<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Annuity and Life Re (Holdings), Ltd.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Shares, par value $1.00
- --------------------------------------------------------------------------------
(Title of Class of Securities)
G03910 10 9
- --------------------------------------------------------------------------------
(CUSIP Number of Class of Securities)
Paul S. Giordano
Senior Vice President, General Counsel and Secretary
EXEL Limited
Cumberland House
One Victoria Street
P.O. Box HM2245
Hamilton HM JX
Bermuda
(441) 292-8515
--------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 15, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires
Filing of this Schedule)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3)
or (4), check the following: [ ]
1
<PAGE>
SCHEDULE 13D
- ------------------------------- -----------------------
CUSIP No.G03910 10 9 Page 2 of 10 Pages
- ------------------------------- -----------------------
- ---- ---------------------------------------------------------------------------
1 NAME OF REPORT PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EXEL Limited. I.D. #(none)
- ---- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ]
(b)[ ]
- ---- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ---- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- ---- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
- -------------- --------- -------------------------------------------------------
7 SOLE VOTING POWER
1,418,440
--------- -------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY --------- -------------------------------------------------------
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
--------- -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ---- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON
1,418,440
- ---- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.18%
- ---- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ---- ---------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
2
<PAGE>
Item 1. Security and Issuer.
This statement on Schedule 13D relates to the Common Shares, par value
$1.00 per share, of Annuity and Life Re (Holdings), Ltd. (the "Company"), and is
being filed pursuant to Rule 13d-1 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The address of the principal executive offices of
the Company is Victoria Hall, Victoria Street, P.O. Box HM1262, Hamilton HM FX,
Bermuda.
Item 2. Identity and Background.
This statement is filed by EXEL Limited, ("EXEL"), a Cayman Islands
corporation. EXEL is a diversified Bermuda-based insurance and reinsurance
holding company. The address of the principal business and principal office of
EXEL is Cumberland House, One Victoria Street, P.O. Box HM2245, Hamilton HM JX,
Bermuda.
(a) Not applicable.
(b) Not applicable
(c) Not applicable.
(d) EXEL has not and, to the best of its knowledge, none of its
directors or executive officers has, during the last five years, been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) EXEL has not and, to the best of its knowledge, none of its
directors or executive officers has, during the last five years, been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final
3
<PAGE>
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The total amount of funds required by EXEL to purchase the Securities
(as defined below), pursuant to the Purchase Agreement described in Item 4, was
$20,000,000, and was furnished from the working capital of EXEL.
Item 4. Purpose of Transaction.
As of March 4, 1998, the Company entered into a Securities Purchase
Agreement (the "Purchase Agreement") with the Company pursuant to which EXEL
agreed to purchase, subject to certain conditions, 1,418,440 Common Shares of
the Company (the "Shares") and 100,000 Warrants to purchase Common Shares (the
"Warrants, and together with the Shares, the "Securities") for an aggregate
purchase price of $20,000,000 (the "Purchase"). Pursuant to the Purchase
Agreement, the Company agreed to issue the Securities to EXEL in consideration
of the purchase price.
At the closing under the Purchase Agreement on April 15, 1998, EXEL
purchased the Securities. The Shares represent beneficial ownership of
approximately 6.18% of the outstanding voting securities of the Company. The
Warrants to purchase an additional 100,000 Common Shares are exercisable as to
one-third of the total on and after April 15, 1999, April 15, 2000 and April 15,
2001, respectively, at an exercise price of $15.00 per share
Registration Rights. The Shares, the Warrants and the Common Shares
issuable upon exercise of the Warrants will not be
4
<PAGE>
registered under the Securities Act of 1933, as amended (the "Securities Act").
Pursuant to a Registration Rights Agreement, dated April 15, 1998 (the
"Registration Rights Agreement"), the Company has granted EXEL demand and
piggy-back registration rights with respect to the Shares and the Common Shares
issuable upon exercise of the Warrants ("Registrable Securities"). The Company
has agreed to use its best efforts to effect any registration requested by the
holders of 30% or more of the then outstanding Registrable Securities and has
agreed to give the holders of Registrable Securities the opportunity to sell
their Registrable Securities pursuant to certain other registration statements
that may be filed by the Company under the Securities Act.
The foregoing descriptions of the Purchase Agreement and the
Registration Rights Agreement are qualified in their entirety by reference to
the Purchase Agreement and the Registration Rights Agreement, which are attached
hereto as Exhibit 1 and Exhibit 2, respectively, and are incorporated herein by
reference.
The Purchase was effected because of EXEL's belief that the Company
represents an attractive investment. Brian M. O'Hara, a director of the Company,
currently serves as the President and Chief Executive Officer of EXEL. In
addition, Michael P. Esposito, Jr., a director of the Company, currently serves
as a non-executive Chairman of the Board of EXEL, and Robert Clements, a
director of the Company, currently serves as a director of EXEL. Robert M.
Lichten, a director of the Company, has agreed to serve as a director of a
United States-based subsidiary of EXEL. EXEL presently expects to limit its
involvement in the
5
<PAGE>
management of the Company to representation on the Company's Board
of Directors.
EXEL may from time to time acquire Common Shares or dispose of Common
Shares through open market or privately negotiated transactions or otherwise,
depending on existing market conditions and other considerations discussed
below. EXEL intends to review its investment in the Company on a continuing
basis and, depending upon the price and availability of Common Shares,
subsequent developments affecting the Company, the Company's business and
prospects, other investment and business opportunities available to EXEL,
general stock market and economic conditions, tax considerations and other
factors considered relevant, may decide at any time to increase, or to
decrease, the size of its investment in the Company.
EXEL does not have and, to the best of its knowledge none of its
officers or directors has, any plans or proposals which relate to or would
result in: (a) the acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company; (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries; (c) a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries; (d) any
change in the present Board of Directors or management of the Company, including
any plans or proposals to change the number or term of directors or to fill any
existing vacancies on the board; (e) any material change in the present
capitalization or dividend policy of the Company; (f) any other
6
<PAGE>
material change in the Company's business or corporate structure; (g) changes in
the Company's charter, By-Laws or instruments corresponding thereto or other
actions which may impede the acquisition of control of the Company by any
person; (h) causing a class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) As of April 15, 1998, EXEL beneficially owned 1,418,440 Common
Shares of the Company. Additionally, EXEL has the right to acquire an additional
100,000 Common Shares pursuant to the Warrants (which are currently not
exercisable). As of April 15, 1998, 1,418,440 Common Shares represented
approximately 6.18% of the outstanding Common Shares, based on the Company's
representation that 22,938,185 Common Shares were outstanding as of that date.
(b) EXEL has the sole irrevocable power to vote or to direct the vote
of the Common Shares and any Common Shares which it may acquire upon exercise of
the Warrants.
(c) Except for the Purchase, EXEL has not effected any transactions in
the Common Shares during the preceding 60 days.
7
<PAGE>
(d) No person other than EXEL has the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
Securities.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
Under the Purchase Agreement, EXEL has agreed that until April 15,
1999 it will limit its transfer of Shares and Warrants to its Affiliates or to
institutional holders purchasing in large blocs, unless the Company otherwise
consents. Also in connection with the Company's underwritten public offering of
17,078,765 Common Shares, EXEL agreed in a letter agreement (the "Lock-up
Agreement") that it would not directly or indirectly, without the prior written
consent of Prudential Securities Incorporated and Merrill Lynch, Pierce, Fenner
& Smith Incorporated. (as representatives of the underwriters of such offering)
and the Company, offer, sell, offer to sell, contract to sell, transfer, assign,
pledge, hypothecate, grant any option to purchase, or otherwise sell or dispose
(or announce any of the foregoing) of any Common Shares or any other securities
convertible into, or exercisable for, any Common Shares or other capital stock
of the Company for the period ending on April 8, 1999. A copy of the Lock-up
Agreement is attached hereto as Exhibit 3 and is incorporated herein by
reference.
Except as described above in Item 4 (which is incorporated herein by
reference) and in this Item 6, there are no contracts, arrangements,
understandings or relationships between EXEL and any other person with respect
to any securities of the Company.
8
<PAGE>
Item 7. Material to be Filed as Exhibits.
1. Securities Purchase Agreement, dated as of March 4, 1998,
by and between the Company and EXEL.
2. Registration Rights Agreement, dated April 15, 1998,
between EXEL and the Company.
3. Letter Agreement, dated April 8, 1998, among EXEL, the
Company, Prudential Securities Incorporated and Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
9
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated April 30, 1998 EXEL LIMITED
By: /s/ Paul S. Giordano
----------------------
Paul S. Giordano
Senior Vice President, General
Counsel and Secretary
10
<PAGE>
Exhibit 1
---------
================================================================================
SECURITIES PURCHASE AGREEMENT
ANNUITY AND LIFE RE (HOLDINGS), LTD.
