as the Company may request, all Company or affiliate memoranda,
notes, records, reports, manuals, drawings, designs, computer files in any media
and other documents (and all copies thereof) relating to the Company's or any
affiliate's business and all property of the Company or any affiliate associated
therewith, which he may then possess or have under his control.
Section: 15. Remedy.
(a) Should the Employee engage in or perform, either directly
or indirectly, any of the acts prohibited by Sections 13 or 14 hereof, it is
agreed that the Company shall be entitled to full injunctive relief, to be
issued by any competent court of equity, enjoining and restraining the Employee
and each and every other person, firm, organization, association, or corporation
concerned therein, from the continuance of such violative acts. The foregoing
remedy available to the Company shall not be deemed to limit or prevent the
exercise by the Company of any or all further rights and remedies which may be
available to the Company hereunder or at law or in equity.
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<PAGE> 10
(b) The Employee acknowledges and agrees that the covenants
contained in this Agreement are fair and reasonable in light of the
consideration paid hereunder, and the invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof. If any provision hereof is
determined to be invalid or unenforceable by a court of competent jurisdiction,
the Employee shall negotiate in good faith to provide Company with protection as
nearly equivalent to that found to be invalid or unenforceable and if any such
provision shall be so determined to be invalid or unenforceable by reason of the
duration or geographical scope of the covenants contained therein, such duration
or geographical scope, or both, shall be considered to be reduced to a duration
or geographical scope to the extent necessary to cure such invalidity.
Section: 16. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit
of the Employee, his heirs, executors, administrators and beneficiaries, and the
Company, the Operating Company and their successors and assigns.
Section: 17. Governing Law.
This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York, without reference to rules
relating to conflicts of law.
Section: 18. Entire Agreement.
This Agreement constitutes the full and complete understanding
and agreement of the parties and supersedes all prior understandings and
agreements as to employment of the Employee. This Agreement cannot be amended,
changed, modified or terminated without the written consent of the parties
hereto.
Section: 19. Waiver of Breach.
The waiver by either party of a breach of any term of this
Agreement shall not operate nor be construed as a waiver of any subsequent
breach thereof.
Section: 20. Notices.
Any notice, report, request or other communication given under
this Agreement shall be written and shall be effective upon delivery when
delivered personally, by Federal Express or by fax.
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<PAGE> 11
Unless otherwise notified by any of the parties, notices shall
be sent to the parties as follows:
To Employee: Lawrence S. Doyle
"The Moorings"
60 Harbour Road
Warwick WK-06
Bermuda
With a
Copy to: Joseph R. Purcell, Esquire
Purcell, Reis, Shannon & Mulcahy
Bedminster, New Jersey
Facsimile: 908-658-4659
To the
Company: Annuity and Life Reassurance, Ltd.
c/o Conyers Dill & Pearman
Clarendon House
2 Church Street
Hamilton HM-CX
Section: 21. Severability.
If any one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
Section: 22. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as on the day and year first above written.
By: /s/ Lawrence S. Doyle
--------------------------------
Lawrence S. Doyle
Annuity and Life Re (Holdings), Ltd.
By: /s/ Frederick S. Hammer
--------------------------------
Annuity and Life Reassurance, Ltd.
By: /s/ Frederick S. Hammer
--------------------------------
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<PAGE> 13
Exhibit A
Initial Cash Bonus Plan
20% of the Company's consolidated pretax earnings from normal
operations in excess of a benchmark return on equity (such benchmark is expected
to be set at approximately 8%), as determined by the Board of Directors in
accordance with Generally Accepted Accounting Principles, consistently applied,
shall be available for all senior executives. The Employee shall be entitled to
60% of the aggregate amount available for all senior executives, to a maximum of
$2 million per annum. All determinations by the Board of Directors shall be
final and conclusive for all purposes of the Plan.
<PAGE> 1
EXHIBIT 10.2
Initial Stock Option Plan
ANNUITY AND LIFE RE (HOLDINGS), LTD.
INITIAL STOCK OPTION PLAN
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
PURPOSE............................................................................. 1
SECTION 1 - Definitions............................................................. 1
SECTION 2 - Administration.......................................................... 4
SECTION 3 - Eligibility............................................................. 4
SECTION 4 - Common Shares........................................................... 5
SECTION 5 - Annual Limit............................................................ 5
SECTION 6 - Granting of Options to Key Employees and Consultants.................... 6
SECTION 7 - Terms and Conditions of Options to Key Employees and
Consultants.................................................................... 6
SECTION 8 - Options for Eligible Non-Employee Directors............................. 12
SECTION 9 - Option Agreements - Other Provisions.................................... 16
SECTION 10 - Capital Adjustments.................................................... 16
SECTION 11 - Amendment or Discontinuance of the Plan................................ 17
SECTION 12 - Termination of Plan.................................................... 18
SECTION 13 - Shareholder Approval................................................... 18
SECTION 14 - Miscellaneous.......................................................... 18
SECTION 15 - Change in Control...................................................... 20
</TABLE>
<PAGE> 3
ANNUITY AND LIFE RE (HOLDINGS), LTD.
INITIAL STOCK OPTION PLAN
PURPOSE
This ANNUITY AND LIFE RE (HOLDINGS), LTD. INITIAL STOCK OPTION
PLAN is intended to provide a means whereby Annuity and Life Re (Holdings), Ltd.
may, through the grant of Options to purchase Common Shares of the Company to
Key Employees, Non-Employee Directors, and Consultants attract and retain such
individuals and motivate them to exercise their best efforts on behalf of the
Company and of any Related Corporation.
SECTION 1 - DEFINITIONS
As used in the Plan the following words and terms shall have
the meaning hereinafter set forth unless the context clearly indicates
otherwise:
(a) BOARD. The term "Board" shall mean the Board of
Directors of the Company.
(b) CODE. The term "Code" shall mean the Internal
Revenue Code of 1986, as amended.
(c) COMMITTEE. The term "Committee" shall mean the
Company's Compensation Committee which shall consist of not less than
two (2) directors of the Company and who shall be appointed by, and
shall serve at the pleasure of, the Board. Each member of such
Committee, while serving as such, shall be deemed to be acting in his
or her capacity as a director of the Company. On and after the date the
Company first registers equity securities under Section 12 of the
Exchange Act, it is intended that each member of the Committee shall be
a Rule 16b-3 Non-Employee Director. Notwithstanding the foregoing, if
the Committee does not consist solely of two (2) or more Rule 16b-3
Non-Employee Directors, the full Board shall serve as the Committee if
it is intended that Options satisfy the advance approval requirements
of 17 CFR Section 240.16b-3.
(d) COMMON SHARES. The term "Common Shares" shall mean
the common shares of the Company, par value $1.00 per share.
(e) COMPANY. The term "Company" shall mean Annuity and
Life Re (Holdings), Ltd., a Bermuda corporation.
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<PAGE> 4
(f) CONSULTANT. The term "Consultant" shall mean a
consultant or advisor who is not an employee of the Company or a
Related Corporation and is not a Non-Employee Director, but may include
directors, officers, employees and partners of Inter-Atlantic Capital
Partners, Inc. or its affiliates.
(g) ELIGIBLE NON-EMPLOYEE DIRECTORS. The term "Eligible
Non-Employee Director" shall mean a Non-Employee Director who is not a
director, officer or employee of Inter-Atlantic Capital Partners, Inc.
or its affiliates.
(h) EXCHANGE ACT. The term "Exchange Act" shall mean
the Securities Exchange Act of 1934, as amended.
(i) FAIR MARKET VALUE. The term "Fair Market Value"
shall mean the fair market value of the optioned Common Shares
arrived at by a good faith determination of the Committee and
shall be:
(1) The quoted closing price, if there is a
market for the Common Shares on a registered securities
exchange or in an over the counter market, on the date of
grant;
(2) The weighted average of the quoted closing
prices on the nearest date before and the nearest date after
the date of grant, if there are no sales on the date of grant
but there are sales on dates within a reasonable period both
before and after the date of grant;
(3) The mean between the bid and asked prices,
as reported by the National Quotation Bureau on the date of
grant, if actual sales are not available during a reasonable
period beginning before and ending after the date of grant; or
(4) Such other method of determining fair market
value as shall be authorized by the Code, or the rules or
regulations thereunder, and adopted by the Committee.
Where the fair market value of the optioned Common Shares is
determined under (2) above, the average of the quoted closing prices on
the nearest date before and the nearest date after the date of grant is
to be weighted inversely by the respective numbers of trading days
between the selling dates and the date of grant (i.e., the valuation
date), in accordance with Treas. Reg. Section 20.2031-2(b)(1).
(j) ISO. The term "ISO" shall mean an Option which, at
the time such Option is granted, qualifies as an incentive stock option
within the meaning of section 422 of the Code.
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<PAGE> 5
(k) KEY EMPLOYEE. The term "Key Employee" shall mean an
officer or any other key employee of the Company or of a Related
Corporation.
(l) NON-EMPLOYEE DIRECTOR. The term "Non-Employee
Director" shall mean a director of the Company who is not an employee of
the Company or a Related Corporation.
(m) NQSO. The term "NQSO" shall mean an Option which is
not an ISO, and/or is designated as an NQSO in the Option Agreement.
(n) OPTION. The term "Option" shall mean any stock option
granted to a Key Employee, Non-Employee Director, or Consultant under
Sections 7 and 8 hereof.
(o) OPTION AGREEMENT. The term "Option Agreement" shall
mean a written document evidencing the grant of an Option, as described in
Section 9.
(p) OPTIONEE. The term "Optionee" shall mean a Key
Employee, Non-Employee Director, or Consultant to whom an Option has been
granted.
(q) PLAN. The term "Plan" shall mean the Annuity and
Life Re (Holdings), Ltd. Initial Stock Option Plan, as set forth herein
and as amended from time to time.
(r) RELATED CORPORATION. The term "Related Corporation"
shall mean either a corporate subsidiary of the Company, as defined in
section 424(f) of the Code, or the corporate parent of the Company, as
defined in section 424(e) of the Code.
(s) RULE 16B-3 NON-EMPLOYEE DIRECTOR. The term "Rule
16b-3 Non-Employee Director" shall mean a director who:
(1) Is not currently an officer (as defined in
17 CFR Section 240.16a-1(f)) of, or otherwise currently
employed by, the Company or a parent or subsidiary of the
Company within the meaning of 17 CFR Section 240.16b-3(b)(3);
(2) Does not receive compensation, either
directly or indirectly, from the Company or a parent or
subsidiary of the Company within the meaning of 17 CFR Section
240.16b-3(b)(3) for services rendered as a consultant or in
any other capacity other than as a director, except for an
amount that does not exceed the dollar amount for which
disclosure would be required under 17 CFR Section 229.404(a);
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<PAGE> 6
(3) Does not possess an interest in any other
transaction for which disclosure would be required pursuant to
17 CFR Section 229.404(a); and
(4) Is not engaged in a business relationship
for which disclosure would be required pursuant to 17 CFR
Section 229.404(b).
SECTION 2 - ADMINISTRATION
The Plan shall be administered by the Committee. The Committee
shall have full authority, subject to the terms of the Plan, to select the Key
Employees and Consultants to be granted ISOs and/or NQSOs under the Plan, to
grant Options on behalf of the Company and to set the date of grant and the
other terms of such Options. Options granted to Non-Employee Directors shall be
granted pursuant to the formula set forth in Section 8(a) hereof.
The Committee may correct any defect, supply any omission and
reconcile any inconsistency in this Plan and in any Option granted hereunder in
the manner and to the extent it shall deem desirable. The Committee also shall
have the authority to establish such rules and regulations, not inconsistent
with the provisions of the Plan, for the proper administration of the Plan, and
to amend, modify or rescind any such rules and regulations, and to make such
determinations and interpretations under, or in connection with, the Plan, as it
deems necessary or advisable. All such rules, regulations, determinations and
interpretations shall be binding and conclusive upon the Company, its
shareholders and all employees, directors, and consultants, and upon their
respective legal representatives, beneficiaries, successors and assigns and upon
all other persons claiming under or through any of them.
No member of the Board or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option granted under it.
SECTION 3 - ELIGIBILITY
Key Employees, Non-Employee Directors, and Consultants shall
be eligible to receive Options under the Plan. Key Employees shall be eligible
to receive ISOs and/or NQSOs. Non-Employee Directors and Consultants shall be
eligible to receive only NQSOs. More than one Option may be granted to a Key
Employee, Non-Employee Director, or Consultant under the Plan.
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<PAGE> 7
SECTION 4 - COMMON SHARES
Options may be granted under the Plan to purchase up to a
maximum of 1,700,000 Common Shares, provided that, if prior to June 30, 1998
there has been an initial public offering of the Common Shares, such maximum
number of Common Shares shall be automatically adjusted to equal the lesser of
(a) the sum of five percent (5%) of the Common Shares issued by the Company in
such initial public offering (including any shares issued pursuant to the
overallotment options granted to the underwriters of such offering) plus 150,000
Common Shares or (b) 1,700,000 Common Shares, and provided further that such
maximum number of Common Shares shall be subject to further adjustment as
provided in Section 10 hereof. Shares issuable under the Plan may be authorized
but unissued shares or reacquired shares, and the Company may purchase shares
required for this purpose, from time to time, if it deems such purchase to be
advisable.
If any Option granted under the Plan expires or otherwise
terminates for any reason whatever (including, without limitation, the
Optionee's surrender thereof) without having been exercised, the shares subject
to the unexercised portion of such Option shall continue to be available for the
granting of Options under the Plan as fully as if such shares had never been
subject to an Option.
SECTION 5 - ANNUAL LIMIT
(a) ISOs The aggregate Fair Market Value (determined as
of the date the ISO is granted) of the Common Shares with respect to
which ISOs are exercisable for the first time by a Key Employee during
any calendar year (under this Plan and any other ISO plan of the
Company or a Related Corporation) shall not exceed one hundred thousand
dollars ($100,000).
(b) OPTIONS OVER ANNUAL LIMIT. If an Option intended as
an ISO is granted to a Key Employee and such Option may not be treated
in whole or in part as an ISO pursuant to the limitation in subsection
(a) above, such Option shall be treated as an ISO to the extent it may
be so treated under such limitation and as an NQSO as to the remainder,
but shall continue to be subject to the provisions of the Plan that
apply to ISOs. For purposes of determining whether an ISO would cause
such limitation to be exceeded, the Key Employee's incentive stock
options shall be taken into account in the order granted.
(c) NQSOs. The annual limit set forth above for ISOs
shall not apply to NQSOs.
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<PAGE> 8
SECTION 6 - GRANTING OF OPTIONS TO KEY EMPLOYEES AND CONSULTANTS
From time to time until the expiration or earlier suspension
or discontinuance of the Plan, the Committee may, on behalf of the Company,
grant to Key Employees and Consultants under the Plan such Options as it
determines are warranted; provided, however, that grants of ISOs and NQSOs shall
be separate and not in tandem. The granting of an Option under the Plan shall
not be deemed either to entitle the Key Employee or Consultant to, or to
disqualify the Key Employee or Consultant from, any participation in any other
grant of Options under the Plan. In making any determination as to whether a Key
Employee or Consultant shall be granted an Option and as to the number of shares
to be covered by such Option, the Committee shall take into account the duties
of the Key Employee or Consultant, his or her present and potential
contributions to the success of the Company or a Related Corporation, and such
other factors as the Committee shall deem relevant in accomplishing the purposes
of the Plan. Moreover, the Committee may provide in the Option that said Option
may be exercised only if certain conditions, as determined by the Committee, are
fulfilled.
SECTION 7 - TERMS AND CONDITIONS OF OPTIONS TO KEY EMPLOYEES AND
CONSULTANTS
The Options granted pursuant to the Plan to Key Employees and
Consultants shall include expressly or by reference the following terms and
conditions, as well as such other provisions not inconsistent with the
provisions of this Plan and, for ISOs, the provisions of section 422(b) of the
Code, as the Committee shall deem desirable:
(a) NUMBER OF SHARES. A statement of the number of
Common Shares to which the Option pertains.
(b) PRICE. A statement of the Option exercise price,
which shall be determined and fixed by the Committee in its discretion
but, in the case of an ISO, shall not be less than the higher of one
hundred percent (100%) (one hundred ten percent (110%) in the case of
more than ten percent (10%) shareholders as discussed in Subsection (j)
below) of the Fair Market Value of the optioned Common Shares, or the
par value thereof, on the date the ISO is granted.
(c) TERM.
(1) ISOs. Subject to earlier termination as
provided in Subsections (e), (f) and (g) below and in Section
10 hereof, the term of each ISO shall be not more than ten
(10) years (five (5) years in the case of
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<PAGE> 9
more than ten percent (10%) shareholders as discussed in (j)
below) from the date of grant.
(2) NQSOs. Subject to earlier termination as
provided in Subsections (e), (f) and (g) below and in
Section 9 hereof, the term of each NQSO shall be not more than
ten (10) years from the date of grant.
(d) EXERCISE.
(1) GENERAL. Unless otherwise provided in the
Option Agreement, Options shall become exercisable in three
(3) equal annual installments, commencing with the first
anniversary of the grant date; provided that the Committee may
accelerate the exercise date of any outstanding Options, in
its discretion, if it deems such acceleration to be desirable.
Any Common Shares, the right to the purchase of which
has accrued under an Option, may be purchased at any time up
to the expiration or termination of the Option. Exercisable
Options may be exercised, in whole or in part, from time to
time by giving written notice of exercise to the Company at
its principal office, specifying the number of Common Shares
to be purchased and accompanied by payment in full of the
aggregate Option exercise price for such shares. Only full
shares shall be issued under the Plan, and any fractional
share which might otherwise be issuable upon exercise of an
Option granted hereunder shall be forfeited.
(2) MANNER OF PAYMENT. The Option exercise price
shall be payable:
(A) In cash or its equivalent;
(B) If the Committee, in its
discretion, so provides in the Option Agreement (as
hereinafter defined) or, in the case of Options which
are not ISOs, if the Committee, in its discretion, so
determines at or prior to the time of exercise, in
whole or in part, in Common Shares previously
acquired by the Optionee, provided that the
Committee, in its discretion, may require (i) if such
Common Shares were acquired through the exercise of
an ISO and are used to pay the Option exercise price
of an ISO, such shares have been held by the Optionee
for a period of not less than the holding period
described in section 422(a)(1) of the Code on the
date of exercise, or (ii) if such Common Shares were
acquired through exercise of an NQSO or of an option
under a similar plan
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or through exercise of an ISO and are used to pay the
Option exercise price of an NQSO, such shares have
been held by the Optionee for a period of more than
six (6) months on the date of exercise;
(C) If the Committee, in its
discretion, so provides in the Option Agreement or,
in the case of Options which are not ISOs, if the
Committee, in its discretion, so determines at or
prior to the time of exercise, in whole or in part,
in Common Shares newly acquired by the Optionee upon
exercise of such Option (which shall constitute a
disqualifying disposition in the case of an Option
which is an ISO);
(D) If the Committee, in its
discretion, so provides in the Option Agreement or,
in the case of Options which are not ISOs, if the
Committee, in its discretion, so determines at or
prior to the time of exercise, in any combination of
(A), (B) and/or (C) above; or
(E) If the Committee, in its
discretion, so provides in the Option Agreement or,
in the case of Options which are not ISOs, if the
Committee, in its discretion, so determines at or
prior to the time of exercise, by permitting the
Optionee to deliver a properly executed notice of
exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker promptly
to deliver to the Company the amount of sale or loan
proceeds necessary to pay the exercise price of the
Option.
In the event such Option exercise price is paid, in
whole or in part, with Common Shares, the portion of the
Option exercise price so paid shall be equal to the Fair
Market Value on the date of exercise of the Option of the
Common Shares surrendered in payment of such Option exercise
price.
(e) TERMINATION OF EMPLOYMENT OR SERVICE.
(1) GENERAL. If an Optionee's employment or
service with the Company (and Related Corporations) is
terminated by either party prior to the expiration date fixed
for his or her Option for any reason other than death,
disability, or Cause (as described in paragraph (2) below),
such Option may be exercised, to the extent of the number of
Common Shares with respect to which the Optionee could have
exercised it on the date of such termination, or to any
greater extent permitted by the Committee, by the Optionee at
any time prior to the earlier of:
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(A) The expiration date fixed for such
Option; or
(B) An accelerated termination date
determined by the Committee, in its discretion,
except that, subject to Section 9 hereof, such
accelerated termination date shall not be earlier
than the date of the Optionee's termination of
employment or service and, unless otherwise
determined by the Committee, in its discretion, shall
not be later than three (3) months after the date of
such termination of employment.
If an Optionee's employment or service with the
Company or a Related Corporation terminates by reason of Cause
prior to the expiration date fixed for his or her Option, such
Option shall terminate immediately.
(2) CAUSE. For purposes of this Plan, unless
otherwise defined in an Optionee's employment or service
contract with the Company or a Related Corporation, "Cause"
shall include insubordination, gross incompetence or
misconduct in the performance of, or gross neglect of,
Optionee's duties, willful violation of any express direction
or of any rule or regulation applicable to such Optionee, any
act of fraud or intentional misrepresentation, or
embezzlement, misappropriation, or conversion of assets or
opportunities of the Company or a Related Corporation.
(f) EXERCISE UPON DISABILITY OF OPTIONEE. If an Optionee
shall become disabled (within the meaning of section 22(e)(3) of the
Code) during his or her employment or service and, prior to the
expiration date fixed for his or her Option, his or her employment or
service is terminated as a consequence of such disability, such Option
may be exercised, to the extent of the number of Common Shares with
respect to which the Optionee could have exercised it on the date of
such termination, or to any greater extent permitted by the Committee,
by the Optionee at any time prior to the earlier of:
(1) The expiration date fixed for the Option; or
(2) An accelerated termination date determined
by the Committee, in its discretion, except that, subject to
Section 9 hereof, such accelerated termination date shall not
be earlier than the date of termination of employment or
service by reason of disability and, unless otherwise
determined by the Committee, in its discretion, shall not be
later than one (1) year after the date of such termination of
employment.
In the event of the Optionee's legal disability, such Option may be so
exercised by the Optionee's legal representative.
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(g) EXERCISE UPON DEATH OF OPTIONEE. If an Optionee shall
die during his or her employment or service and prior to the expiration
date fixed for his or her Option, or if an Optionee whose employment or
service is terminated for any reason shall die following his or her
termination of employment or service, but prior to the earlier of:
(1) The expiration date fixed for such Option;
or
(2) The expiration of the period determined
under Subsections (e) and (f) above, if applicable;
such Option may be exercised, to the extent of the number of Common
Shares with respect to which the Optionee could have exercised it on
the date of his or her death, or to any greater extent permitted by the
Committee, by the Optionee's estate, personal representative or
beneficiary who acquired the right to exercise such Option by bequest
or inheritance or by reason of the death of the Optionee, at any time
prior to the earlier of:
(A) The expiration date specified in
such Option (which may be the expiration date
determined under Subsections (e) and (f) above, if
applicable); or
(B) An accelerated termination date
determined by the Committee, in its discretion except
that, subject to Section 9 hereof, such accelerated
termination date shall not be later than one (1) year
after the date of death.
(h) NON-TRANSFERABILITY.
(1) ISOs. No ISO shall be assignable or
transferable by a Key Employee otherwise than by will or by
the laws of descent and distribution, and during the lifetime
of the Key Employee, the ISO shall be exercisable only by him
or by his or her guardian or legal representative. If the Key
Employee is married at the time of exercise and if the Key
Employee so requests at the time of exercise, the certificate
or certificates shall be registered in the name of the Key
Employee and the Key Employee's spouse, jointly, with right of
survivorship.
(2) NQSOs. Except as otherwise provided in any
Option Agreement, no NQSO shall be assignable or transferable
by the Optionee otherwise than by will or by the laws of
descent and distribution, and during the lifetime of the
Optionee, the NQSO shall be exercisable only by him or by his
or her guardian or legal representative. If the Optionee
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<PAGE> 13
is married at the time of exercise and if the Optionee so
requests at the time of exercise, the certificate or
certificates shall be registered in the name of the Optionee
and his or her spouse, jointly, with right of survivorship.
(i) RIGHTS AS A SHAREHOLDER. An Optionee shall have no
rights as a shareholder with respect to any shares covered by his or
her Option until the issuance of a share certificate to him or her for
such shares.
(j) TEN PERCENT SHAREHOLDER. If a Key Employee owns more
than ten percent (10%) of the total combined voting power of all shares
of stock of the Company or of a Related Corporation at the time an ISO
is granted to such Key Employee, the Option exercise price for the ISO
shall be not less than one hundred ten percent (110%) of the Fair
Market Value of the optioned Common Shares on the date the ISO is
granted, and such ISO, by its terms, shall not be exercisable after the
expiration of five (5) years from the date the ISO is granted. The
conditions set forth in this Subsection (j) shall not apply to NQSOs.
(k) LISTING AND REGISTRATION OF SHARES. Each Option shall
be subject to the requirement that, if at any time the Committee shall
determine, in its discretion, that the listing, registration or
qualification of the shares covered thereby upon any securities
exchange or under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the granting of such Option or the purchase
of shares thereunder, or that action by the Company or by the Optionee
should be taken in order to obtain an exemption from any such
requirement, no such Option may be exercised, in whole or in part,
unless and until such listing, registration, qualification, consent,
approval, or action shall have been effected, obtained, or taken under
conditions acceptable to the Committee. Without limiting the generality
of the foregoing, each Optionee or his or her legal representative or
beneficiary may also be required to give satisfactory assurance that
shares purchased upon exercise of an Option are being purchased for
investment and not with a view to distribution, and certificates
representing such shares may be legended accordingly.
(l) WITHHOLDING AND USE OF SHARES TO SATISFY TAX
OBLIGATIONS. The obligation of the Company to deliver Common Shares
upon the exercise of any Option shall be subject to applicable tax
withholding requirements.
If the exercise of any Option is subject to the withholding
requirements of applicable tax laws, the Committee, in its discretion
(and subject to such withholding rules ("Withholding Rules") as shall
be adopted by the Committee), may permit the Optionee to satisfy the
minimum required withholding tax, in
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whole or in part, by electing to have the Company withhold (or by
returning to the Company) Common Shares, which shares shall be valued,
for this purpose, at their Fair Market Value on the date of exercise of
the Option (or if later, the date on which the Optionee recognizes
ordinary income with respect to such exercise). An election to use
Common Shares to satisfy tax withholding requirements must be made in
compliance with and subject to the Withholding Rules. The Committee may
not withhold shares in excess of the number necessary to satisfy the
minimum tax withholding requirements.