March 4, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
SECTION 1. AUTHORIZATION OF SECURITIES.......................................1
SECTION 2. PURCHASE AND SALE OF SECURITIES...................................1
2.1. Issuance of Securities..........................................1
2.2. Closing of Issuance.............................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................2
3.1. Corporate Organization..........................................2
3.2. Subsidiaries....................................................2
3.3. Capitalization..................................................3
3.4. Corporate Proceedings, etc......................................4
3.5. Consents and Approvals..........................................4
3.6. Absence of Defaults, Conflicts, etc.............................4
3.7. Financial Statements............................................5
3.8. Absence of Certain Developments.................................5
3.9. Compliance with Law.............................................5
3.10. Litigation.....................................................6
3.11. Material Contracts.............................................6
3.12. Absence of Undisclosed Liabilities.............................6
3.13. Employees......................................................7
3.14. Tax Matters....................................................7
3.15. Employee Benefit Plans.........................................7
3.16. Patents, Licenses, etc.........................................8
3.17. Insurance......................................................9
3.18. Transactions with Related Parties..............................9
3.19. Private Offering...............................................9
3.20. Brokerage......................................................10
3.21. Illegal or Unauthorized Payments; Political Contributions......10
3.22. Material Facts.................................................10
3.23. Foreign Assets Control Regulations, etc........................11
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR....................11
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES...............................12
5.1. Resale of Securities............................................12
5.2. Covenants Pending Closing.......................................12
5.3. Further Assurance...............................................13
SECTION 6. INVESTOR'S CLOSING CONDITIONS.....................................13
6.1. Representations and Warranties..................................13
6.2. Compliance with Agreement.......................................13
-i-
<PAGE>
6.3. Officer's Certificate...........................................13
6.4. Delivery of Shares and Warrants.................................13
6.5. Injunction......................................................13
6.6. Counsel's Opinions..............................................14
6.7. Consummation of Public Offering.................................17
6.8. Purchase by Other Investors.....................................17
6.9. Registration Rights Agreement...................................17
6.10. Process Agent..................................................17
6.11. Proceedings....................................................17
SECTION 7. COMPANY CLOSING CONDITIONS........................................17
7.1. Representations and Warranties..................................18
7.2. Compliance with Agreement.......................................18
7.3. Injunction......................................................18
7.4. Consummation of Public Offering.................................18
SECTION 8. LIMITATION ON DISPOSITION.........................................18
SECTION 9. COVENANTS.........................................................19
9.1. Financial and Business Information..............................19
9.2. Inspection......................................................20
9.3. Keeping of Books................................................20
9.4. Lost, etc. Certificates; Exchange...............................21
9.5. Review of Documents.............................................21
9.6. Confidential Information........................................21
SECTION 10. INTERPRETATION OF THIS AGREEMENT.................................21
10.1. Terms Defined..................................................21
10.2. Directly or Indirectly.........................................23
10.3. Section Headings...............................................23
SECTION 11. MISCELLANEOUS....................................................24
11.1. Notices........................................................24
11.2. Expenses and Taxes.............................................24
11.3. Reproduction of Documents......................................25
11.4. Termination and Survival.......................................25
11.5. Successors and Assigns.........................................25
11.6. Entire Agreement; Amendment and Waiver.........................26
11.7. Severability...................................................26
11.8. Governing Law; Submission to Jurisdiction......................26
11.9. Counterparts...................................................27
-ii-
<PAGE>
Schedule 2.1 Investors
Schedule 3.1(a) Memorandum of Association
Schedule 3.1(b) Bye-Laws
Schedule 3.1(c) Contemplated Business
Schedule 3.3 Warrants, Options and Convertible Securities
Schedule 3.7 Financial Statements
Schedule 3.8 Certain Developments
Schedule 3.11 Material Contracts
Schedule 3.12 Certain Liabilities
Schedule 3.13 For Cause Employees
Schedule 3.15 Employee Benefit Arrangements
Schedule 3.16 Intellectual Property
Schedule 3.18 Transactions with Related Parties
EXHIBIT A Class B Warrant
EXHIBIT B Registration Rights Agreement
EXHIBIT C Lock-up Provisions
-iii-
<PAGE>
ANNUITY AND LIFE RE (HOLDINGS), LTD.
SECURITIES PURCHASE AGREEMENT
Dated as of March 4, 1998
To the Investor executing
this Agreement on the
signature page hereof
Ladies and Gentlemen:
ANNUITY AND LIFE RE (HOLDINGS), LTD., a Bermuda corporation (the
"Company"), hereby agrees with you (the "Investor") as follows:
SECTION 1. AUTHORIZATION OF SECURITIES
The Company has duly authorized the issuance, sale and delivery
of its common shares, par value $1.00 per share (the "Common Shares") and its
Class B Warrants to purchase its Common Shares, the form of which is attached
hereto as Exhibit A (the "Class B Warrants").
SECTION 2. PURCHASE AND SALE OF SECURITIES
2.1. Issuance of Securities
Subject to the terms and conditions set forth in this Agreement
and in reliance upon the Company's and the Investor's representations set forth
below, on the Closing Date (as defined below) the Company shall sell to the
Investor, and the Investor shall purchase from the Company, the number of Common
Shares (the "Shares") and Class B Warrants (the "Warrants"), and at the
aggregate cash purchase price (the "Purchase Price"), set forth opposite its
name on Schedule 2.1. Such sale and purchase shall be effected on the Closing
Date by the Company executing and delivering to the Investor, duly registered in
its name (or that of its nominee), a duly executed stock certificate and warrant
certificate evidencing the Shares and the Warrants being purchased by it,
against delivery by the Investor to the Company of the Purchase Price by wire
transfer of immediately available funds to such account as the Company shall
designate, not less than three Business Days prior to the Closing Date. The
Company is entering into securities purchase agreements (the "Other Agreements")
substantially in the form of this Agreement with the other investors listed on
Schedule 2.1 ("Other Investors" and, collectively with the Investor, the
"Investors"). The Company's agreements with each of the Investors are separate
agreements, and the sales to each of the Investors are separate sales.
<PAGE>
2.2. Closing of Issuance
The closing of such sale and purchase (the "Closing") shall take
place at 10:00 A.M., New York City time, on the IPO Closing Date or such other
date as the Investor and the Company agree in writing (the "Closing Date"), at
the offices of Willkie Farr & Gallagher, 153 East 53rd Street, New York, New
York, or such other location as the Investor and the Company shall mutually
select.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that:
3.1. Corporate Organization
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of Bermuda. True and complete copies of the
Memorandum of Association, Bye-Laws and other constitutive documents as amended
through the date hereof (collectively, the "Organizational Documents") have been
attached as Schedule 3.1(a) and Schedule 3.1(b) respectively.
(b) The Company has all requisite power and authority and has all
necessary approvals, licenses, permits and authorization to own its properties
and to carry on its business as presently contemplated to be conducted as
described in Schedule 3.1(c). The Company has all requisite power and authority
to execute and deliver the Transaction Documents and to perform its obligations
hereunder and thereunder.
(c) The Company has filed all necessary documents to qualify to
do business as a foreign corporation in, and the Company is in good standing
under the laws of, each jurisdiction in which the conduct of the Company's
business as presently contemplated as described in Schedule 3.1(c) or the nature
of the property owned by it or proposed to be owned requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the business, properties, prospects, profits or condition (financial or
otherwise) of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect").
3.2. Subsidiaries
Except for Annuity Life Reassurance Ltd., the Company has no
subsidiaries and no interests or investments in any partnership, trust or other
entity or organization. Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its properties and to conduct its business as
-2-
<PAGE>
presently contemplated as described in Schedule 3.1(c) and is duly registered,
qualified and authorized to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the nature of its
properties requires such registration, qualification or authorization, except
where the failure to be so registered, qualified and authorized would not have a
Material Adverse Effect; all of the issued and outstanding capital stock of each
subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable, and is owned of record and beneficially by the Company free and
clear of any mortgage, pledge, lien, encumbrance, security interest, claim or
equity.
3.3. Capitalization
(a) On the Closing Date (i) the authorized capital stock of the
Company will consist of 100,000,000 Common Shares, par value $1.00 per share and
50,000,000 preferred shares, par value $1.00 per share, and (ii) the issued and
outstanding shares of capital stock of the Company will consist of Common Shares
which will, to the best knowledge of the Company, be held beneficially by the
persons and in the amounts set forth in Schedule 3.3.