SECTION 8 - OPTIONS FOR NON-EMPLOYEE DIRECTORS
(a) GRANTING OF OPTIONS TO OUTSIDE DIRECTORS.
(1) Each person who becomes an Eligible Non-
Employee Director shall be granted an NQSO to purchase 15,000
Common Shares on the later of (A) the date he or she becomes
an Eligible Non-Employee Director and (B) the date of the
Company's initial public offering of its Common Shares.
(2) In addition, with respect to the Company's
first annual shareholder's meeting after December 31, 1998 and
each subsequent annual shareholder's meeting of the Company,
each Non-Employee Director whose term as a director has not
ended as of the date of such annual shareholder's meeting
shall be granted an NQSO to purchase 2,000 Common Shares as of
the day of such annual shareholder's meeting.
(b) TERMS AND CONDITIONS OF OPTIONS. Options granted to
Non-Employee Directors shall expressly specify that they are NQSOs. In
addition, such Options shall include expressly or by reference the
following terms and conditions, as well as such other provisions not
inconsistent with the provisions of this Plan:
(1) NUMBER OF SHARES. A statement of the number
of Common Shares to which the Option pertains.
(2) PRICE. A statement of the Option exercise
price, which shall be one hundred percent (100%) of the Fair
Market Value of the optioned Common Shares on the date the
Option is granted.
(3) TERM. Subject to earlier termination as
provided in Subsections (5), (6) and (7) below, the term of
each Option granted under this Section 8 shall be 10 years
from the date of grant.
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<PAGE> 15
(4) EXERCISE.
(A) GENERAL. Options granted under
Section 8(a)(1) shall become exercisable in three (3)
equal annual installments, commencing with the first
anniversary of the grant date. Options granted under
Section 8(a)(2) shall be immediately exercisable as
of the grant date, provided that if such date is not
at least one year after the date upon which the
Company's initial public offering of its Common
Shares was consummated, such Options shall become
exercisable on the first anniversary of the
consummation of such initial public offering. Any
Common Shares, the right to the purchase of which has
accrued under an Option, may be purchased at any time
up to the expiration or termination of the Option.
Exercisable Options may be exercised, in whole or in
part, from time to time by giving written notice of
exercise to the Company at its principal office,
specifying the number of Common Shares to be
purchased and accompanied by payment in full of the
aggregate Option exercise price for such shares. Only
full shares shall be issued under the Plan, and any
fractional share which might otherwise be issuable
upon the exercise of an Option granted hereunder
shall be forfeited.
(B) MANNER OF PAYMENT. The Option
exercise price shall be payable:
(i) In cash or its equivalent;
(ii) Unless in the opinion of
counsel to the Company to do so may result
in a possible violation of law, in whole or
in part through the transfer of Common
Shares previously acquired by the
Non-Employee Director, provided that if such
Common Shares were acquired through exercise
of an NQSO or of an option under a similar
plan, such Common Shares so transferred
shall have been held by the Non-Employee
Director for more than six (6) months on the
date of exercise;
(iii) Unless in the opinion of
counsel to the Company to do so may result
in a possible violation of law, in whole or
in part, in Common Shares newly acquired by
the Non-Employee Director upon the exercise
of such Option; or
(iv) In any combination of (i),
(ii), and/or (iii) above.
In the event such Option exercise price is
paid, in whole or in part, with Common Shares, the
portion of the Option exercise price so paid shall
equal the Fair Market Value on the date of
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<PAGE> 16
exercise of the Option of the Common Shares
surrendered in payment of such Option exercise price.
(5) EXPIRATION OF TERM OR REMOVAL AS DIRECTOR.
If a Non-Employee Director's service as a director of the
Company terminates prior to the expiration date fixed for his
or her Option for any reason (such as, without limitation,
failure to be re-elected by the Company's shareholders) other
than by disability, death, or Cause (as described in Section
7(e)(2) above), such Option may be exercised, to the extent of
the number of Common Shares with respect to which the
Non-Employee Director could have exercised it on the date of
such termination, by the Non-Employee Director at any time
prior to the earlier of:
(A) The expiration date fixed for such
Option; or
(B) Three (3) months after the date of
such termination of service as a director.
If a Non-Employee Director's service as a director of
the Company terminates by reason of Cause prior to the
expiration date fixed for his or her Option, such Option shall
terminate immediately.
(6) EXERCISE UPON DISABILITY OF NON-EMPLOYEE
DIRECTOR. If a Non-Employee Director shall become disabled
(within the meaning of section 22(e)(3) of the Code) during
his or her term as a director of the Company and, prior to the
expiration date fixed for his or her Option, his or her term
as a director is terminated as a consequence of such
disability, such Option may be exercised, to the extent of the
number of Common Shares with respect to which the
Non-Employee Director could have exercised it on the date of
such termination, by the Non-Employee Director at any time
prior to the earlier of:
(A) The expiration date fixed for such
Option; or
(B) One year after the date of such
termination of service as a director.
In the event of the Non-Employee Director's
legal disability, such Option may be so exercised by his or
her legal representative.
(7) EXERCISE UPON DEATH OF NON-EMPLOYEE
DIRECTOR. If a Non-Employee Director shall die during his or
her term as a
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<PAGE> 17
director of the Company and prior to the expiration date fixed
for his or her Option, or if a Non-Employee Director whose
term as a director has been terminated for any reason shall
die following his or her termination as a director, but prior
to the earlier of:
(A) The expiration date fixed for such
Option; or
(B) The expiration of the period
determined under Subsections (5) and (6) above, if
applicable;
such Option may be exercised, to the extent of the number of
Common Shares with respect to which the Non-Employee Director
could have exercised it on the date of his or her death, by
the Non-Employee Director's estate, personal representative or
beneficiary who acquired the right to exercise such Option by
bequest or inheritance or by reason of the death of the
Non-Employee Director, at any time prior to the earlier of:
(i) The expiration date
specified in such Option (which may be the
expiration date determined under Subsections
(5) and (6) above, if applicable); or
(ii) One year after the date of
death.
(8) RIGHTS AS A SHAREHOLDER. A Non-Employee
Director shall have no rights as a shareholder with respect to
any shares covered by his or her Option until the issuance of
a share certificate to him or her for such shares.
(9) LISTING AND REGISTRATION OF SHARES. Each
Option shall be subject to the requirement that, if at any
time the Committee shall determine, in its discretion, that
the listing, registration or qualification of the shares
covered thereby upon any securities exchange or under any
applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of,
or in connection with, the granting of such Option or the
purchase of shares thereunder, or that action by the Company
or by the Optionee should be taken in order to obtain an
exemption from any such requirement, no such Option may be
exercised, in whole or in part, unless and until such listing,
registration, qualification, consent, approval, or action
shall have been effected, obtained, or taken under conditions
acceptable to the Committee. Without limiting the generality
of the foregoing, each Optionee or his or her legal
representative or beneficiary may also be required to give
satisfactory assurance that shares purchased upon
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exercise of an Option are being purchased for investment and
not with a view to distribution, and certificates representing
such shares may be legended accordingly.
SECTION 9 - OPTION AGREEMENTS - OTHER PROVISIONS
Options granted under the Plan shall be evidenced by Option
Agreements in such form as the Committee shall, from time to time, approve,
which Option Agreements shall contain such provisions, not inconsistent with the
provisions of the Plan for NQSOs granted pursuant to the Plan, and such
conditions, not inconsistent with section 422(b) of the Code or the provisions
of the Plan for ISOs granted pursuant to the Plan, as the Committee shall deem
advisable, and which Option Agreements shall specify whether the Option is an
ISO or NQSO; provided, however, if the Option is not designated in the Option
Agreement as an ISO or NQSO, the Option shall constitute an ISO if it complies
with the terms of section 422 of the Code, and otherwise, it shall constitute an
NQSO. Each Optionee shall enter into, and be bound by, such Option Agreement.
SECTION 10 - CAPITAL ADJUSTMENTS
The number of shares which may be issued under the Plan, and
the maximum number of shares with respect to which options may be granted during
a specified period to any Key Employee, Non-Employee Director, or Consultant
under the Plan, as stated in Section 4 hereof, and the number of shares issuable
upon exercise of outstanding Options under the Plan (as well as the Option
exercise price per share under such outstanding Options), shall, subject to the
provisions of section 424(a) of the Code, be adjusted to reflect any stock
dividend, stock split, share combination, or similar change in the
capitalization of the Company.
In the event of a corporate transaction (as that term is
described in section 424(a) of the Code and the Treasury Regulations issued
thereunder as, for example, a merger, consolidation, acquisition of property
or stock, separation, reorganization, or liquidation), each outstanding Option
shall be assumed by the surviving or successor corporation or by a parent or
subsidiary of such corporation if such corporation is the employer corporation
(as provided in section 424(a) of the Code and the regulations thereunder);
provided, however, that, in the event of a proposed corporate transaction, the
Committee may terminate all or a portion of the outstanding Options to Key
Employees and Consultants if it determines that such termination is in the best
interests of the Company. If the Committee decides to terminate outstanding
Options, the Committee shall give each Key Employee and Consultant holding an
Option to be terminated not less than seven (7) days' notice prior to any such
termination by reason of such a corporate transaction, and any such
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Option which is to be so terminated may be exercised (if and only to the extent
that it is then exercisable) up to, and including the date immediately preceding
such termination. Further, as provided in Section 7 hereof the Committee, in its
discretion, may accelerate, in whole or in part, the date on which any or all
Options granted to Key Employees and Consultants become exercisable.
The Committee also may, in its discretion, change the terms of
any outstanding Option to reflect any such corporate transaction, provided that,
in the case of ISOs, such change is excluded from the definition of a
"modification" under section 424(h) of the Code.
SECTION 11 - AMENDMENT OR DISCONTINUANCE OF THE PLAN
(a) GENERAL. The Board from time to time may suspend or
discontinue the Plan or amend it in any respect whatsoever, except that
the following amendments shall require shareholder approval (given in
the manner set forth in Section 11(b) below):
(1) With respect to ISOs, any amendment which
would:
(A) Change the class of employees
eligible to participate in the Plan;
(B) Except as permitted under Sections
4 and 10 hereof, increase the maximum number of
Common Shares with respect to which ISOs may be
granted under the Plan; or
(C) Extend the duration of the Plan
under Section 12 hereof with respect to any ISOs
granted hereunder; and
(2) Any amendment which would require
shareholder approval under 17 CFR Section 240.16b-3 in order
for the Plan to continue to constitute a "formula plan" with
respect to Options granted to Non-Employee Directors,
unless (i) the Plan is amended in a manner that takes
advantage of another method of complying with 17 CFR
Section240.16b-3 with respect to Options granted to
Non-Employee Directors, or (ii) compliance with 17 CFR
Section 240.16b-3 is not intended.
Notwithstanding the foregoing, no such suspension,
discontinuance or amendment shall materially impair the rights of any
holder of an outstanding Option without the consent of such holder.
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<PAGE> 20
(b) SHAREHOLDER APPROVAL REQUIREMENTS. Shareholder
approval must meet the following requirements:
(1) The approval of shareholders must be by a
majority of the votes cast at a meeting duly held in
accordance with the applicable laws of Bermuda; and
(2) The approval of shareholders must comply
with all applicable provisions of the corporate charter,
bye-laws, and applicable law prescribing the method and degree
of shareholder approval required for the issuance of corporate
stock or options. If the applicable law does not prescribe a
method and degree of shareholder approval in such case, the
approval of shareholders must be effected:
(A) By a method and in a degree that
would be treated as adequate under applicable law of
Bermuda in the case of an action requiring
shareholder approval (i.e., an action on which
shareholders would be entitled to vote if the action
were taken at a duly held shareholders' meeting); or
(B) By a majority of the votes cast at
a duly held shareholders' meeting at which a quorum
representing a majority of all outstanding voting
stock is, either in person or by proxy, present and
voting on the Plan.
SECTION 12 - TERMINATION OF PLAN
Unless earlier terminated as provided in the Plan, the Plan
and all authority granted hereunder shall terminate absolutely at 12:00 midnight
on December 2, 2007, which date is within ten (10) years after the date the Plan
was adopted by the Board (or the date the Plan was approved by the shareholders
of the Company, whichever is earlier), and no Options hereunder shall be granted
thereafter. Nothing contained in this Section 12, however, shall terminate or
affect the continued existence of rights created under Options issued hereunder
and outstanding on December 2, 2007, which by their terms extend beyond such
date.
SECTION 13 - SHAREHOLDER APPROVAL
This Plan shall become effective on December 3, 1997 (the date
the Plan was adopted by the Board); provided, however, that if the Plan is not
approved by the shareholders in the manner described in Section 11(b), within
twelve (12) months
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<PAGE> 21
before or after said date, ISOs granted hereunder shall be null and void and no
additional ISOs shall be granted hereunder.
SECTION 14 - MISCELLANEOUS
(a) GOVERNING LAW. With respect to any ISOs granted
pursuant to the Plan and the Option Agreements thereunder, the Plan,
such Option Agreements and any ISOs granted pursuant thereto shall be
governed by the applicable Code provisions to the maximum extent
possible. Otherwise, the operation of, and the rights of Optionees
under, the Plan, the Option Agreements and any Options granted
thereunder shall be governed by applicable United States law and
otherwise by the laws of Bermuda.
(b) RIGHTS. Neither the adoption of the Plan nor any
action of the Board or the Committee shall be deemed to give any
individual any right to be granted an Option, or any other right
hereunder, unless and until the Committee shall have granted such
individual an Option, and then his or her rights shall be only such as
are provided by the Option Agreement.
Any Option under the Plan shall not entitle the holder thereof
to any rights as a shareholder of the Company prior to the exercise of
such Option and the issuance of the shares pursuant thereto. Further,
notwithstanding any provisions of the Plan or the Option Agreement with
an Optionee, the Company shall have the right, in its discretion, to
retire a Key Employee at any time pursuant to its retirement rules or
otherwise to terminate an Optionee's employment or service at any time
for any reason whatsoever.
(c) INDEMNIFICATION OF BOARD AND COMMITTEE. Without
limiting any other rights of indemnification which they may have from
the Company and any Related Corporation, the members of the Board and
the members of the Committee shall be indemnified by the Company
against all costs and expenses reasonably incurred by them in
connection with any claim, action, suit, or proceeding to which they or
any of them may be a party by reason of any action taken or failure to
act under, or in connection with, the Plan, or any Option granted
thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such
action, suit, or proceeding, except a judgment based upon a finding of
willful misconduct or recklessness on their part. Upon the making or
institution of any such claim, action, suit, or proceeding, the Board
or Committee member shall notify the Company in writing, giving the
Company an opportunity, at its own expense, to handle and defend the
same before such Board or Committee member undertakes to handle it on
his or her own behalf.
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<PAGE> 22
(d) APPLICATION OF FUNDS. Any cash received in payment
for Common Shares upon exercise of an Option shall be added to the
general funds of the Company and shall be used for its corporate
purposes. Any Common Shares received in payment for Common Shares upon
exercise of an Option shall be cancelled.
(e) NO OBLIGATION TO EXERCISE OPTION. The granting of
an Option shall impose no obligation upon an Optionee to
exercise such Option.
SECTION 15 - CHANGE IN CONTROL
(a) GENERAL. All outstanding Options shall become fully
vested and exercisable upon a Change in Control of the Company. In the
event of a Change in Control in which outstanding Options are not
assumed by the surviving entity, the Committee shall terminate all
outstanding Options on at least seven days' notice. Any such Option
which is to be so terminated may be exercised up to, and including the
date immediately preceding such termination. In any transaction to
which both Section 10 and this Section 15 are applicable, only the
provisions of this Section 15 shall apply.
(b) DEFINITION OF CHANGE IN CONTROL. For purposes of
this Section 15, a "Change in Control" of the Company shall be
deemed to have occurred if:
(1) Any person, including a group of persons
acting in concert, becomes the beneficial owner of shares of
the Company having 50 percent or more of the total number of
votes that may be cast for the election of directors of the
Company;
(2) There occurs any cash tender or exchange
offer for shares of the Company, merger or other business
combination, or any combination of the foregoing transactions,
and as a result of or in connection with any such event
persons who were directors of the Company before the event
shall cease to constitute a majority of the board of directors
of the Company or any successor to the Company; or
(3) The sale, conveyance or other disposition
(other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of
the assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to have occurred by reason of a change in beneficial ownership
occurring in connection with the initial public offering of the Common
Shares.
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(c) In the event of a Change in Control of the Company in
which holders of Common Shares are entitled only to receive money or
other property exclusive of securities, then in lieu of outstanding
Options being terminated or assumed by the Surviving Entity, each
Optionee shall have the right, at its sole option, to require the
Company or such surviving entity to purchase such Optionee's Options
(without prior exercise by Optionee) at its fair value as of the day
before such transaction became publicly known, as determined by an
unaffiliated internationally recognized accounting firm or investment
bank selected by the Company or such surviving entity and reasonably
acceptable to all electing Optionees.
IN WITNESS WHEREOF, Annuity and Life Re (Holdings), Ltd.
has caused these presents to be duly executed, under seal, as of
this 23rd day of December, 1997.
ANNUITY AND LIFE RE (HOLDINGS), LTD.
By: /s/ Lawrence S. Doyle
-----------------------------------
President
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EXHIBIT 10.3
Insurance Management Agreement
INSURANCE MANAGEMENT AGREEMENT
THIS AGREEMENT, dated as of the 22nd day of December, 1997, by and between
MARSH & McLENNAN MANAGEMENT SERVICES (BERMUDA) LIMITED, a Bermuda corporation
("MMB"), and Annuity and Life Reassurance, Ltd., a Bermuda corporation
("INSURANCE CO.").
WITNESSETH:
WHEREAS, INSURANCE CO. has received authority from the Registrar of
Companies in Bermuda (the "Registrar") under the provisions of the Insurance Act
(Bermuda), 1978 and the Regulations made thereunder (the "Insurance Act") to
engage in the underwriting of insurance or reinsurance as an insurance company;
and
WHEREAS, in conjunction with such underwriting INSURANCE CO. will require
management, administrative and consulting services and MMB is willing to furnish
such services; and
WHEREAS, the parties desire to enter into an agreement whereby MMB will
render, itself or through others retained by MMB, management, administrative and
consulting services with regard to the operation of INSURANCE CO.;
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<PAGE> 2
NOW, THEREFORE, it is hereby mutually agreed by the parties as follows:
1. MMB'S SERVICES. MMB will render the following services with regard to the
business of INSURANCE CO., subject to the limitations and exceptions set forth
herein:
(a) Underwriting of Insurance by INSURANCE CO. Upon the prior written
instructions of INSURANCE CO. MMB shall use its best efforts to cause INSURANCE
CO. to underwrite specific insurance risks within a given class of insurance
business: provided, however, that MMB shall act within any restrictions set
forth by INSURANCE CO. and/or the Registrar for that class of business.
(b) Policyholder Service. Subject to the risks being accepted by the
INSURANCE CO. or the underwriters retained by INSURANCE CO., MMB shall issue and
endorse policies, and, if so instructed in writing by INSURANCE CO., terminate
or cancel policies and issue notices of cancellation. MMB shall bill, receive
and render receipts for premiums due to INSURANCE CO. in accordance with the
terms and conditions of each policy of insurance issued and in accordance with
the written instructions of INSURANCE CO. MMB shall have full authority
hereunder to take whatever action it deems necessary or appropriate to attempt
to collect premiums, including, if so instructed by INSURANCE CO., the
2
<PAGE> 3
cancellation of policies. MMB shall have no liability for uncollected premiums.
(c) Claims. MMB shall, in accordance with written instructions from
INSURANCE CO., accept or reject claims, settle claims and arrange for the
adjustment of losses and defense of actions, as necessary or appropriate,
arising out of contracts of insurance and reinsurance.
(d) Ceding Reinsurance. If INSURANCE CO. desires to cede reinsurance, MMB
shall administer the cessions to the reinsurers in accordance with instructions
provided by INSURANCE CO. Any such reinsurance arranged shall be on a "gross
premiums" basis and any brokerage normal to such transactions shall be retained
by any insurance broker, including any MMB affiliate, appointed by INSURANCE CO.
to place such reinsurance.
(e) Assuming Reinsurance. If INSURANCE CO. desires to underwrite
reinsurance, MMB shall administer the cessions received from the ceding
companies in accordance with instructions received from INSURANCE CO. INSURANCE
CO. acknowledges that the Registrar may restrict or impose conditions on
INSURANCE CO.'s assumption of reinsurance.
(f) Advice on Insurance Programs. Upon the request of INSURANCE CO. and to
the extent authorized by applicable law, MMB shall assist INSURANCE CO. in the
analysis of insurance and reinsurance programs for
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<PAGE> 4
which INSURANCE CO. is contemplating or has issued insurance or reinsurance
policies.
(g) Other Services. MMB shall perform such other services as may from time
to time be agreed upon between MMB and INSURANCE CO. Initially this will involve
administration of payroll and employee benefits. If an employee of MMB acts as a
director or officer of Insurance Co., such person shall be included as an
additional insured under INSURANCE CO.'s directors and officers liability
policy.
2. OFFICE RECORDS; REPORTS; EXAMINATIONS; INVESTMENTS AND ACCOUNTS.
(a) Office, Books and Records. MMB shall maintain an office in Bermuda,
which shall be appropriately identified as an office of INSURANCE CO. MMB shall
keep at such office, in a manner and form approved by or acceptable to INSURANCE
CO., true and complete books of account and records of all business conducted
under and pursuant to this Agreement and shall, at all reasonable times, make
available for examination and inspection to a duly authorized representative of
INSURANCE CO. or the Registrar, all such books and records. Such books and
records shall remain the property of INSURANCE CO. and shall be delivered
promptly to INSURANCE CO. or its designee following any termination hereof, but
MMB shall have the right at any time within six
4
<PAGE> 5
years after any termination of this Agreement to inspect such books and records
and to make copies thereof or extracts therefrom.
(b) Reports to INSURANCE CO. INSURANCE CO.'s fiscal year shall commence on
January 1st and shall end on December 31st of each year. Based on information
made available to MMB, and if requested by INSURANCE CO., MMB shall
periodically prepare such reports as shall be agreed to by MMB and INSURANCE
CO. Financial Statements of INSURANCE CO. for each fiscal year shall be audited
at INSURANCE CO.'s expense by a firm of independent chartered accountants which
shall be selected by INSURANCE CO.
(c) Reports and Examinations. All Bermudian governmental reports,
including tax reports, and all other applications and reports as shall be
required by the Insurance Act shall be prepared and filed by MMB after review
by INSURANCE CO. INSURANCE CO. shall be responsible for any fees or taxes.
INSURANCE CO. shall cooperate with MMB in connection with the preparation of
such reports by furnishing to MMB any information in its possession necessary
for such reports.
MMB shall notify INSURANCE CO. to the extent it obtains knowledge of any
proposed or actual examination or investigation by the Registrar or other
authorized parties of the business and affairs of INSURANCE CO. and MMB shall
cooperate with any such examination or investigation.
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<PAGE> 6
(d) Investments. INSURANCE CO. shall provide MMB with written Investment
Guidelines and MMB shall invest the funds of INSURANCE CO., or liquidate or
change such investments only in accordance with such Guidelines. Such
Investment Guidelines may be changed by INSURANCE CO. from time to time but MMB
shall not be required to recognize such change until MMB has received written
notice thereof. In the event and so long as INSURANCE CO. has not provided MMB
with Investment Guidelines, MMB will invest the funds of INSURANCE CO. solely in
overnight deposits in a Bank chosen by INSURANCE CO.
MMB shall have no liability whatsoever for the soundness of any
investments made hereunder, the amount of return from such investments, the
solvency of the institution in which they may be deposited or invested or any
other liability based upon MMB's actions or failures to act unless MMB's acts
or failures to act are proven to be wilful misconduct or gross negligence.
(e) Bank Accounts. Upon the request of INSURANCE CO., MMB shall open,
maintain and operate bank accounts in Bermuda or elsewhere in the name of
INSURANCE CO., and shall made deposits therein and disbursements therefrom in
accordance with such limitations and restrictions as may be set forth in
written instructions from, or in resolutions passed by the board of directors,
of INSURANCE CO.
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<PAGE> 7
(f) Information Provided to MMB. INSURANCE CO. shall keep MMB informed
during the term of this Agreement of all material developments relating to the
business of INSURANCE CO. and shall promptly furnish to MMB executed sets of
all minutes of the meetings of and the resolutions adopted by the stockholders
and the board of directors of INSURANCE CO.
(g) Authority of MMB. MMB shall have all the power and authority necessary
or desirable to carry out its duties and obligations under this Agreement,
which shall include the right to engage, as an independent contractor, any
person, corporation or other organization to perform any functions to be
performed hereunder by MMB. The authority granted hereunder shall specifically
include the right to engage other operating units within J&H Marsh & McLennan,
Incorporated, or any subsidiary or affiliated company thereof, to perform any
such functions.
3. RELATIONSHIP BETWEEN PARTIES; LIMITATION OF RESPONSIBILITY.
(a) Independent Contractors. The relationship between the parties
established by this Agreement is that of independent contracting parties. As
such, subject to the terms of this Agreement, each shall conduct its business
at its own initiative, responsibility and expense, and shall have no authority
to incur any obligation on
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<PAGE> 8
behalf of the other party. No third party shall have or be deemed to acquire
any rights under this Agreement. Neither party shall use the name of the other
party or any affiliate of such other party in any public document, advertising,
public relations release or any other publicity without the prior written
consent of such other party.
(b) Compliance with Laws. MMB shall use its best efforts to advise
INSURANCE CO. regarding compliance with the insurance Laws of Bermuda. MMB
shall not be responsible for advice on compliance with the laws in any other
jurisdiction in which INSURANCE CO. does business.
(c) Scope of Services. The obligations of MMB hereunder are limited to the
good faith performance of the services to INSURANCE CO. set forth herein and
MMB shall have no liability to INSURANCE CO. or any other person for any action
taken pursuant hereto other than as a result of its wilful misconduct or gross
negligence. MMB is entitled to rely on information or instructions (oral or
written) provided by INSURANCE CO. and MMB shall have no responsibility for the
accuracy or completeness of such information or instructions. MMB shall not
have any other or further obligations or responsibilities to INSURANCE CO.,
including, but not limited to, any obligation or responsibility for the payment
of any insurance or reinsurance premiums, the profitability of the business of
INSURANCE CO., the solvency of any person (including INSURANCE CO.) or the
failure of third parties
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<PAGE> 9
(including insurers and reinsurers) to fulfill their obligations.