(b) All the outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and non-assessable, and
were issued in accordance with the registration or qualification requirements of
the Securities Act and any other relevant securities laws or pursuant to valid
exemptions therefrom. The Company has authorized (or as of the Closing Date will
have authorized) the issuance, sale and delivery of the Shares and Warrants in
accordance with this Agreement and, subject to the issuance of the Warrants, the
Company has reserved (or as of the Closing Date will have reserved) for issuance
Common Shares initially issuable upon conversion of the Warrants. Upon issuance,
sale and delivery as contemplated by this Agreement, the Shares will be duly
authorized, validly issued, fully paid and non-assessable shares of the Company,
free of all preemptive or similar rights, and entitled to the rights described
in the Organizational Documents and in Schedule 3.3. Upon their issuance in
accordance with the terms of the Warrants, the Common Shares issuable upon
exercise of the Warrants will be duly authorized, validly issued, fully paid and
non-assessable Common Shares of the Company, free of all preemptive or similar
rights.
(c) Except for the rights which attach to the warrants, options
and convertible securities which are listed on Schedule 3.3 hereto and to the
Warrants referred to herein and in the Other Agreements, on the Closing Date
there will be no Common Shares or any other equity security of the Company
issuable upon conversion or exchange or exercise of any security of the Company
nor will there be any rights, options or warrants outstanding or
-3-
<PAGE>
other agreements to acquire any Common Shares nor will the Company be
contractually obligated to purchase, redeem or otherwise acquire any of its
outstanding shares. No shareholder of the Company is entitled to any preemptive
or similar rights to subscribe for shares of capital stock of the Company.
3.4. Corporate Proceedings, etc.
The Company has duly authorized the execution, delivery, and
performance of the Transaction Documents and each of the transactions and
agreements contemplated hereby and thereby. No other corporate action (including
shareholder approval) is necessary to authorize such execution, delivery and
performance of the Transaction Documents, and upon such execution and delivery
each of the Transaction Documents shall constitute the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and general principles of equity.
3.5. Consents and Approvals
The execution and delivery by the Company of the Transaction
Documents, the performance by the Company of its obligations hereunder and
thereunder and the consummation by the Company of the transactions contemplated
hereby and thereby do not require the Company or any of its subsidiaries to
obtain any consent, approval or action of, or make any filing with or give any
notice to, any corporation, person or firm or any public, governmental or
judicial authority (except for filings in connection with the Public Offering,
all of which shall have been duly made as of the Closing Date).
3.6. Absence of Defaults, Conflicts, etc.
The execution and delivery of the Transaction Documents do not,
and the fulfillment of the terms hereof and thereof by the Company, and the
issuance of the Shares and Warrants (and the issuance of Common Shares issuable
upon exercise of the Warrants) will not, result in a breach of any of the terms,
conditions or provisions of, or constitute a default under, or permit the
acceleration of rights under or termination of, any Material Contract or the
Organizational Documents, or any order, rule or regulation of any court or
federal, state or foreign regulatory board or body or administrative agency
having jurisdiction over the Company or any of its subsidiaries or over their
respective properties or businesses. No event has occurred and no condition
exists which, upon notice or the passage of time (or both), would constitute a
default under any such Material Contract or in any license, permit or
authorization to which the Company or any subsidiary is a party or by which any
of them may be bound.
-4-
<PAGE>
3.7. Financial Statements
The audited balance sheet of the Company as at December 22, 1997
set forth in Schedule 3.7, fairly presents the financial position of the Company
as at the date thereof. Such balance sheet, including the schedules and notes
thereto, was prepared in accordance with GAAP.
3.8. Absence of Certain Developments
Since December 22, 1997, except as described in Schedule 3.8,
there has been no (i) material adverse change in the condition, financial or
otherwise, of the Company and its subsidiaries taken as a whole or in their
assets, liabilities, properties, or business or prospects, (ii) declaration,
setting aside or payment of any dividend or other distribution with respect to
the capital stock of the Company, (iii) issuance of capital stock (other than
pursuant to the exercise of options, warrants, or convertible securities
outstanding on the date hereof or as contemplated by this Agreement and the
Other Agreements) or options, warrants or rights to acquire capital stock (other
than the rights granted to the Investors hereunder and under the Company's Stock
Option Plan, the Other Agreements), (iv) material loss, destruction or damage to
any property of the Company or any subsidiary, whether or not insured, (v)
acceleration or prepayment of any indebtedness for borrowed money or the
refunding of any such indebtedness, (vi) labor trouble involving the Company or
any subsidiary or any material change in their personnel or the terms and
conditions of employment, (vii) waiver of any valuable right, (viii) loan or
extension of credit to any officer or employee of the Company or any subsidiary
or (ix) acquisition or disposition of any material assets (or any contract or
arrangement therefor), or any other material transaction by the Company or any
subsidiary otherwise than for fair value in the ordinary course of business.
3.9. Compliance with Law
(a) Neither the Company nor any of its subsidiaries is in
material violation of any laws, ordinances, governmental rules or regulations to
which it is subject, including without limitation laws or regulations relating
to the environment or to occupational health and safety, and no material
expenditures are or will be required in order to cause its currently
contemplated operations or properties to comply with any such law, ordinances,
governmental rules or regulations.
(b) The Company and its subsidiaries have all licenses, permits
(other than certain employee work permits), franchises or other governmental
authorizations necessary to the ownership of their property or to the conduct of
their respective businesses as presently contemplated as described in Schedule
3.1(c) (including, without limitation, such licenses and
-5-
<PAGE>
permissions in Bermuda which are necessary to carry on the business of a
long-term insurer), all to the extent necessary to avoid a Material Adverse
Effect. Neither the Company nor any subsidiary has finally been denied any
application for any such licenses, permits, franchises or other governmental
authorizations necessary to its business.
3.10. Litigation
There is no legal action, suit, arbitration or other legal,
administrative or other governmental investigation, inquiry or proceeding
(whether federal, state, local or foreign) pending or, to the best of the
Company's knowledge, threatened against or affecting the Company or any
subsidiary or any of their respective properties, assets or presently
contemplated businesses. Neither the Company nor any subsidiary is subject to
any order, writ, judgment, injunction, decree, determination or award of any
court or of any governmental agency or instrumentality (whether federal, state,
local or foreign).
3.11. Material Contracts
Schedule 3.11 sets forth a true and complete list of each
material contract, agreement, instrument, commitment and other arrangement to
which the Company or any subsidiary is a party or otherwise relating to or
affecting any of their respective assets, including without limitation:
employment, severance or consulting agreements; loan, credit or security
agreements; joint venture agreements and distribution agreements (each, a
"Material Contract"). Each Material Contract is valid, binding and enforceable
against the Company or such subsidiary and, to the Company's best knowledge, the
other parties thereto, in accordance with its terms, and in full force and
effect on the date hereof.
3.12. Absence of Undisclosed Liabilities
Except as disclosed in Schedule 3.12, neither the Company nor any
of its subsidiaries has any debt, obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due,
whether or not known to the Company) arising out of any transaction entered into
at or prior to the Closing, or any act or omission at or prior to the Closing,
or any state of facts existing at or prior to the Closing, including taxes with
respect to or based upon the transactions or events occurring at or prior to the
Closing, and including, without limitation, unfunded past service liabilities
under any pension, profit sharing or similar plan, except current liabilities
incurred and obligations under agreements entered into, in the usual and
ordinary course of business, none of which (individually or in the aggregate)
would have a Material Adverse Effect.
-6-
<PAGE>
3.13. Employees
(a) The Company and its subsidiaries are in full compliance with
all laws regarding employment, wages, hours, equal opportunity, collective
bargaining and payment of social security and other taxes (except that certain
employees may be required to obtain work permits under Bermuda law).
(b) Except as set forth on Schedule 3.13, the employment of all
Persons and officers employed by the Company or any of its subsidiaries is
terminable at will without any penalty or severance obligation of any kind on
the part of the employer. All sums due for employee compensation and benefits
and all vacation time owing to any employees of the Company or any of its
subsidiaries have been duly and adequately accrued on the accounting records of
the Company and its subsidiaries.
(c) To the best knowledge of the Company none of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interests of the Company or that would
conflict with the Company's business as proposed to be conducted.
(d) To the best knowledge of the Company no officer or key
employee, nor any group of key employees, intends to terminate their employment
with the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing (other than temporary employees who are also
employees of Inter-Atlantic Capital Partners, Inc. or Conyers Dill & Pearman).
3.14. Tax Matters
There are no taxes due and payable by the Company or any of its
subsidiaries which have not been paid. The provisions for taxes on the audited
balance sheet described in Section 3.7 has been established in accordance with
GAAP. The Company and its subsidiaries have duly filed all tax returns required
to have been filed by it. Neither the Company nor any of its subsidiaries has
been subject to a tax audit of any kind.
3.15. Employee Benefit Plans
The Company and its subsidiaries have no employee benefit plans
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974) covering former and current employees of the Company or any of its
subsidiaries, or under which the Company or any of its subsidiaries has any
obligation or liability. Schedule 3.15 lists all material plans, contracts,
bonuses, commissions, profit-sharing, savings, stock options,
-7-
<PAGE>
insurance, deferred compensation, or other similar fringe or employee benefits
covering former or current employees of the Company or any of its subsidiaries
or under which the Company or any of its subsidiaries has any obligation or
liability (each, a "Benefit Arrangement"). True and complete copies of all
Benefit Arrangements have been provided or made available to the Investor prior
to the date hereof. The Benefit Arrangements are and have been administered in
substantial compliance with their terms and with the requirements of applicable
law.
3.16. Patents, Licenses, etc.
Except as provided on Schedule 3.16, the Company or one of its
subsidiaries owns, free and clear of all encumbrances, restrictions, liens,
security interests and charges, and have good and marketable title to, or hold
adequate licenses or otherwise possess all such rights as are necessary to use
all patents (and applications therefor), patent disclosures, trademarks, service
marks, trade names, copyrights (and applications therefor), inventions,
discoveries, processes, know-how, scientific, technical, engineering and
marketing data, computer software, formulae and techniques used or proposed to
be used, in or necessary for the conduct of its business as now conducted or as
proposed to be conducted (collectively, "Intellectual Property").
Neither the Company nor any of its subsidiaries has received
notice nor otherwise has reason to know of any conflict or alleged conflict with
the rights of others pertaining to the Intellectual Property described in this
Section 3.16. The Company's business, as presently conducted and as proposed to
be conducted, does not infringe upon or violate any patent rights or trade
secrets of others. The Company and its subsidiaries have the unrestricted right
to use, free and clear of any rights or claims of others, all trade secrets,
processes, customer lists and other rights incident to their respective
businesses as now conducted or as proposed to be conducted.
Except as provided for on Schedule 3.16, neither the Company nor
any of its subsidiaries is currently obligated or under any existing liability
to make royalty or other payments to any owner of, licensor of, or other
claimant to, any patent, trademark, service names, trade names, copyrights, or
other intangible asset, with respect to the use thereof or in connection with
the conduct of its business as now conducted or as proposed to be conducted, or
otherwise. To the Company's best knowledge, no employee of the Company or any of
its subsidiaries has violated any employment agreement or proprietary
information agreement which he had with a previous employer or any patent policy
of such employer, or is a party to or threatened by any litigation concerning
any patents, trademarks, trade secrets, service names, trade names, copyrights,
licenses and the like.
-8-
<PAGE>
3.17. Insurance
The Company and its subsidiaries and their respective properties
are insured in such amounts, against such losses and with such insurers as are
prudent when considered in light of the nature of the properties and businesses
of the Company and its subsidiaries. The Company maintains (or as of the Closing
Date will maintain) directors and officers insurance (in customary form) in
amounts not less than $10,000,000.
3.18. Transactions with Related Parties
Except as disclosed on Schedule 3.18, neither the Company nor any
subsidiary is a party to any agreement with any of the Company's directors,
officers or shareholders (other than shareholders which become such as a result
of the Public Offering and other than the Investors) or any Affiliate or family
member of any of the foregoing under which it: (i) leases any real or personal
property (either to or from such Person), (ii) licenses technology (either to or
from such Person), (iii) is obligated to purchase any tangible or intangible
asset from or sell such asset to such Person, (iv) purchases products or
services from such Person or (v) has borrowed money from or loaned money to such
Person. Except as set forth in Schedule 3.18, neither the Company nor any
subsidiary employs as an employee or engages as a consultant any family member
of any of the Company's directors, officers or shareholders. To the best
knowledge of the Company, there exist no agreements among shareholders of the
Company to act in concert with respect to their voting or holding of Company
securities.
3.19. Private Offering
Neither the Company nor anyone acting on its behalf, directly or
indirectly, has sold or has offered any of the Shares or Warrants (or any
similar security) for sale to, or solicited offers to buy from, or otherwise
approached or negotiated with respect thereto with, any prospective purchaser,
other than the Investors and not more than 10 other institutional investors,
each of which was offered such securities for purposes of investment. Neither
the Company nor anyone acting on its behalf shall offer the Shares or Warrants
(or any similar security) for issue or sale to, or solicit any offer to acquire
any of the same from, anyone so as to bring the issuance and sale of such Shares
or Warrants or Common Shares issuable upon exercise of the Warrants, or any part
thereof, within the provisions of Section 5 of the Securities Act or in
violation of the provisions of any securities or Blue Sky law of any applicable
jurisdiction. Based upon the representations of the Investors set forth in
Section 4 hereof and of the Other Agreements, the offer, issuance and sale of
the Shares and the Warrants and the issuance of the Common Shares issuable upon
exercise of the Warrants are and will be exempt from the registration and
prospectus delivery requirements
-9-
<PAGE>
of the Securities Act, and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all other applicable securities laws.
3.20. Brokerage
There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Company and the
Company agrees to indemnify and hold the Investor harmless against any costs
(including, without limitation, reasonable attorneys fees and disbursements for
the defense of any such claims) or damages incurred as a result of any such
claim.
3.21. Illegal or Unauthorized Payments; Political Contributions
Neither the Company or any of its subsidiaries nor, to the best
of the Company's knowledge (after reasonable inquiry of its officers and
directors), any of the officers, directors, employees, agents or other
representatives of the Company or any of its subsidiaries or any other business
entity or enterprise with which the Company or any subsidiary is or has been
affiliated or associated, has, directly or indirectly, made or authorized any
payment, contribution or gift of money, property, or services, whether or not in
contravention of applicable law, (a) as a kickback or bribe to any Person or (b)
to any political organization, or the holder of or any aspirant to any elective
or appointive public office except for personal political contributions not
involving the direct or indirect use of funds of the Company or any of its
subsidiaries.
3.22. Material Facts
This Agreement, the schedules hereto and the other agreements,
documents, certificates or written statements furnished or to be furnished to
the Investor through the Closing Date by or on behalf of the Company in
connection with the transactions contemplated hereby taken as a whole, do not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein or herein, in
light of the circumstances in which they were made, not misleading. There is no
fact which is known to the Company and which has not been disclosed herein or
otherwise by the Company to the Investor which may materially adversely affect
the business, properties, assets or condition, financial or otherwise, or
prospects of the Company and its subsidiaries taken as a whole.
-10-
<PAGE>
3.23. Foreign Assets Control Regulations, etc.
Neither the sale of the Shares and Warrants by the Company
hereunder nor its use of the proceeds thereof will violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or
any enabling legislation or executive order relating thereto.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company as follows:
(a) It is acquiring the Shares and Warrants (and will acquire the
Common Shares issuable upon conversion of the Warrants) for its own account for
investment and not with a view towards the distribution thereof, nor with any
present intention of distributing the Shares or Warrants (or the Common Shares
acquired upon exercise of the Shares), but subject, nevertheless, to any
requirement of law that the disposition of the Investor's property shall at all
times be within the Investor's control, and without prejudice to the Investor's
right at all times to sell or otherwise dispose of all or any part of such
securities under a registration under the Securities Act or under an exemption
from said registration available under the Securities Act to the extent
permitted by the Transaction Documents.
(b) It is either (x) a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act or (y) an "accredited investor"
within the meaning of Rule 501(a)(3) under the Securities Act.
(c) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Company as contemplated by this Agreement, and is able to bear
the economic risk of such investment for an indefinite period of time. It has
been furnished access to such information and documents as it has requested and
has been afforded an opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Shares and Warrants contemplated hereby.
(d) It has all requisite power and authority to execute this
Agreement and the Registration Rights Agreement, to perform its obligations
hereunder and thereunder and to acquire and hold the Shares and Warrants.
-11-
<PAGE>
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1. Resale of Securities
(a) The Investor covenants that it will not sell or otherwise
transfer (and the Company shall not be required to register the transfer of) any
Shares or Warrants (or any Common Shares acquired upon exercise of the Warrants)
except pursuant to an effective registration under the Securities Act or in a
transfer effected under the provisions of Rule 144(k) under the Securities Act
or in a transaction which, in the opinion of counsel (which may be in-house
counsel to the Investor), qualifies as an exempt transaction under the
Securities Act and the rules and regulations promulgated thereunder and any
applicable state securities laws and in a manner consistent with the Investor's
representations and warranties set forth in Section 4 and subject to the
provisions of the Transaction Documents.
(b) The certificates evidencing the Shares and Warrants and
Common Shares issuable upon exercise of the Warrants will bear the following
legend reflecting the foregoing restrictions on the transfer of such securities:
"The securities evidenced hereby have
not been registered under the Securities Act of 1933,
as amended (the "Act"), and may not be transferred
except pursuant to an effective registration under the
Act or in a transaction which, in the opinion of
counsel, qualifies as an exempt transaction under the
Act and the rules and regulations promulgated
thereunder. The transfer of such securities is also
subject to certain limitations on transfer as set forth
in certain agreements between the Company and certain
institutional investors in the Company, copies of which
are available upon request of the Company."