(d) Indemnification. INSURANCE CO. shall indemnify and hold harmless
MMB, its officers, directors, employees, agents and affiliates from and against
any losses, claims, damages, liabilities, cost or expenses, including reasonable
attorneys fees and expenses of investigation (collectively, "Losses"), to which
MMB may become subject in connection with the services it provides hereunder;
provided, however, that INSURANCE CO. shall not be liable under the
foregoing indemnity in respect of any Losses to the extent that a court having
jurisdiction shall have determined by a final judgment that such Loss resulted
from MMB's wilful misconduct or gross negligence. The provisions of this section
shall survive the expiration or termination of this Agreement, including any
extensions thereof.
4. COMPENSATION AND EXPENSES.
Fees and expenses for MMB's services hereunder shall be determined and
paid in accordance with Schedule 1, which is attached hereto and made a part
hereof.
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<PAGE> 10
5. EFFECTIVE DATE AND TERMINATION.
(a) Effective Date and Normal Termination. This Agreement shall become
effective on the date set forth on page one hereof (the "Effective Date") and
shall continue until the 31st day of December 1998 and shall be renewable
annually thereafter by the agreement of the parties; provided, however, that
either party may terminate this Agreement at any time by giving not less than
ninety (90) days' written notice to the other party of its intention to do so.
Upon the expiration or termination hereof, MMB shall have no further duties or
obligations hereunder unless specifically set forth herein or otherwise agreed
to by the parties.
(b) Termination for Breach or Bankruptcy. This Agreement may also be
terminated forthwith by written notice of termination to the other party upon
the occurrence of either of the following:
(i) If such other party fails to perform or observe, or commits a
breach of, any provision of this Agreement, and fails to cure, remedy or
satisfactorily explain such failure or breach within thirty (30) days following
delivery to such other party of a written notice of the alleged failure or
breach, or
(ii) If such other party become insolvent (in the legal sense) or
files a voluntary petition in bankruptcy, or makes an assignment for
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<PAGE> 11
the benefit of creditors; or if a committee of creditors or other
representative is appointed to represent its business or an involuntary
petition in bankruptcy is filed against it, and the party fails within thirty
(30) days following the appointment of such committee or representative or the
filing of such involuntary petition to cause the discharge of such committee or
representative or the dismissal of such petition; or if the other party commits
any other act indicating insolvency.
6. MISCELLANEOUS.
(a) Non-Exclusivity. This Agreement shall not in any way prevent MMB
from performing similar services for others.
(b) Foreign Exchange. All expenses and costs paid by MMB on behalf of
INSURANCE CO. in any currency other than United States dollars shall be
converted to United States dollars at the conversion rate in effect on the date
that the expenses or costs were paid by MMB, so that all exchange gain or loss
incident thereto shall be incurred by or inure to the benefit of INSURANCE CO.;
provided, however, that MMB will obtain the written consent of INSURANCE CO.
before making such disbursement.
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(c) Assignments. Neither this Agreement nor any right, benefit or
obligation conferred or imposed hereunder is assignable in whole or in part,
whether by operation of law or otherwise, by either party hereto without the
prior written consent of the other party; provided, however, that either party
may make such an assignment to a corporation which controls, is controlled by,
or is under common control with the assignor.
(d) Successors and Assigns. This Agreement shall be binding upon the
successors, legal representatives or permitted assigns of the parties hereto.
(e) Notices. Any notice or other communication required or permitted
hereunder shall be deemed given upon delivery if delivered personally, or three
days after mailing if mailed by an international overnight courier if such
courier provides evidence of receipt, or the next business day if sent by
facsimile and confirmed by mail, as follows:
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To MMB: Marsh & McLennan Management
(Bermuda) Limited
P.O. Box HM 1262
Hamilton HM FX, Bermuda
To INSURANCE CO.: Annuity and Life Reassurance, Ltd.
P.O. Box HM 1262
Hamilton HM FX, Bermuda
or to such other addresses as such parties shall have last designated by notice
to the other parties.
(f) Entire Agreement. All prior negotiations and agreement between the
parties hereto relating to the subject matter hereof are superseded by this
Agreement, and there are no representations, warranties, understandings or
agreements other than those expressly set forth herein, except as modified by
an instrument signed by the parties hereto.
(g) Waivers. The failure of either party at any time to require the other
party's performance of any obligation under this Agreement shall not affect the
right to require performance of that obligation in the future. Any waiver by
either party of any breach of any provision hereof shall not be construed as a
waiver of any continuing or succeeding breach of such provision, a waiver or
modification of the provision itself, or a waiver or modification of any other
right under this Agreement.
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<PAGE> 14
(h) Captions. The captions of the several sections of this Agreement are
inserted solely for convenience of reference, and are neither a part of nor
intended to govern, limit or aid in the construction of any term or provision
hereof.
(i) Governing Law. The validity, construction and enforceability of this
Agreement shall be governed in all respects by the Laws of Bermuda.
(j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(k) Survival. The representations, warranties and agreements contained or
referred to herein, shall survive the termination hereof, provided that no
claims may be initiated by or on behalf of any party against any other party on
the basis of such representations, warranties and agreements after three years
from the termination hereof, unless based upon a breach or failure to comply
with an agreement which is to be performed or complied with in whole or in part
after three years from the termination hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first-above written.
MARSH & McLENNAN MANAGEMENT (BERMUDA) LIMITED
("MMB")
By: /s/ David Lindo
-----------------------
Title: Senior Vice President
Annuity and Life Reassurance, Ltd.
("INSURANCE CO.")
By: /s/ Lawrence S. Doyle
-----------------------
Title: CEO
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SCHEDULE 1
COMPENSATION PROVISION
Fees and Expenses with Minimum Fees
(a) Fees
(i) MMB's fees are based on a number of factors including time charges,
complexity, and the value of its services. Individual hourly rates vary
according to the degree of responsibility involved and the experience and skill
required and are reviewed and adjusted annually.
(ii) In consideration for the services to be performed hereunder by MMB,
INSURANCE CO. shall pay to MMB the greater of an amount equal to MMB's fees as
calculated in accordance with (i) above, or fifteen thousand dollars ($15,000;
fee per contract year commencing February 1, 1998 (the "Minimum Fee"). For
purposes of this Agreement a contract year shall mean a twelve (12) month period
commencing on February 1st of each year. If a notice of termination is delivered
prior to February 1, 1998 no fee shall be payable under this paragraph (a)(ii)
only. Costs incurred up to that point under paragraph (iv) shall be reimbursed
to MMB by INSURANCE CO.
(iii) If this Agreement is in effect for only a portion of any contract
year, MMB shall be entitled to fees commensurate with the
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services rendered during such shorter period.
(iv) In addition to the aforementioned services MMB will provide certain
facilities where INSURANCE CO. may maintain its principal office as required,
including but not limited to office space and computer equipment and office
furniture at a fee to be agreed between the parties. All such facilities will be
regarded as ancillary to the provision of services as described or to be added.
(b) Increases. MMB shall notify INSURANCE CO. not less than fifteen (15)
days prior to any increase in MMB's schedule of hourly rates over those in
effect at the time this Agreement is executed.
(c) Expenses. All salaries and fringe benefits of MMB personnel rendering
services under this Agreement shall be at the expense of MMB without
reimbursement by INSURANCE CO. INSURANCE CO. shall be responsible for all costs,
expenses and charges incurred in, or incidental to, its business, including but
not limited to printing costs (e.g. policies and endorsement forms); office
supplies (e.g. stationery, office forms and invoices); photocopy and other
reproduction charges; telephone and facsimile charges; filing and examination
fees; lawyers' and accountants' fees, and any other services contracted for or
on behalf of INSURANCE CO. under the
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provisions of Section 2(g) hereof; premium and other taxes; and all costs,
charges and expenses relative to the processing, handling and adjustment of
claims and losses under coverages authorized and/or written by INSURANCE CO. If
any such expenses are advanced and paid by MMB on behalf of INSURANCE CO.
INSURANCE CO. shall reimburse MMB therefor upon receipt of the statement noted
below.
(d) Billing and Payments. MMB shall render, within thirty (30) days after
the end of each month, a statement to INSURANCE CO. setting forth its fees and
expenses incurred during the immediately preceding month. Payment of the amount
set forth in the statement rendered shall be due ten (10) days subsequent to the
date of the statement.
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MANAGEMENT FEE SCHEDULE
Time charges incurred on behalf of MMB's clients are recorded by each employee
on an hourly rate basis, and are administered through its computerized Time
Recording System.
MMB's hourly charge out rates are as follows:
<TABLE>
<S> <C>
Management $185
Supervisor $170
Technical $140
Support $110
Junior $ 65
</TABLE>
<PAGE> 1
Exhibit 10.4
Agreement with
Inter-Atlantic
Securities Corp.
AGREEMENT
This AGREEMENT is made as of December 23, 1997 by and among
INTER-ATLANTIC SECURITIES CORP., a Delaware corporation ("Inter-Atlantic"),
ANNUITY AND LIFE RE (HOLDINGS), LTD., a Bermuda corporation ("Annuity Re"), and
ANNUITY AND LIFE REASSURANCE, LTD., a Bermuda corporation ("Annuity
Reassurance").
BACKGROUND
Annuity Re was incorporated on December 2, 1997 and has no operating
history. Annuity Re intends to engage in the business of reinsuring annuity and
life insurance policies through its wholly-owned subsidiary, Annuity
Reassurance, a Bermuda corporation that was incorporated on December 2, 1997.
Inter-Atlantic is willing to provide assistance to Annuity Re and
Annuity Reassurance with regard to the formation of Annuity Re and Annuity
Reassurance and the commencement of operations by Annuity Re and Annuity
Reassurance (collectively, the "Formation") and with regard to the proposed
initial public offering of common shares of Annuity Re (the "IPO"), as well as
to provide certain continuing services thereafter, subject to the terms of this
Agreement.
Annuity Re and Annuity Reassurance desire to engage Inter-Atlantic
with respect to the Formation and the IPO, as well as to provide certain
continuing services thereafter, subject to the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements herein contained, the parties hereto, intending
to be legally bound, hereby agree as follows:
SECTION 1. ENGAGEMENT OF INTER-ATLANTIC.
(a) Annuity Re and Annuity Reassurance hereby engage Inter-Atlantic to
assist with the Formation, the IPO and certain other matters; and, in connection
therewith, to provide the services set forth in Section 1(b) of this Agreement
and following the IPO to provide the services set forth in Section 1(c) of this
Agreement, subject in each case to the supervision and direction of Annuity Re's
Board of Directors (the "Board"). Inter-Atlantic hereby accepts such engagement
on the terms and conditions hereinafter set forth.
(b) Inter-Atlantic shall perform or supervise the performance by others of
the following services in connection with the Formation and the IPO, as may be
requested by Annuity Re or Annuity Reassurance from time to time:
<PAGE> 2
(1) direct the preparation of all documents necessary for the
organization of Annuity Re and Annuity Reassurance under Bermuda law;
(2) assist Annuity Re and Annuity Reassurance in the negotiation of
all contractual arrangements necessary or desirable for Annuity Re and Annuity
Reassurance to engage in their proposed lines of business, including, without
limitation, real estate leases, employment agreements and investment advisory
agreements;
(3) assist Annuity Re and Annuity Reassurance in recruiting their
senior management teams;
(4) assist Annuity Re and Annuity Reassurance in obtaining all
necessary governmental permits for Annuity Re and Annuity Reassurance to engage
in their proposed lines of business;
(5) assist Annuity Re in preparing or causing to be prepared a
registration statement registering the IPO under the Securities Act of 1933, as
amended, and all applicable state and federal securities laws;
(6) assist Annuity Re in retaining such underwriters as may be
necessary or desirable in connection with the IPO;
(7) incur in the name of Annuity Re or Annuity Reassurance, as
agent, or in the name of Inter-Atlantic, and pay, all reasonable costs and
expenses related to the Formation and the IPO;
(8) assist Annuity Re and Annuity Reassurance in engaging such
legal counsel, independent auditors and other third parties as may be necessary
or desirable in connection with the foregoing;
(9) prepare regular reports to the Board describing the status of
the Formation and the IPO; and
(10) upon Board authorization or as otherwise deemed appropriate by
Inter-Atlantic, perform such additional services relating to any of the
foregoing or to the Formation and the IPO.
(c) Inter-Atlantic shall perform or supervise the performance by others of
the following services after the consummation of the IPO, as may be requested by
Annuity Re or Annuity Reassurance from time to time:
(1) assist Annuity Re and Annuity Reassurance with regard to the
development of reinsurance products and related products;
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<PAGE> 3
(2) assist Annuity Re and Annuity Reassurance with regard to
financial planning;
(3) assist Annuity Re and Annuity Reassurance in the management of
their assets and liabilities;
(4) assist Annuity Re and Annuity Reassurance with regard to their
non-United States marketing efforts; and
(5) provide such other services as may be requested from time to
time.
SECTION 2. FEES AND EXPENSE REIMBURSEMENTS.
(a) Initial Fee. Upon the closing of the IPO, Annuity Re and Annuity
Reassurance shall, in addition to the other amounts payable hereunder, pay
Inter-Atlantic a fee equal to $2.0 million by wire transfer pursuant to
instructions previously given to Annuity Re and Annuity Reassurance for that
purpose. Unless otherwise extended by mutual agreement among Inter-Atlantic and
Annuity Re and Annuity Reassurance, in the event the closing of the IPO does not
occur by June 30, 1998, no fee shall be owed by Annuity Re and Annuity
Reassurance to Inter-Atlantic pursuant to this Section 2(a).