5.2. Covenants Pending Closing
Pending the Closing the Company will not, without the Investor's
prior written consent, take any action which would result in any of the
representations or warranties contained in this Agreement not being true in all
material respects at and as of the time immediately after such action, or in any
of the covenants contained in this Agreement becoming incapable of performance
in all material respects. The Company will promptly advise the Investor in
writing of any action or event of which it becomes aware which has the effect of
making incorrect any of such representations or warranties in any material
respect or which has the effect of rendering any of such covenants incapable of
performance.
-12-
<PAGE>
5.3. Further Assurance
Each of the parties shall execute such documents and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby. Each
such party shall use its reasonable efforts to fulfill or obtain the fulfillment
of the conditions to the Closing as promptly as practicable.
SECTION 6. INVESTOR'S CLOSING CONDITIONS
The obligation of the Investor to purchase and pay for the Shares
and Warrants on the Closing Date, as provided in Section 2 hereof, shall be
subject to the performance by the Company of its agreements theretofore to be
performed hereunder and to the satisfaction, prior thereto or concurrently
therewith, of the following further conditions:
6.1. Representations and Warranties
The representations and warranties of the Company contained in
this Agreement shall be true in all material respects on and as of the Closing
Date as though such warranties and representations were made at and as of such
date, except as otherwise affected by the transactions contemplated hereby.
6.2. Compliance with Agreement
The Company shall have performed and complied in all material
respects with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by the Company
prior to or on the Closing Date.
6.3. Officer's Certificate
The Investor shall have received a certificate, dated the Closing
Date, signed by each of the President and the Chief Operating Officer of the
Company, certifying that the conditions specified in the foregoing Sections 6.1
and 6.2 hereof have been fulfilled.
6.4. Delivery of Shares and Warrants
The Company shall have delivered to the Investor the certificates
evidencing the Shares and Warrants being purchased by it hereunder as provided
in Section 2.1.
6.5. Injunction
There shall be no injunction, writ, preliminary restraining order
or any order of any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.
-13-
<PAGE>
6.6. Counsel's Opinions
The Investors shall have received (x) from the Company's counsel
delivering opinions to the Underwriters in connection with the Public Offering
on the IPO Closing Date, copies of such opinions together with letters from such
counsel allowing the Investor to rely thereon and (x) opinions, dated the
Closing Date, from counsel for the Company substantially to the effect that:
(i) Each of the Company and its subsidiaries is duly
organized and validly existing in good standing under
the laws of Bermuda, has the all requisite power and
authority and has all necessary approvals, licenses,
permits and authorization to own its properties and to
carry on its business as proposed to be conducted as
contemplated by the Registration Statement. The Company
has all requisite power and authority to execute and
deliver the Transaction Documents and to perform its
obligations thereunder.
(ii) Each of the Company and its subsidiaries are duly
qualified as a foreign corporation in every
jurisdiction in which such qualification is necessary,
except where the failure to so qualify would not have a
material adverse effect on the Company and its
subsidiaries taken as a whole.
(iii) Section 3.3(a) of this Agreement accurately
reflects the share records of the Company as to its
authorized and issued capital stock and the Company has
duly reserved for issuance such number of Common Shares
initially issuable upon exercise of the Warrants.
(iv) Except for the rights which attach to the Warrants
and to the warrants, options and convertible securities
listed on Schedule 3.3 hereto, to the best knowledge of
such counsel, there are no Common Shares issuable upon
conversion or exchange or exercise of any security of
the Company nor are there any rights, options or
warrants outstanding or other agreements to acquire
Common Shares from the Company nor is the Company
contractually obligated to purchase, redeem or
otherwise acquire any of its outstanding shares. Except
as disclosed in Schedule 3.3, no shareholder of the
Company is entitled to
-14-
<PAGE>
any preemptive or similar right to subscribe for shares
of capital stock of the Company provided by statute or
the Organizational Documents or, to the best knowledge
of such counsel, by any other agreement or instrument.
(v) All the outstanding shares of capital stock of the
Company have been duly and validly issued and are fully
paid and non-assessable. When issued in accordance with
the terms of this Agreement, the Shares will be (and
upon their issuance the Common Shares issuable upon
exercise of the Warrants will be) (x) duly authorized,
validly issued, fully paid and non-assessable Common
Shares of the Company, free of all preemptive or
similar rights provided by statute or the
Organizational Documents or, to the best knowledge of
such counsel, any other agreement or instrument, and
(y) entitled to the rights described in Schedule 3.3.
(vi) The Company has duly authorized the execution,
delivery, and performance of the Transaction Documents
and each of the transactions and agreements
contemplated thereby, and no other corporate action is
necessary to authorize such execution, delivery or
performance. The Transaction Documents have been duly
executed and delivered on behalf of the Company and
constitute the valid and binding obligation of the
Company, enforceable against the Company in accordance
with their terms, except as such enforcement may be
subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and general
principles of equity.
(vii) The execution and delivery by the Company of the
Transaction Documents, the performance by the Company
of its obligations thereunder and the consummation by
the Company of the transactions contemplated thereby do
not require the Company to obtain any consent, approval
or action of, or make any filing with or give any
notice to, any corporation, person or firm or any
public, governmental or judicial authority except such
as have been duly obtained or made, as
-15-
<PAGE>
the case may be, and are in full force and effect.
(viii) The execution and delivery of the Transaction
Documents do not, and the fulfillment of the terms
hereof and thereof by the Company and the issuance of
Common Shares upon conversion of the Warrants as herein
contemplated will not, (A) result in a breach of any of
the terms, conditions or provisions of, or constitute a
default under, any material indenture, mortgage, deed
of trust, credit agreement, note or other evidence of
indebtedness, or other material agreement to which the
Company or any of its subsidiaries is a party and which
is listed on Schedule 3.11, (B) violate the
Organizational Documents, or any law, rule or
regulation known to such counsel of any court or other
regulatory board or body or administrative agency
having jurisdiction over the Company or over its
properties or businesses or (C) conflict with or
constitute a default under any judgment, writ, decree
or order known to such counsel to be applicable by its
terms to the Company or any of its subsidiaries.
(ix) To the best knowledge of such counsel, there is no
action, suit, investigation or proceeding pending or
threatened, against the Company or any of its
properties or assets by or before any court, arbitrator
or governmental body, department, commission, board,
bureau, agency or instrumentality, which questions the
validity of the Transaction Documents, the Shares or
the Warrants or any action taken or to be taken
pursuant hereto or thereto.
(x) The issuance and sale of the Shares and Warrants do
not (and the issuance of Common Shares issuable upon
exercise of the Warrants will not) require registration
under Section 5 of the Securities Act or qualification
under any state securities or Blue Sky laws.
(xi) The choice of New York law and the submission by
the Company to the jurisdiction of New York State
courts and federal courts sitting in New York as
provided in Section 10.04 are valid and enforceable in
New York and in Bermuda.
-16-
<PAGE>
6.7. Consummation of Public Offering
The Company shall have consummated the Public Offering as
contemplated by the Registration Statement at a price to the public of at least
$15.00 per share and shall have received not less than $150,000,000 in net
proceeds (after underwriting discounts and commissions which shall not in any
event exceed 6%) therefrom (the "Public Offering Proceeds"). The Public Offering
Proceeds shall exceed Other Sale Proceeds by the ratio of at least 2.5 to 1.0.
"Other Sale Proceeds" means the net proceeds to the Company from (x) the sale of
the Shares and Warrants hereunder and under the Other Agreements and (y) all
other sales of Common Shares (except to the underwriters in the Public Offering)
and securities convertible into, or exchangeable or exercisable for, Common
Shares (herein called "Other Sales"). The Company agrees that on and prior to
the Closing Date it will not make or agree to make Other Sales on terms more
favorable to the purchasers involved in such Other Sales than the terms of the
Agreement relating to the Shares and Warrants unless such more favorable terms
are also extended to the Investor.
6.8. Purchase by Other Investors
Each of the Other Investors shall have purchased the Shares and
Warrants to be purchased by it under the Other Agreements and the Company shall
have received payment of the Purchase Price under such Other Agreements.
6.9. Registration Rights Agreement
The Company shall have executed and delivered to the Investor the
Registration Rights Agreement, the form of which is attached as Exhibit B hereto
(the "Registration Rights Agreement").
6.10. Process Agent
The Investor shall have received a copy of the acceptance by CT
Corporation System of its appointment under the provisions of Section 11.8(d).
6.11. Proceedings
The Investor shall have received copies of all documents or other
evidence which it and its special counsel, Willkie Farr & Gallagher, may
reasonably request in connection with the transactions contemplated hereby and
of all records of corporate proceedings in connection therewith.
SECTION 7. COMPANY CLOSING CONDITIONS
The obligation of the Company to issue and deliver the Shares and
Warrants on the Closing Date, as provided in Section 2
-17-
<PAGE>
hereof, shall be subject to the performance by the Investor of its agreements
theretofore to be performed hereunder and to the satisfaction, prior thereto or
concurrently therewith, of the following further conditions:
7.1. Representations and Warranties
The representations and warranties of the Investor contained in
this Agreement shall be true on and as of the Closing Date as though such
warranties and representations were made at and as of such date, except as
otherwise affected by the transactions contemplated hereby.
7.2. Compliance with Agreement
The Investor shall have performed and complied with all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by it prior to or on the Closing Date.
7.3. Injunction
There shall be no injunction, writ, preliminary restraining order
or any order of any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.
7.4. Consummation of Public Offering.
The Company shall have consummated the Public Offering as
contemplated by the Registration Statement at a price to the public of at least
$15.00 per share and shall have received not less than $150,000,000 in net
proceeds (after underwriting discounts and commissions) therefrom.
SECTION 8. LIMITATION ON DISPOSITION
The Investor will not, without the consent of the Company, sell,
transfer or otherwise dispose of the Shares or Warrants for a period of one year
after the Closing Date except (i) to one or more of its Affiliates, or (ii) to
any institutional investor purchasing all of the Shares and Warrants then held
by the Investor (or if not all such Shares and Warrants, Shares and/or Warrants
representing at least 1,000,000 Common Shares (assuming exercise of the
Warrants)); provided that any such transferee shall agree to be bound by the
provisions of this Section 8. The Investor will agree to execute a "lock-up"
agreement with the Underwriters in connection with the Public Offering in
customary form and as more particularly described in Exhibit C hereto.
-18-
<PAGE>
SECTION 9. COVENANTS
9.1. Financial and Business Information
From and after the date hereof, the Company shall deliver to each
of the Investors so long as such Investor owns beneficially (within the meaning
of Rule 13d-3 under the Exchange Act) any Shares or Warrants or Common Shares
issuable upon exercise of the Warrants:
(a) Quarterly Statements - as soon as practicable, and in any
event within 45 days after the close of each of the first three fiscal quarters
of each fiscal year of the Company in the case of quarterly statements, a
consolidated balance sheet, statement of income and statement of cash flows of
the Company and any subsidiaries as at the close of such month or quarter and
covering operations for such month or quarter, as the case may be, and the
portion of the Company's fiscal year ending on the last day of such month or
quarter, all in reasonable detail and prepared in accordance with GAAP, subject
to audit and year-end adjustments, setting forth in each case in comparative
form the figures for the comparable period of the previous fiscal year.
(b) Annual Statements - as soon as practicable after the end of
each fiscal year of the Company, and in any event within 90 days thereafter,
duplicate copies of:
(1) consolidated balance sheet of the Company and any
subsidiaries at the end of such year; and
(2) consolidated statements of income, stockholders' equity and
cash flows of the Company and any subsidiaries for such year, setting
forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and accompanied by an opinion
thereon of independent certified public accountants of recognized
national standing selected by the Company, which opinion shall state
that such financial statements fairly present the financial position
of the Company and any subsidiaries on a consolidated basis and have
been prepared in accordance with GAAP (except for changes in
application in which such accountants concur) and that the examination
of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards,
and accordingly included such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances.
(c) Audit Reports - promptly upon receipt thereof, one copy of
each other financial report and internal control letter submitted to the Company
or any subsidiary by independent accountants in connection with any annual,
interim or special audit made by them of the books of the Company or any
subsidiary.
-19-
<PAGE>
(d) Other Reports - promptly upon their becoming available, one
copy of each financial statement, report, notice or proxy statement sent by the
Company to shareholders generally, of each financial statement, report, notice
or proxy statement filed by the Company or any of its subsidiaries with the SEC
or any successor agency, if applicable, of each regular or periodic report and
any registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Company or any subsidiary
with, or received by such Person in connection therewith from, any domestic or
foreign securities exchange, the SEC or any successor agency or any foreign
regulatory authority performing functions similar to the SEC, of any press
release issued by the Company or any subsidiary, and of any material of any
nature whatsoever prepared by the SEC or any successor agency thereto or any
state blue sky or securities law commission which relates to or affects in any
way the Company or any subsidiary.
(e) Requested Information - with reasonable promptness, the
Company shall furnish each of the Investors with such other data and information
as from time to time may be reasonably requested.
9.2. Inspection
As long as an Investor owns beneficially (within the meaning of
Rule 13d-3 under the Exchange Act) at least two percent (2%) of the outstanding
Common Shares, the Company shall permit such Investor, its nominee, assignee,
and its representative during normal business hours and upon reasonable advance
notice to visit and inspect any of the properties of the Company and its
subsidiaries, to examine all its books of account, records, reports and other
papers not contractually required of the Company to be confidential or secret,
to make copies and extracts therefrom, and to discuss its affairs, finances and
accounts with its officers, directors, key employees and independent public
accountants or any of them (and by this provision the Company authorizes said
accountants to discuss with such Investor, its nominees, assignees and
representatives the finances and affairs of the Company and any subsidiaries),
all at such reasonable times and as often as may be reasonably requested.
9.3. Keeping of Books
The Company will keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Company and its subsidiaries in accordance with
GAAP.
-20-
<PAGE>
9.4. Lost, etc. Certificates; Exchange
Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of any certificate
evidencing any Shares or Warrants (or Common Shares issuable upon exercise of
the Warrants) owned by one of the Investors, and (in the case of loss, theft or
destruction) of an unsecured indemnity satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such certificate, if mutilated, the Company
will make and deliver in lieu of such certificate a new certificate of like
tenor and for the number of shares evidenced by such certificate which remain
outstanding. Such Investor's agreement of indemnity shall constitute indemnity
satisfactory to the Company for purposes of this Section 9.5. Upon surrender of
any certificate representing any Shares (or Common Shares issuable upon exercise
of the Warrants) for exchange at the office of the Company, the Company at its
expense will cause to be issued in exchange therefor new certificates in such
denomination or denominations as may be requested for the same aggregate number
of Shares, Warrants or Common Shares, as the case may be, represented by the
certificate so surrendered and registered as such holder may request. The
Company will also pay the cost of all deliveries of certificates for such
securities to the office of such Investor (including the cost of insurance
against loss or theft in an amount satisfactory to the holders) upon any
exchange provided for in this Section 9.5.
9.5. Review of Documents
The Investor shall have the right to review and approve all
statements or disclosures (in the Registration Statement or in press releases or
elsewhere) made by the Company in relation to the Investor's investment in and
relationship to the Company.
9.6. Confidential Information
The Investor acknowledges that its receipt of material non-public
information as a consequence of its exercise of its rights under Sections 9.1
and 9.2 may obligate it not to trade in securities of the Company which it may
hold so long as such information is not publicly disclosed by the Company. Such
information will be utilized by the Investor to analyze its investment in the
Company.
SECTION 10. INTERPRETATION OF THIS AGREEMENT
10.1. Terms Defined
As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Section hereof following
such term:
-21-
<PAGE>
Affiliate: means any Person or entity, directly or indirectly,
controlling, controlled by or under common control with such Person or entity.
Business Day: shall mean a day other than a Saturday, Sunday or
other day on which banks in New York, New York and Hamilton, Bermuda are not
required or authorized by law to close.
Closing: shall have the meaning set forth in Section 2.2.
Closing Date: shall have the meaning set forth in Section 2.2.
Common Shares: shall have the meaning set forth in Section 1.
Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended.
GAAP: at any time shall mean United States generally accepted
accounting principles at the time in effect.
Intellectual Property: shall have the meaning set forth in
Section 3.16.
Investor: shall mean the Person executing this Agreement on the
signature page hereof and its successors and assigns as the holder of Shares,
Warrants or Common Shares issuable upon exercise of the Warrants.
IPO Closing Date: shall mean the date of the consummation of the
Public Offering.
Material Adverse Effect: shall have the meaning set forth in
Section 3.1(c).
Material Contract: shall have the meaning set forth in Section
3.11.
Other Agreements: shall have the meaning set forth in Section
2.1.
Organizational Documents: shall have the meaning set forth in
Section 3.1(a).
Person: shall mean an individual, partnership, joint-stock
company, corporation, limited liability company, trust or unincorporated
organization, and a government or agency or political subdivision thereof.
-22-
<PAGE>
Public Offering: shall mean the sale by the Company of its Common
Shares to the underwriters as contemplated by the Registration Statement.
Registration Rights Agreement: shall have the meaning set forth
in Section 6.8.
Registration Statement: shall mean the Registration Statement
filed by the Company with the SEC on Form S-1 (No.333-43301) on December 24,
1997, as amended, in the form it becomes effective under the Securities Act.
SEC: shall mean the Securities and Exchange Commission.
Securities Act: shall mean the Securities Act of 1933, as
amended.
Shares: shall have the meaning set forth in Section 2.1.
subsidiary: shall mean a corporation of which a Person owns,
directly or indirectly, more than 50% of the Voting Stock.