(b) Annual Fee. Commencing with the first anniversary of the consummation
of the IPO, Annuity Re and Annuity Reassurance shall pay to Inter-Atlantic a fee
at the rate of $600,000 per annum, payable quarterly in advance until this
agreement is terminated as provided herein.
(c) Expense Reimbursements.
(1) Annuity Re and Annuity Reassurance shall reimburse
Inter-Atlantic for all reasonable costs and expenses incurred by Inter-Atlantic,
whether incurred before or after the date hereof, in connection with the
performance of the services contemplated by this Agreement, including, without
limitation, fees and disbursements paid in accordance with Section 1(b)(7)
hereof to third-parties retained by Inter-Atlantic to assist in the Formation or
the IPO, and fees charged by third-parties in connection with any filing,
notification, consent, approval or authorization made or obtained by
Inter-Atlantic in connection with the Formation or the IPO; provided that if the
IPO has not been consummated by June 30, 1998, Annuity Re and Annuity
Reassurance shall not be obligated to reimburse Inter-Atlantic for any such
costs or expenses incurred before the date hereof.
(2) With respect to costs and expenses incurred by Inter-Atlantic in
connection with the performance of the services contemplated by Section 1(b) of
this Agreement, Inter-Atlantic shall deliver to the Board an itemized statement
(the "Closing Statement") of such costs and expenses five business days prior to
the scheduled closing of the IPO. The Closing Statement should attach copies of
material invoices received by Inter-Atlantic with regard to such costs and
expenses. The Closing Statement shall include Inter-Atlantic's reasonable
estimate of all costs and expenses expected to be incurred after the delivery of
such statement and through to the
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<PAGE> 4
closing of the IPO. Annuity Re and Annuity Reassurance shall pay Inter-Atlantic
the amount set forth on the Closing Statement at the closing of the IPO. If the
closing of the IPO does not occur by June 30, 1998, Inter-Atlantic shall deliver
the Closing Statement, reflecting only the costs and expenses for which
Inter-Atlantic is entitled to reimbursement under Section 2(c)(1) hereof, to the
Board by July 15, 1998, and Annuity Re and Annuity Reassurance shall pay
Inter-Atlantic the amount set forth on the Closing Statement no later than July
31, 1998.
(3) With respect to costs and expenses incurred by Inter-Atlantic in
connection with the performance of the services contemplated by Section 1(c) of
this Agreement, Inter-Atlantic shall deliver to the Board an itemized statement
(each a "Quarterly Statement") of such costs and expenses incurred during each
calendar quarter within 30 days of the end of each such calendar quarter. The
Quarterly Statement should attach copies of material invoices received by
Inter-Atlantic with regard to such costs and expenses. Annuity Re and Annuity
Reassurance shall pay Inter-Atlantic the amount set forth on each Quarterly
Statement within 15 days of its receipt by the Board.
(4) The Board shall promptly notify Inter-Atlantic of any objection
to the Closing Statement or any Quarterly Statement and the parties shall
negotiate in good faith to resolve any such objection. If the parties fail to
resolve such disputed matter within ten business days after receipt by
Inter-Atlantic of notice of the Board's objection, then any such disputed matter
may, at the election of either party, be submitted to and resolved by KPMG Peat
Marwick. The fees and expenses of such accounting firm incurred in resolving the
disputed matter shall be equitably apportioned by such accounting firm based
upon the extent to which Annuity Re and Annuity Reassurance, on the one hand, or
Inter-Atlantic, on the other hand, are determined by such accounting firm to be
the prevailing party.
SECTION 3. TERM.
The term of this Agreement shall extend from the date hereof until
the fifth anniversary of the consummation of the IPO, and thereafter shall
automatically be renewed from year-to-year, unless and until terminated by
either party upon 30 days notice prior to the termination of the initial or any
renewal term.
SECTION 4. LIMITATION OF LIABILITY OF INTER-ATLANTIC.
The duties of Inter-Atlantic shall be confined to those expressly
set forth herein, and no implied duties are assumed by or may be asserted
against Inter-Atlantic hereunder. Inter-Atlantic shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any act or
omission in carrying out its duties hereunder, except a loss resulting solely
from Inter-Atlantic's willful misfeasance or gross negligence.
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<PAGE> 5
SECTION 5. INDEMNITY.
(a) Annuity Re and Annuity Reassurance shall indemnify, defend and hold
harmless Inter-Atlantic and its officers, directors, shareholders, employees,
agents, representatives and affiliates ("Inter-Atlantic Indemnities") against
and in respect of any and all losses, costs, expenses (including, without
limitation, costs of investigation and defense and reasonable attorneys' fees),
claims, damages, obligations and liabilities (collectively, "Damages") arising
out of, based upon or otherwise in respect of the Formation, the IPO or the
operation by Annuity Re and Annuity Reassurance of their businesses, or related
to this Agreement or Inter-Atlantic's performance thereof, except to the extent
that any such Damages result solely from the willful misfeasance or gross
negligence of one or more Inter-Atlantic Indemnities.
(b) Inter-Atlantic shall indemnify, defend and hold harmless Annuity Re
and Annuity Reassurance and their officers, directors, shareholders, employees,
agents, representatives and affiliates against and in respect of any and all
Damages to the extent arising out of, based upon or otherwise in respect of
Inter-Atlantic's willful misfeasance or gross negligence in connection with
Inter-Atlantic's performance of this Agreement.
(c) This Section 5 shall survive the termination of this Agreement.
SECTION 6. MISCELLANEOUS.
(a) Notices. All notices, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given (i) when
delivered by hand (with written confirmation of receipt), (ii) when sent by
telecopier (with written confirmation of successful transmission), provided that
a copy is mailed by certified or registered mail, postage prepaid, return
receipt requested or (iii) two business days following deposit thereof (with all
postage and other fees paid) with a nationally recognized overnight delivery
service, in each case to the appropriate addresses and telecopier numbers, as
applicable, set forth below (or to such other addresses and telecopier numbers
as a party may designate by notice to the other parties):
To Inter-Atlantic:
Inter-Atlantic Securities Corp.
712 Fifth Avenue
New York, NY 10019
Attn.: William S. Ogden, Jr., President
(212) 581-2000
(212) 581-2433 Telecopy Number
-5-
<PAGE> 6
To Annuity Re:
Annuity and Life Re (Holdings), Ltd.
Victoria Hall, Victoria Street
P.O. Box HM1262
Hamilton, HM FX, Bermuda
Attn.: Lawrence S. Doyle, President and
Chief Executive Officer
To Annuity Reassurance:
Annuity and Life Reassurance, Ltd.
Victoria Hall, Victoria Street
P.O. Box HM1262
Hamilton, HM FX, Bermuda
Attn.: Lawrence S. Doyle, President and
Chief Executive Officer
(b) Assignment and Benefit. This Agreement or any rights hereunder may not
be assigned by Annuity Re or Annuity Reassurance, nor may Annuity Re or Annuity
Reassurance delegate any obligations hereunder, without the prior written
consent of Inter-Atlantic. Inter-Atlantic shall have the right to assign this
Agreement or any rights hereunder to Inter-Atlantic Capital Partners, Inc. and
to the successors and assigns of Inter-Atlantic Capital Partners, Inc. Subject
to the foregoing, this Agreement and the rights and obligations contained herein
shall inure to the benefit of, and be binding upon, the parties hereto and each
of their respective successors and assigns. This Agreement shall not be
construed as giving any person, other than the parties hereto and their
successors and assigns, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any of the provisions herein contained, this
Agreement and all provisions and conditions hereof being intended to be, and
being, for the sole and exclusive benefit of such parties, successors and
assigns and for the benefit of no other person or entity.
(c) Amendment and Waiver. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
Neither the failure nor any delay by any party in exercising any right, power or
privilege under this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, no claim or right arising out of this
Agreement can be waived by a party, in whole or in part, except in a writing
signed by such party. The waiver by a party of any breach of any provision of
this Agreement shall not constitute or operate as a waiver of any other breach
of such provision or of any other provision hereof, nor shall any failure to
enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof.
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<PAGE> 7
(d) Governing Law. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the laws of the State of New York,
without giving effect to otherwise applicable principles of conflicts of law.
(e) Severability. The invalidity or unenforceability of any particular
provision, or part of any provision, of this Agreement shall not affect the
other provisions or parts hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions or parts were omitted.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original; and any person may
become a party hereto by executing a counterpart hereof, but all of such
counterparts together shall be deemed to be one and the same instrument. It
shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
(g) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter of this Agreement
and supersedes all prior agreements and understandings with respect to the
subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized representatives to execute this Agreement, all as of the date first
above written.
INTER-ATLANTIC SECURITIES CORP.
By: /s/ William S. Ogden, Jr.
-------------------------------------------
Name: William S. Ogden, Jr.
Title: President
ANNUITY AND LIFE RE (HOLDINGS), LTD.
By: /s/ Lawrence S. Doyle
-------------------------------------------
Name: Lawrence S. Doyle
Title: President and Chief Executive Officer
ANNUITY AND LIFE REASSURANCE, LTD.
By: /s/ Lawrence S. Doyle
-------------------------------------------
Name: Lawrence S. Doyle
Title: President and Chief Executive Officer
-7-
<PAGE> 1
Exhibit 10.5
Registration Rights Agreement
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT dated January 9, 1998, among ANNUITY
AND LIFE RE (HOLDINGS), LTD., a Bermuda corporation (the "Company"), and the
Persons executing this Agreement as Holders (such persons and their permitted
successors and assigns, the "Holders").
The Company has issued its Class A Warrants to the Holders to
purchase the Company's Common Shares (the "Warrants"). Pursuant to the Warrants,
the Company has agreed to register such shares for sale under the Securities Act
of 1933, as amended.
NOW, THEREFORE, in consideration of the completion of the
transactions contemplated by the Warrants and of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows,
intending to be legally bound.
Section 1. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Business Day": any day on which the Company's Common Shares are
available for trading on the principal stock exchange or market upon which they
are traded.
"Closing Date": the date on which is consummated the initial public
offering of the Common Shares pursuant to the Securities Act.
"Common Shares": the Company's Common Shares, par value $1.00 per
share.
"Exchange Act": the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder, all as the same shall be in
effect at the relevant time.
"Holder": each Person (other than the Company) executing this
Agreement and each permitted successor or assignee of a Holder, for so long as
(and to the extent that) such Person owns or has the right to acquire any
Registrable Securities.
"Person": an individual, a partnership (general or limited),
corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
"Registrable Securities": (1) the Common Shares issued or issuable
pursuant to the Warrants and (2) any additional Common Shares or other equity
securities of the Company issued or issuable in respect of such Common Shares
(or other equity securities issued in respect thereof) by way of a stock
dividend or stock split, in connection with a combination, exchange,
<PAGE> 3
reorganization, recapitalization or reclassification of Company securities, or
pursuant to a merger, division, consolidation or other similar business
transaction or combination involving the Company; provided that as to any
particular Registrable Securities, such securities shall cease to constitute
Registrable Securities (a) when a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of thereunder, (b) when such securities
shall have been disposed of pursuant to Rule 144 (or any successor provision to
such Rule) under the Securities Act, or (c) when such securities shall have
ceased to be outstanding.
"Registration Expenses": all expenses incident to the Company's
performance of or compliance with the registration requirements set forth in
this Agreement including, without limitation, the following: (a) the fees,
disbursements and expenses of the Company's counsel, accountants, and experts in
connection with the registration under the Securities Act of Registrable
Securities; (b) all expenses in connection with the preparation, printing and
filing of the registration statement, any preliminary prospectus or final
prospectus, any other offering document and amendments and supplements thereto,
and the mailing and delivering of copies thereof to underwriters and dealers, if
any; (c) the cost of printing or producing any agreement(s) among underwriters,
underwriting agreement(s) and blue sky or legal investment memoranda, any
selling agreements, and any other documents in connection with the offering,
sale or delivery of Registrable Securities to be disposed of; (d) the fees and
expenses incurred in connection with the listing of Registrable Securities on
each securities exchange on which Company securities of the same class are then
listed or with the Nasdaq National Market System; (e) the fees and expenses, not
to exceed $25,000, of a single counsel retained by any and all Holders
participating in a registration pursuant to this Agreement, (f) any
underwriters' discounts or compensation, brokers' commissions or similar selling
expenses attributable to the sale of Registrable Securities; (g) any SEC or blue
sky registration or filing fees attributable to Registrable Securities or
transfer taxes applicable to Registrable Securities, (h) any other expenses in
connection with the qualification of Registrable Securities for offer and sale
under state securities laws, including the fees and disbursements of counsel for
the underwriters in connection with such qualification and in connection with
any blue sky and legal investment surveys; and (i) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of the sale of Registrable Securities to be disposed of.
"Registration Statement": a registration statement under the
Securities Act filed by the Company pursuant to this Agreement, including all
amendments thereto, all preliminary and final prospectuses included therein and
all exhibits thereto.
"SEC": the United States Securities and Exchange Commission, or such
other federal agency at the time having the principal responsibility for
administering the Securities Act.
"Securities Act": the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, all as the same shall be in effect
at the relevant time.
"Warrant": the Class A Warrants of the Company.
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<PAGE> 4
Section 2. Underwritten Demand Registration.