Transaction Documents: shall mean this Agreement, the Other
Agreements, the Class B Warrants and the Registration Rights Agreement.
Voting Stock: shall mean securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
Warrants: shall have the meaning set forth in Section 2.1.
10.2. Directly or Indirectly
Where any provision in this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
10.3. Section Headings
The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
thereof.
-23-
<PAGE>
SECTION 11. MISCELLANEOUS
11.1. Notices
(a) All communications under this Agreement shall be in writing
and shall be delivered by hand or facsimile or mailed by overnight courier or by
registered mail or certified mail, postage prepaid:
(1) if to the Investor, at: the address specified in Schedule
2.1, or at such other address as the Investor may have furnished
the Company in writing, or
(2) if to the Company, at: Victoria Hall, Victoria Street, P.O.
Box HM1262, Hamilton, HM FX, Bermuda, marked for the attention of
President, or at such other address as it may have furnished the
Investor in writing.
(b) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the date
of such mailing.
11.2. Expenses and Taxes
(a) Whether or not the issue and sale of the Shares and Warrants
contemplated hereby are consummated, the Company will pay all costs and expenses
(including attorneys' fees and disbursements of counsel) incurred by the
Investor in connection with such issue and sale and all costs and expenses
(including attorneys' fees and disbursements of counsel) incurred by the
Investor in connection with any amendments, waivers or consents under or in
respect of the Transaction Documents (whether or not such amendment, waiver or
consent becomes effective). In addition, the Company will pay the Investor the
costs and expenses (including attorneys' fees and disbursements) incurred by it
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under the Transaction Documents or in responding to any subpoena or
other legal process or informal investigative demand (which investigative demand
shall have been issued by a governmental agency or official) issued in
connection with the Transaction Documents or the Investor's investment in the
Company.
(b) The Company will pay, and save and hold the Investor harmless
from, any and all claims arising out of or relating to the transactions
contemplated by the Transaction Documents or the performance thereof and all
liabilities (including interest and penalties) with respect to, or resulting
from any delay or failure in paying, stamp and other taxes (other
-24-
<PAGE>
than income taxes), if any, which may be payable or determined to be payable on
the execution and delivery or acquisition of the Shares or Warrants or the
Common Shares issuable upon exercise of the Warrants.
11.3. Reproduction of Documents
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter
be executed, (b) documents received by the Investors on the Closing Date (except
for certificates evidencing the Shares themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to the Investors, may be reproduced by the Investors by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process and either Investor may destroy any original document so reproduced. All
parties hereto agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by an Investor in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
11.4. Termination and Survival
Unless the Closing has occurred prior thereto, this Agreement
and, except as herein provided, all the rights of the parties hereto, shall
terminate on June 30, 1998 (unless such date is extended by mutual written
consent). Notwithstanding the foregoing, Section 11.2 hereof shall survive the
termination of this Agreement. All warranties, representations, and covenants
made by the Investor and the Company herein or in any certificate or other
instrument delivered by the Investor or the Company under this Agreement shall
be considered to have been relied upon by the Company or the Investor, as the
case may be, regardless of any investigation made by the Investor and shall
survive all deliveries to the Investor of the Shares, or payment to the Company
for such Shares and Warrants, regardless of any investigation made by the
Company or the Investor, as the case may be, or on the Company's or the
Investor's behalf. All statements in any such certificate or other instrument
shall constitute warranties and representation by the Company hereunder, except
that the Investor shall not be required to purchase Shares or Warrants from any
Person other than the Company.
11.5. Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties.
-25-
<PAGE>
11.6. Entire Agreement; Amendment and Waiver
This Agreement and the agreements attached as Exhibits hereto
constitute the entire understandings of the parties hereto and supersede all
prior agreements or understandings with respect to the subject matter hereof
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Company and the Investor.
11.7. Severability
In the event that any part or parts of this Agreement shall be
held illegal or unenforceable by any court or administrative body of competent
jurisdiction, such determination shall not effect the remaining provisions of
this Agreement which shall remain in full force and effect.
11.8. Governing Law; Submission to Jurisdiction
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
(b) Each of the Company and the Investor (each a "Party")
irrevocably submits to the non-exclusive in personam jurisdiction of any New
York State or United States federal court sitting in the Borough of Manhattan,
The City of New York, over any suit, action or proceeding arising out of or
relating to the Transaction Documents. To the full extent it may effectively do
so under applicable law, each Party irrevocably waives and agrees not to assert,
by way of motion, as a defense or otherwise, any claim that it is not subject to
the in personam jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
(c) Each Party agrees, to the full extent it may effectively do
so under applicable law, that a final judgment in any suit, action or proceeding
of the nature referred to in paragraph (b) of this Section 11.8 brought in any
such court shall be conclusive and binding upon such Party, subject to rights of
appeal and may be enforced in the courts of the United States or the State of
New York (or any other courts to the jurisdiction of which such Party is or may
be subject) by a suit upon such judgment.
(d) Each Party consents to process being served in any suit,
action or proceeding of the nature referred to in paragraph (b) of this Section
11.8 by mailing a copy thereof by registered or certified mail, postage prepaid,
return receipt requested, to
-26-
<PAGE>
the address of such Party specified in Section 11.1 or at such other address of
which the other Party shall then have been notified pursuant to said Section.
Without limiting the foregoing, the Company hereby appoints, in the case of any
such suit, action or proceeding brought in the courts of or in the State of New
York, CT Corporation, 1633 Broadway, New York, NY 10019, to receive, for it and
on its behalf, service of process in the State of New York with respect thereto.
Each Party agrees that such service upon receipt by it or its agent, as the case
may be, (i) shall be deemed in every respect effective service of process upon
it in any such suit, action or proceeding and (ii) shall, to the full extent
permitted by applicable law, be taken and held to be valid personal service upon
and personal delivery to such Party. Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United
States Postal Service or the Bermuda Post or any reputable commercial delivery
service.
(e) Nothing in this Section 11.8 shall affect the right of any
Party to serve process in any manner permitted by law, or limit any right that
such Party may have to bring proceedings against the other Party in the courts
of any appropriate jurisdiction or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction.
(f) Each Party waives trial by jury in any action brought on or
with respect to the Transaction Documents or any other document executed in
connection therewith.
11.9. Counterparts
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
-27-
<PAGE>
If you are in agreement with the foregoing please so indicate by
executing the acceptance set forth below and return a copy of this Agreement to
the Company, whereupon this Agreement shall be a binding agreement between us.
Very truly yours,
ANNUITY AND LIFE RE
(HOLDINGS), LTD.
By: /s/ Lawrence S. Doyle
---------------------
Name: Lawrence S. Doyle
Title: President and Chief
Executive Officer
The foregoing Agreement is
hereby accepted:
EXEL LIMITED
By: /s/ Robert R. Lusardi
---------------------------
Name: Robert R. Lusardi
Title: EVP & CFO
-28-
<PAGE>
Schedule 2.1
Investors
---------
Number of
Shares and
Investor Name and Address Warrants* Purchase Price
- ------------------------------- ---------- --------------
Risk Capital Reinsurance 1,418,440 $20,000,000
Company Shares
20 Horseneck Lane 100,000
Greenwich, CT 06830 Warrants
ATTN: Managing Director
The Prudential Insurance 1,028,369 $14,500,000
Company of America Shares
100 Mulberry Street 72,500
Gateway Two Warrants
Newark, NJ 07102
ATTN: Randy Hood
EXEL Limited 1,418,440 $20,000,000
1 Victoria Street Shares
Hamilton, Bermuda 100,000
HM 11 Warrants
ATTN: Chief Financial Officer
- -----------------------
* The number of Shares to be purchased by The Prudential Insurance Company of
America shall not exceed 4.9% of the outstanding Common Shares on the
Closing Date. To the extent the number of shares purchased is less than
that specified above, the Purchase Price shall be reduced by $14.10 for
each share not so purchased. The number of Warrants shall be reduced to the
number obtained by dividing the reduced Purchase Price by $200.
<PAGE>
EXHIBIT C
---------
Lock-up Provisions
------------------
The Investor will agree with the Underwriters in connection with the Public
Offering not to offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose of (or announce any of the
foregoing) any of the Shares or Warrants or Common Shares issuable upon exercise
of the Warrants for a period of one year after the Closing Date (180 days if the
Investor is The Prudential Insurance Company of America) without, in any such
case, the consent of Prudential Securities Incorporated and Merrill Lynch & Co.
on behalf of the Underwriters.
<PAGE>
Exhibit 2
---------
Registration Rights Agreement dated April 15, 1998, among ANNUITY AND LIFE
RE (HOLDINGS), LTD., a Bermuda corporation (the "Company"), and EXEL LIMITED
(the "Initial Holder").