(a) At any time on or after the first anniversary of the Closing
Date, and before the tenth anniversary of the Closing Date the Holder or Holders
of ten (10) percent or more of the Registrable Securities issued or issuable
pursuant to the Warrants may (by written notice delivered to the Company)
require registration of all or any portion of such Registrable Securities for
sale in an underwritten public offering. In each such case, such notice shall
specify the number of Registrable Securities for which such underwritten
offering is to be made. Within ten Business Days after its receipt of any such
notice, the Company shall give written notice of such request to all other
Holders, and all such Holders shall have the right to have any or all
Registrable Securities owned by them included in the requested underwritten
offering as they shall specify in a written notice received by the Company
within ten Business Days after the Company's notice is given. Within ten
Business Days after the expiration of such ten Business Day period, the Company
shall notify all Holders requesting inclusion of Registrable Securities in the
proposed underwriting of (1) the aggregate number of Registrable Securities
proposed to be included by all Holders in the offering, and (2) the proposed
commencement date of the offering, which shall be a date not more than thirty
days after the Company gives such notice. The managing underwriter for such
offering shall be chosen by the Holders of a majority of the Registrable
Securities being included therein and shall be satisfactory to the Company.
(b) If any request for an underwriting shall have been made pursuant
to subsection (a), the Company shall, at the request of the managing underwriter
for such offering, prepare and file a Registration Statement with the SEC as
promptly as reasonably practicable, but in any event within 45 days after the
managing underwriter's request therefor.
(c) The Company shall not have any obligation to permit or
participate in more than two underwritten public offerings pursuant to this
Section, or to file a Registration Statement pursuant to this Section with
respect to less than ten (10) percent of the Registrable Securities issued or
issuable pursuant to the Warrants.
(d) The Company shall have the right to defer the filing or
effectiveness of a Registration Statement relating to any registration requested
under this Section for a reasonable period of time not to exceed 180 days if (1)
the Company is, at such time, working on an underwritten public offering of its
securities for the account of the Company and is advised by its managing
underwriter that such offering would in its opinion be materially adversely
affected by such filing; or (2) the Company in good faith determines that any
such filing or the offering of any Registrable Securities would (A) materially
impede, delay or interfere with any proposed financing, offer or sale of
securities, acquisition, corporate reorganization or other significant
transaction involving the Company or (B) require the disclosure of material
non-public information, the disclosure of which would materially and adversely
affect the Company.
(e) The Company shall have no obligation to file a Registration
Statement pursuant to this Section earlier than 360 days after the effective
date of a prior registration statement of the Company covering an underwritten
public offering for the account of the
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<PAGE> 5
Company the effective date of which is after the first anniversary of the
Closing Date if (1) the Company shall have offered pursuant to Section 4 to
include the Holders' Registrable Securities in such Registration Statement; (2)
the Holders shall not have elected to include in such Registration Statement at
least ten (10) percent of the Registrable Securities issued or issuable pursuant
to the Warrants included in the Merger Consideration; and (3) no Registrable
Securities requested to be included in such registration statement shall have
been excluded therefrom pursuant to Section 4(c).
(f) The Holders of a majority of Registrable Securities requested to
be included in any offering pursuant to this Section may elect by written notice
to the Company not to proceed with the offering, in which case the Company shall
not be obligated to proceed with such offering. If they do so, the Holders that
shall have requested Registrable Securities to be included in the offering shall
pay all Registration Expenses incurred by the Company in connection with such
offering prior to receipt of such notice.
(g) Neither the Company nor any other Person shall be entitled to
include any securities held by it in any underwritten offering pursuant to this
Section, unless all Registrable Securities for which inclusion has been
requested are also included.
(h) No registration of Registrable Securities under this Section
shall relieve the Company of its obligation to effect registrations of
Registrable Securities pursuant to Sections 3 and 4.
Section 3. Shelf Registrations.
(a) At any time on or after the first anniversary of the Closing
Date, and before the tenth anniversary of the Closing Date, the Holder or
Holders of five (5) percent or more of the Registrable Securities issued or
issuable pursuant to the Warrants may (by written notice to the Company) require
registration of all or any portion of such Registrable Securities for sale in
open market transactions or negotiated block trades. Within ten Business Days
after its receipt of such notice, the Company shall give written notice of such
request to all other Holders, and all such Holders shall have the right to have
any or all Registrable Securities owned by them included in the requested
registration as they shall specify in a written notice received by the Company
within ten Business Days after the Company's notice is given. Within ten
Business Days after the expiration of such ten Business Day period, the Company
shall notify all Holders requesting inclusion of Registrable Securities in the
requested registration of the aggregate number of Registrable Securities
proposed to be included by all Holders in this registration.
(b) If any request for registration shall have been made pursuant to
subsection (a), the Company shall prepare and file a Registration Statement with
the SEC as promptly as reasonably practicable, but in any event within 45 days
after the expiration of the ten Business Day period within which Holders may
request inclusion in the registration.
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<PAGE> 6
(c) The Company shall have no obligation to file a Registration
Statement pursuant to this Section earlier than 180 days after the effective
date of any earlier Registration Statement filed pursuant to this Section.
(d) The Holders of a majority of Registrable Securities requested to
be included in any registration pursuant to this Section may elect by written
notice to the Company not to proceed with such registration, in which case the
Company will not be obligated to proceed therewith. If they do so, the Holders
that shall have requested Registrable Securities to be included in the
registration shall pay all Registration Expenses incurred by the Company in
connection with such registration price to receipt of such notice.
(e) No registration of Registrable Securities under this Section
shall relieve the Company of its obligation to effect registrations of
Registrable Securities under Sections 2 and 4.
Section 4. Incidental Registration.
(a) From and after the first anniversary of the Closing Date, if the
Company proposes, other than pursuant to Section 2 or 3, to file a Registration
Statement under the Securities Act to register any of its Common Shares for
public sale under the Securities Act (whether proposed to be offered for sale by
the Company or by any other Person), it will give prompt written notice (which
notice shall specify the intended method or methods of disposition) to the
Holders of its intention to do so, and upon the written request of any Holder
delivered to the Company within ten Business Days after any such notice (which
request shall specify the number of Registrable Securities intended to be
disposed of by such Holder), the Company will use commercially reasonable
efforts to include in such Registration Statement all Registrable Securities
which the Company has been so requested to register by Holders.
(b) If at any time prior to the effective date of any Registration
Statement described in subsection (a), the Company shall determine for any
reason not to proceed with such registration, the Company may, at its election,
give written notice of such determination to the Holders requesting registration
and thereupon the Company shall be relieved of its obligation to register such
Registrable Securities in connection with such registration.
(c) The Company will not be required to effect any registration of
Registrable Securities pursuant to this Section in connection with an offering
of securities solely for the account of the Company if the Company shall have
been advised in writing (with a copy to the Holders requesting registration) by
a nationally recognized investment banking firm (which may be the managing
underwriter for the offering) selected by the Company that, in such firm's
opinion, registration of Registrable Securities and of any other securities
requested to be included in such registration by Persons having rights to
include securities therein at that time may interfere with an orderly sale and
distribution of the securities being sold by the Company in such offering or
adversely affect the price of such securities; but if an offering of less than
all of the Registrable Securities requested to be registered by the Holders and
other securities requested to be included in such registration by such other
Persons would not, in the opinion of such firm, adversely affect
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<PAGE> 7
the distribution or price of the securities to be sold by the Company in the
offering, the aggregate number of Registrable Securities requested to be
included in such offering by the Holders shall be reduced pro rata in accordance
with the proportion that the number of shares proposed to be included in such
registration by Holders bears to the number of shares proposed to be included in
such registration by Holders and all other such Persons.
(d) The Company shall not be required to give notice of, or effect
any registration of Registrable Securities under this Section incidental to, the
registration of any of its securities in connection with mergers,
consolidations, acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock options or other employee benefit or compensation
plans.
(e) No registration of Registrable Securities effected under this
Section shall relieve the Company of its obligations to effect registrations of
Registrable Securities pursuant to Sections 2 and 3.
Section 5. Holdbacks and Other Transfer Restrictions.
(a) No Holder shall, if requested by the managing underwriter in an
underwritten offering: (1) that includes such Holder's Registrable Securities,
effect any public sale or distribution of securities of the Company of the same
class as the securities included in such Registration Statement (or convertible
into such class), including a sale pursuant to Rule 144(k) under the Securities
Act (except as part of such underwritten registration) during the ten day period
prior to, and during the 180-day period beginning on the closing date of each
underwritten offering made pursuant to such registration statement, to the
extent timely notified in writing by the Company or the managing underwriter;
and (2) in the event of an offering for the account of the Company, to the
extent such Holder does not elect (or is not permitted under Section 4(c)) to
sell such securities in connection with such offering, during the period of
distribution of the Company's securities in such offering and during the period
in which the underwriting syndicate, if any, participates in the aftermarket. In
any such case the Company shall require the managing underwriter to notify the
Company and the Company, in turn, shall notify all Holders of Registrable
Securities included in the offering promptly after such participation ceases. If
the Company or such managing underwriter so requests, each Holder shall enter
into an agreement reflecting such restrictions.
(b) No Holder shall, during any period in which any of its
Registrable Securities are included in any effective Registration Statement, (1)
effect any stabilization transactions or engage in any stabilization activity in
connection with the Common Shares or other equity securities of the Company in
contravention of Regulation M under the Exchange Act; (2) permit any Affiliated
Purchaser (as that term is defined in Rule 100(b) of Regulation M under the
Exchange Act) to bid for or purchase for any account in which such Holder has a
beneficial interest, or attempt to induce any other person to purchase, any
shares of Common Stock or Registrable Securities in contravention of Regulation
M under the Exchange Act; or (3) offer or agree to pay, directly or indirectly,
to anyone
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<PAGE> 8
any compensation for soliciting another to purchase, or for purchasing (other
than for such Holder's own account), any securities of the Company on a national
securities exchange in contravention of Regulation M under the Exchange Act.
(c) Each Holder shall, in the case of a registration including
Registrable Securities to be offered by it for sale through brokers
transactions, furnish each broker through whom such Holder offers Registrable
Securities such number of copies of the prospectus as the broker may require and
otherwise comply with the prospectus delivery requirements under the Securities
Act.
Section 6. Registration Procedures. If and whenever the Company is
required by the provisions of this Agreement to effect a registration of
Registrable Securities:
(a) The Company will use commercially reasonable efforts to prepare
and file with the SEC, within the time periods specified herein, a Registration
Statement on Form S-3 or its equivalent (or on such other registration form
available to the Company that permits the greatest extent of incorporation by
reference of materials filed by the Company, under the Exchange Act), and will
use commercially reasonable efforts to cause such registration statement to
become effective as promptly as practicable thereafter and to remain effective
under the Securities Act until (1) the earlier of such time as all securities
covered thereby have been disposed of pursuant to such Registration Statement or
180 days after such Registration Statement becomes effective, in the case of
registrations pursuant to Section 2, or (2) 90 days after such Registration
Statement becomes effective, in the case of registrations pursuant to Section 3,
in every case as any such period may be extended pursuant to subsection (h) or
Section 8.
(b) The Company will prepare and file with the SEC such amendments,
post-effective amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective for such period of time required by subsection
(a), as such period may be extended pursuant to subsection (h) or Section 8.
(c) The Company will comply in all material respects with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the period during which
any such Registration Statement is required to be effective.
(d) The Company will furnish to any Holder and any underwriter of
Registrable Securities (1) such number of copies (including manually executed
and conformed copies) of such Registration Statement and of each amendment
thereof and supplement thereto (including all annexes, appendices, schedules and
exhibits), (2) such number of copies of the prospectus used in connection with
such Registration Statement (including each preliminary prospectus, any summary
prospectus and the final prospectus and including prospectus supplements), and
(3) such
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<PAGE> 9
number of copies of other documents, in each case as such Holder or such
underwriter may reasonably request.
(e) The Company will use commercially reasonable efforts to register
or qualify all Registrable Securities covered by such Registration Statement
under the securities or "blue sky" laws of states of the United States and any
other jurisdiction as any Holder or any underwriter shall reasonably request,
and do any and all other acts and things which may be reasonably requested by
such Holder or such underwriter to consummate the offering and disposition of
Registrable Securities in such jurisdictions; but the Company shall not be
required to qualify generally to do business as a foreign corporation or as a
dealer in securities, subject itself to taxation, or consent to general service
of process in any jurisdiction wherein it is not then so qualified or subject.
(f) The Company will use, as soon as practicable after the
effectiveness of the Registration Statement, commercially reasonable efforts to
cause the Registrable Securities covered by such Registration Statement to be
registered with, or approved by, such other United States and Bermuda public,
governmental or regulatory authorities, if any, as may be required in connection
with the disposition of such Registrable Securities.
(g) The Company will use commercially reasonable efforts to list the
Registrable Securities covered by such Registration Statement on any securities
exchange (or if applicable, the Nasdaq National Market System) on which any
securities of the Company are then listed, if the listing of such Registrable
Securities is then permitted under the applicable rules of such exchange (or if
applicable, the Nasdaq National Market System).