The Company has issued its common shares, par value $1.00 per share
("Common Shares") and its Class B Warrants to purchase Common Shares (the
"Warrants") to the Initial Holder pursuant to the terms of that certain
Securities Purchase Agreement, between the Company and the Initial Holder dated
as of March 4, 1998 (the "Securities Purchase Agreement"). Pursuant to the
Securities Purchase Agreement, the Company has agreed to register such shares
for sale under the Securities Act of 1933, as amended, as more specifically
provided below.
NOW, THEREFORE, in consideration of the completion of the transactions
contemplated by the Securities Purchase Agreement 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 transactions
contemplated by the Securities Purchase Agreement.
"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.
"Holders": the Initial Holder and the permitted successors or assignees of
the Initial Holder, for so long as (and to the extent that) such Persons own or
have the right to acquire any Registrable Securities.
"Holder Agreements": This Agreement and any other Agreement between the
Company and one of the Other Investors which is substantially similar to this
Agreement.
"Other Investors: The Persons (other than the Company) which are parties to
Securities Purchase Agreements in substantially the form entered into between
the Company and the Holder on March 4, 1998.
"Person": an individual, a partnership (general or limited), corporation,
limited liability company, joint venture, business
1
<PAGE>
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 pursuant to the
terms of the Securities Purchase Agreement; (2) the Common Shares issued or
issuable pursuant to the Warrants issued pursuant to the terms of the Securities
Purchase Agreement, and (3) 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,
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 Persons participating in a
registration pursuant to a Holder 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
2
<PAGE>
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 B Warrants of the Company.
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 thirty
(30) percent or more of the Registrable Securities 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.
3
<PAGE>
(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
thirty (30) percent of the Registrable Securities.
(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 180 days after the effective date of a
prior registration statement of the Company covering an underwritten public
offering for the account of the 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 thirty (30) percent of the Registrable
Securities; 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 the Holders so elect, 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.
4
<PAGE>
(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
thirty (30) percent or more of the Registrable Securities 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 the Holders may
request inclusion in the registration.
(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 the Holders so elect, 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 offering prior to receipt of such notice.
5
<PAGE>
(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, and before
the tenth anniversary of the Closing Date, if the Company proposes, other than
pursuant to Section 2 or 3 of this Agreement, 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 the 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 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
6
<PAGE>
proposed to be included in such registration by the Holders bears to the number
of shares proposed to be included in such registration by the 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 effect (except as part of such underwritten registration) 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 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 Holder does not elect (or is not permitted under Section 4(c)) to
sell such securities in connection with such offering, 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 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
7
<PAGE>
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 Common Shares or Registrable Securities in contravention
of Regulation M under the Exchange Act; or (3) offer or agree to pay, directly
or indirectly, to anyone 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
8
<PAGE>
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 number of copies of other documents, in each case as the 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
9
<PAGE>
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 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 the 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 (including, without
limitation, making its management available to the extent reasonably requested
by the Holders to participate in marketing presentations to potential investors
in connection with any underwritten offering), 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
10
<PAGE>
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 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 (it
being understood that each Holder shall not be required to make any
representation concerning the Company or its business or to indemnify or
contribute for any liabilities losses or expenses related to any omission or
misstatements in any registration statement or prospectus except to the extent
based upon information provided in writing by the Holder expressly for use
therein).
(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
11
<PAGE>
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 (it being understood that each Holder shall not be
required to make any representation concerning the Company or its business or to
indemnify or contribute for any liabilities losses or expenses related to any
omission or misstatements in any registration statement or prospectus except to
the extent based upon information provided in writing by the Holder expressly
for use therein).
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).
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
12
<PAGE>
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, to the extent permitted by applicable law,
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
country 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
13
<PAGE>
preparation of the Registration Statement (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, to the extent permitted by applicable law,
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 or under Section 11(d) 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
14
<PAGE>
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. 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 judgment
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. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested the indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by this Section, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without the indemnifying party's written consent if (i) such
settlement is entered into more than thirty (30) days after receipt by the
indemnifying party of the aforesaid request, and (ii) the indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
consent of the indemnified party, which consent shall not be unreasonably
withheld, consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation or which requires action other than the payment of
money by the indemnifying party.
15
<PAGE>
(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) and the indemnified
party is actually prejudiced by such failure, then each indemnifying party
shall, to the extent permitted by applicable law, 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.
(e) Notwithstanding any other provision of this Section 11, the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement of any material fact contained in any such
registration statement, preliminary prospectus, final prospectus or summary
prospectus contained therein or any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances in which they were made not misleading in a
prospectus or prospectus
16
<PAGE>
supplement, if such untrue statement or omission is completely corrected in an
amendment or supplement to such prospectus or prospectus supplement, the seller
of the Registrable Securities has an obligation under the Securities Act to
deliver a prospectus or prospectus supplement in connection with such sale of
Registrable Securities and the seller of Registrable Securities thereafter fails
to deliver such prospectus or prospectus supplement as so amended or
supplemented prior to or concurrently with the sale of Registrable Securities to
the person asserting such loss, claim, damage or liability after the Company has
furnished such seller with a sufficient number of copies of the same.
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, 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
17
<PAGE>
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, 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
18
<PAGE>
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 Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such 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.
19
<PAGE>
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
Name: Lawrence S. Doyle
Title: President and Chief
Executive Officer
EXEL LIMITED
By /s/ Paul S. Giordano
Name: Paul S. Giordano
Title: SVP & General Counsel
20
<PAGE>
<PAGE>
Exhibit 3
April 8, 1998
Prudential Securities Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BT Alex. Brown Incorporated
CIBC Oppenheimer Corp.
Schroder & Co, Inc.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
One New York Place
New York, New York 10292
Gentlemen:
In connection with the initial public offering (the "Offering") of
Common Shares, par value $1.00 per share (the "Common Shares") of Annuity and
Life Re (Holdings), Ltd. (the "Company"), the undersigned understands that the
Company has filed a Registration Statement on Form S-1 (as amended, the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") for the registration of approximately 19,262,500 Common Shares
(including 2,512,500 shares subject to an over-allotment option) in connection
with the Offering. The undersigned further understands that you are
contemplating entering into an Underwriting Agreement with the Company in
connection with the Offering. All terms not otherwise defined herein shall have
the same meanings as in the Underwriting Agreement.
In order to induce the Company, you and the other Underwriters to
enter into the Underwriting Agreement and to proceed with the Offering, the
undersigned agrees, for the benefit of the Company, you and the other
Underwriters, that should the Offering be effected, the undersigned will not,
without the prior written consent of the Company and Prudential Securities
Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf
of the Underwriters, directly or indirectly, offer, sell, offer to sell,
contract to sell, transfer, assign, pledge, hypothecate, grant any option to
purchase or otherwise sell or dispose (or announce any offer, sale, offer of
sale, contract of sale, transfer, assignment, pledge,
1
<PAGE>
hypothecation, grant of any option to purchase or other sale or disposition) of
(i) any Common Shares or other capital stock of the Company or (ii) any other
securities convertible into, or exercisable or exchangeable for, any Common
Shares or other capital stock of the Company beneficially owned (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by
the undersigned on the date hereof or hereafter acquired for a period of one
year subsequent to the date of the final Prospectus filed with the Commission
pursuant to Rule 424(b) of the Securities Act of 1933, as amended (the "Act")
promulgated by the Commission, or if no filing under Rule 424(b) is made, the
date of the final Prospectus included in the Registration Statement when
declared effective under the Act.
Further, the undersigned agrees that prior to the effective date of
the Registration Statement, the undersigned will not, without the prior written
consent of the Company and Prudential Securities Incorporated and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, on behalf of the Underwriters, directly or
indirectly, offer,, sell, offer to sell, contract to sell, transfer (or announce
any offer, sale, offer of sale, contract of sale, transfer, assignment, pledge,
hypothecation, grant of any option to purchase or otherwise dispose or transfer
(or announce any offer, sale, offer of sale, contract of sale, transfer,
assignment, pledge, hypothecation, grant of any option to purchase or other
disposition or transfer) of (i) any Common Shares or other capital stock of the
Company or (ii) any other securities convertible into, or exercise or
exchangeable for, any Common Shares or other capital stock of the Company,
beneficially owned (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) by the undersigned on the date hereof or
hereafter acquired.
The undersigned confirms that it understands that the Underwriters and
the Company will rely upon the representations set forth in this agreement in
proceeding with the Offering. This agreement shall be binding on the undersigned
and its respective successors, heirs, personal representatives and assigns.
2
<PAGE>
It is understood that, if the Underwriting Agreement does not become
effective in accordance with its terms on or before June 30, 1998, this letter
agreement shall become null and void of no further force or effect
EXEL LIMITED
By:___________________________
Name:
Title
The foregoing is accepted and
agreed to as of the date first
above written:
PRUDENTIAL SECURITIES MERRILL LYNCH, PIERCE, FENNER
INCORPORATED & SMITH INCORPORATED
By:______________________ By:__________________________
Name: Name:
Title: Title:
3