(h) The Company will notify each Holder as promptly as practicable
and, if requested by any Holder, confirm such notification in writing, (1) when
a prospectus or any prospectus supplement has been filed with the SEC, and when
a Registration Statement or any post-effective amendment thereto has been filed
with and declared effective by the SEC, (2) of the issuance by the SEC of any
stop order or the coming to its knowledge of the initiation of any proceedings
for that purpose, (3) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (4) of the occurrence of any event which requires
the making of any changes to a Registration Statement or related prospectus so
that such documents will not contain 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, in light of the circumstances under which they were
made, not misleading (and the Company shall promptly prepare and furnish to each
Holder a reasonable number of copies of a supplemented or amended prospectus
such that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading), and (5) of the Company's determination that the
filing of a post-effective amendment to a Registration Statement shall be
necessary or appropriate. Upon the receipt of any notice from the Company of the
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<PAGE> 10
occurrence of any event of the kind described in clause (4), the Holders shall
forthwith discontinue any offer and disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until all Holders shall have received copies of a supplemented or amended
prospectus which is no longer defective and, if so directed by the Company,
shall deliver to the Company all copies (other than permanent file copies) of
the defective prospectus covering such Registrable Securities which are then in
the Holders' possession. If the Company shall provide any notice of the type
referred to in the preceding sentence, the period during which the Registration
Statement is required by subsection (a) to be effective shall be extended by the
number of days from and including the date such notice is provided, to and
including the date when Holders shall have received copies of the corrected
prospectus.
(i) The Company will enter into such agreements and take such other
appropriate actions as are customary and reasonably necessary to expedite or
facilitate the disposition of such Registrable Securities, and in that regard,
will deliver to the Holders such documents and certificates as may be reasonably
requested by the Holders of a majority of the Registrable Securities being sold
or, as applicable, the managing underwriters, to evidence the Company's
compliance with this Agreement, including, in the case of any underwritten
offering, using commercially reasonable efforts to cause its independent
accountants to deliver to the managing underwriters an accountants' comfort
letter substantially similar to that in scope delivered in an underwritten
public offering and covering audited and interim financial statements included
in the registration statement, or if such letter can not be obtained through the
exercise of commercially reasonable efforts, cause its independent accountants
to deliver to the managing underwriters a comfort letter based on negotiated
procedures providing comfort with respect to the Company's financial statements
included or incorporated by reference in the registration statement at the
highest level permitted to be given by such accountants under the then
applicable standards of the American Institute of Certified Public Accountants
with respect to such Registration Statement.
Section 7. Underwriting.
(a) If requested by the underwriters for any underwritten offering
of Registrable Securities pursuant to a registration under Section 2, the
Company will enter into and perform its obligations under an underwriting
agreement with the underwriters for such offering, such agreement to contain
such representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions, including, without limitation, customary provisions
relating to indemnities and contribution and the provision of opinions of
counsel and accountants' comfort letters. If Registrable Securities are to be
distributed by such underwriters on behalf of any Holder, such Holder shall also
be a party to any such underwriting agreement.
(b) If any registration pursuant to Section 4 shall involve an
underwritten offering, the Company may require Registrable Securities requested
to be registered pursuant to
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<PAGE> 11
Section 4 to be included in such underwriting on the same terms and conditions
as shall be applicable to the securities being sold through underwriters under
such registration. In such case, each Holder requesting registration shall be a
party to any such underwriting agreement. Such agreement shall contain such
representations and warranties by the Holders requesting registration and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to secondary distributions, including, without
limitation, provisions relating to indemnities and contribution.
(c) In any offering of Registrable Securities pursuant to a
registration hereunder, each Holder requesting registration shall also enter
into such additional or other agreements as may be customary in such
transactions, which agreements may contain, among other provisions, such
representations and warranties as the Company or the underwriters of such
offering may reasonably request (including, without limitation, those concerning
such Holder, its Registrable Securities, such Holder's intended plan of
distribution and any other information supplied by it to the Company for use in
such registration statement), and customary provisions relating to indemnities
and contribution.
Section 8. Information Blackout.
(a) At any time when a Registration Statement is effective, upon
written notice from the Company to the Holders that the Company has determined
in good faith that sale of Registrable Securities pursuant to the Registration
Statement would require disclosure of non-public material information, the
disclosure of which would have a material adverse effect on the Company, all
Holders shall suspend sales of Registrable Securities pursuant to such
Registration Statement until the earlier of (1) 20 days after the Company
notifies the Holders of such good faith determination, and (2) such time as the
Company notifies the Holders that such material information has been disclosed
to the public or has ceased to be material or that sales pursuant to such
Registration Statement may otherwise be resumed (the number of days from such
suspension of sales by the Holders until the day when such sales may be resumed
hereunder is hereinafter called a "Sales Blackout Period").
(b) The time period set forth in Section 6(a)(1) or (2) shall be
extended for a number of days equal to the number of days in the Sales Blackout
Period.
(c) No Sales Blackout Period shall be commenced by the Company
within 90 days after the end of a Sales Blackout Period.
Section 9. Rule 144. The Company shall take all actions reasonably
necessary to comply with the filing requirements described in Rule 144(c)(1)
under the Securities Act so as to enable the Holders to sell Registrable
Securities without registration under the Securities Act. Upon the written
request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with the filing requirements under such
Rule 144(c)(1).
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Section 10. Preparation; Reasonable Investigation; Information. In
connection with the preparation and filing of each Registration Statement
registering Registrable Securities under the Securities Act, (a) the Company
will give the Holders and the underwriters, if any, and their respective counsel
and accountants, drafts of such registration statement for their review and
comment prior to filing and (during normal business hours and subject to such
reasonable limitations as the Company may impose to prevent disruption of its
business) such reasonable and customary access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the reasonable opinion of the Holders of a majority of
the Registrable Securities being registered and such underwriters or their
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act and (b) as a condition precedent to including any Registrable
Securities of any Holder in any such registration, the Company may require such
Holder to furnish the Company such information regarding such Holder and the
distribution of such securities as the Company may from time to time reasonably
request in writing or as shall be required by law or the SEC in connection with
any registration.
Section 11. Indemnification and Contribution.
(a) In the case of each offering of Registrable Securities made
pursuant to this Agreement, the Company shall indemnify and hold harmless each
Holder, its officers and directors, each underwriter of Registrable Securities
so offered and each Person, if any, who controls any of the foregoing persons
within the meaning of the Securities Act ("Holder Indemnitees"), from and
against any and all claims, liabilities, losses, damages, expenses and
judgments, joint or several, to which they or any of them may become subject,
including any amount paid in settlement of any litigation commenced or
threatened, and shall promptly reimburse them, as and when incurred, for any
legal or other expenses incurred by them in connection with investigating any
claims and defending any actions, insofar as such losses, claims, damages,
liabilities or actions shall arise out of, or shall be based upon, any violation
or alleged violation by the Company of the Securities Act, any blue sky laws,
securities laws or other applicable laws of any state or county in which the
Registrable Securities are offered, and relating to action taken or action or
inaction required of the Company in connection with such offering, or shall
arise out of, or shall be based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in any
preliminary or final prospectus included therein) relating to the offering and
sale of such Registrable Securities, or any amendment thereof or supplement
thereto, or in any document incorporated by reference therein, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; but the
Company shall not be liable to any Holder Indemnitee in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement, or any omission
or alleged omission, if such statement or omission shall have been made in
reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of such Holder specifically for use in the preparation
of the Registration Statement
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(or in any preliminary or final prospectus included therein), or any amendment
thereof or supplement thereto. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of any Holder and
shall survive the transfer of such securities. The foregoing indemnity agreement
is in addition to any liability which the Company may otherwise have to any
Holder Indemnitee.
(b) In the case of each offering of Registrable Securities made
pursuant to this Agreement, each Holder shall indemnify and hold harmless the
Company, its officers and directors and each person, if any, who controls any of
the foregoing within the meaning of the Securities Act (the "Company
Indemnitees"), from and against any and all claims, liabilities, losses,
damages, expenses and judgments, joint or several, to which they or any of them
may become subject, including any amount paid in settlement of any litigation
commenced or threatened, and shall promptly reimburse them, as and when
incurred, for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out of, or shall be based
upon, any violation by such Holder of the Securities Act, any blue sky laws,
securities laws or other applicable laws of any state or country in which the
Registrable Securities are offered and relating to action taken or action or
inaction required of such Holder in connection with such offering, or shall
arise out of, or shall be based upon, any untrue statement of a material fact
contained in the Registration Statement (or in any preliminary or final
prospectus included therein) relating to the offering and sale of such
Registrable Securities or any amendment thereof or supplement thereto, or any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that such untrue statement is contained in, or such fact is
omitted from, information furnished in writing to the Company by or on behalf of
such Holder specifically for use in the preparation of such Registration
Statement (or in any preliminary or final prospectus included therein). Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of any Company Indemnitee. In no event shall the liability
of a Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by it upon the sale of Registrable Securities pursuant to such
offering. The foregoing indemnity is in addition to any liability which Holder
may otherwise have to any Company Indemnitee.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 11, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing, but the failure
to give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party. In case any such
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
and shall pay as incurred the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense.
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<PAGE> 14
Notwithstanding the foregoing, the indemnifying party shall pay as incurred the
fees and expenses of the counsel retained by the indemnified party in the event
(1) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel or (2) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by the Holders of a majority of the
Registrable Securities disposed under the applicable Registration Statements in
the case of Holder Indemnitees and by the Company in the case of Company
Indemnitees. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with such
consent or if there be a final judgement for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 11 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) in respect of any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to therein, or if the
indemnified party failed to give the notice required under subsection (c), then
each indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is appropriate
to reflect not only both the relative benefits received by such party (as
compared to the benefits received by all other parties) from the offering in
respect of which indemnity is sought, but also the relative fault of all parties
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by a party shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by it bear
to the total amounts received by each other party. Relative fault 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 party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties agree that it would not be just
and equitable if contributions pursuant to this subsection (d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this subsection
(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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<PAGE> 15
(e) The indemnity provided for hereunder shall not inure to the
benefit of any indemnified party to the extent that such indemnified party
failed to comply with the applicable prospectus delivery requirements of the
Securities Act as then applicable to the person asserting the loss, claim,
damage or liability for which indemnity is sought.
Section 12. Expenses. In connection with any registration under this
Agreement the Company shall pay all Registration Expenses (to the extent not
borne by underwriters or others), except as provided in Section 2(f) or 3(d),
and each Holder shall pay its pro rata share of the items described in clause
(i) of the definition of "Registration Expenses" in Section 1.
Section 13. Notices. Except as otherwise provided below, whenever it
is provided in this Agreement that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties hereto, or whenever any of the parties hereto, wishes to
provide to or serve upon the other party any other communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be delivered in
person or sent by telecopy, as follows: (a) if to a Holder, at the most current
address given by such Holder to the Company by means of a notice given in
accordance with the provisions of this Section 13, which address initially is,
with respect to the Holders who have executed this agreement, the addresses set
forth in Schedule A and with respect to all other holders is as set forth in the
register for the Registrable Securities; and (b) if to the Company, initially at
the Company's principal address and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 13. The
furnishing of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Every notice, demand, request, consent,
approval, declaration or other communication hereunder shall be deemed to have
been duly furnished or served on the party to which it is addressed, in the case
of delivery in person or by telecopy, on the date when sent (with receipt
personally acknowledged in the case of telecopied notice), and in all other
cases, five business days after it is sent. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
Section 14. Entire Agreement. This Agreement represents the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes any and all prior oral and written agreements,
arrangements and understandings among the parties hereto with respect to such
subject matter; and this Agreement can be amended, supplemented or changed, and
any provision hereof can be waived or a departure from any provision hereof can
be consented to, only by a written instrument making specific reference to this
Agreement signed by the Company and the Holders of a majority of the Registrable
Securities then outstanding, but if by less than all Holders, then only to the
extent such amendment,
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<PAGE> 16
supplement or change does not adversely affect the rights of any Holder which is
not a party thereto.
Section 15. Headings. The section headings contained in this
Agreement are for general reference purposes only and shall not affect in any
manner the meaning, interpretation or construction of the terms or other
provisions of this Agreement.
Section 16. Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of New York applicable to
contracts to be made, executed, delivered and performed wholly within such state
and, in any case, without regard to the conflicts of law principles of such
state.
Section 17. Severability. If any provision of this Agreement shall
be held by any court of competent jurisdiction to be illegal, void or
unenforceable, such provision shall be of no force and effect, but the
illegality or unenforceability of such provision shall have no effect upon and
shall not impair the enforceability of any other provision of this Agreement.
Section 18. No Waiver. The failure of any party at any time or times
to require performance of any provision hereof shall not affect the right at a
later time to enforce the same. No waiver by any party of any condition, and no
breach of any provision, term, covenant, representation or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
Section 19. 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 but one and the same original instrument. Not all
parties need sign the same counterpart. Delivery by facsimile of a signature
page to this Agreement shall have the same effect or delivery of an original
executed counterpart.
Section 20. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; but nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of applicable law. If any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registerable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such
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<PAGE> 17
Registrable Securities such Holder shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement, and such
Holder shall be entitled to receive the benefits hereof.
IN WITNESS WHEREOF, this Agreement has been executed and delivered
as of the date first above written.
ANNUITY AND LIFE RE (HOLDINGS), LTD.
By /s/ Lawrence S. Doyle
--------------------------------------
Lawrence S. Doyle
President and Chief Executive Officer
HOLDERS
/s/ Michael P. Esposito, Jr.
------------------------------------------
Michael P. Esposito, Jr.
/s/ Frederick S. Hammer
------------------------------------------
Frederick S. Hammer
/s/ Robert M. Lichten
------------------------------------------
Robert M. Lichten
/s/ William S. Ogden, Jr.
------------------------------------------
William S. Ogden, Jr.
/s/ Andrew S. Lerner
------------------------------------------
Andrew S. Lerner
/s/ Arnold Welles
------------------------------------------
Arnold Welles
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