EXHIBIT 10.9
SECURITIES PURCHASE AGREEMENT
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This SECURITIES PURCHASE AGREEMENT, dated as of December 22, 1999
(this "Agreement"), is made by and among Maximus Capital Holdings, Ltd., a
corporation organized under the laws of Bermuda (the "Company"), Max Re Ltd., a
corporation organized under the laws of Bermuda ("Max Re"), and Capital Z
Investments, L.P. a Bermuda limited partnership (the "Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and Max Re desire to issue to the Purchaser, and
the Purchaser agrees to accept securities of the Company and Max Re, on the
terms specified herein; and
WHEREAS, the Company has commenced a private placement (the
"Offering") of its common shares, par value US$1.00 per share (the "Company
Common Shares"); and
WHEREAS, it is contemplated that the Offering will be consummated in
two or more closings, and the purchases of Company Common Shares and non-voting
common shares, par value US$1.00 per share, of Max Re ("Max Re Non-Voting Common
Shares") pursuant to this Agreement will be consummated contemporaneously with
the initial closing of the Offering; and
WHEREAS, ▇▇▇▇▇ Holdings, L.L.C., a Delaware limited liability company
(the "Other Purchaser"), will purchase securities of the Company and Max Re on
the date hereof substantially on the same terms and conditions contained herein.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements hereinafter contained and the transactions contemplated by the
Offering, the parties hereto hereby agree as follows:
1. Sale and Purchase of Shares and Issuance of Warrants.
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1.1 Sale and Purchase of the Company Shares.
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Subject to the terms and conditions of this Agreement, on the
Closing Date (as defined below), the Company shall sell and issue to the
Purchaser, and the Purchaser shall purchase and accept from the Company, ONE
MILLION FOUR HUNDRED FORTY THOUSAND THREE HUNDRED THIRTY FOUR (1,440,334)
Company Common Shares at US$15.00 per share (collectively, the "Company
Shares").
1.2 Sale and Purchase of Max Re Non-Voting Common Shares.
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Subject to the terms and conditions of this Agreement, on the
Closing Date, Max Re shall sell and issue to the Purchaser, and the Purchaser
shall purchase and accept from Max Re, ONE MILLION EIGHT HUNDRED NINETY TWO
THOUSAND NINE HUNDRED NINETY NINE (I,892,999) Max Re Non-Voting Common Shares
(including any Max Re Non-Voting Common Shares acquired upon exercise of any of
the warrants issued hereunder, the "Max Re Shares").
1.3 Issuance of the Initial Warrants.
--------------------------------
Subject to the terms and conditions of this Agreement, on the
Closing Date, Max Re shall issue and deliver to the Purchaser a warrant,
substantially in the form attached hereto as Exhibit A (the "Initial Warrant"),
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to purchase NINE HUNDRED SEVENTY FIVE THOUSAND SIXTY SEVEN (975,067) Max Re
Non-Voting Common Shares at an exercise price of US$15.00 per share on the terms
and conditions set forth therein. Max Re shall issue and deliver to the
Purchaser an additional warrant on each subsequent closing of the Offering,
substantially in the form attached hereto as Exhibit A (each an "Additional
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Initial Warrant" and, together with the Initial Warrant, the "Initial
Warrants"), to purchase that number of Max Re Non-Voting Common Shares equal to
four and one-half percent (4.5%) of the aggregate number of Company Common
Shares and Max Re Non-Voting Common Shares issued at such subsequent closing of
the Offering at an exercise price of US$15.00 per share on the terms and
conditions set forth herein.
1.4 Issuance of Additional Warrant.
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In the event Comp any Common Shares are issued after the final
closing of the Offering, but prior to the second anniversary of the final
closing of the Offering, Max Re shall, subject to any required approval of the
Bermuda Monetary Authority, issue to the Purchaser a warrant, substantially in
the same form as the Initial Warrants (each an "Additional Warrant,"
collectively with the Initial Warrants, the "Warrants"), to purchase that amount
of Max Re Non-Voting Common Shares that would be exchangeable pursuant to
Section 7 herein for four and one-half percent (4.5%) of the newly issued
Company Common Shares in the case of the first US$600 million of newly issued
Company Common Shares, and five percent (5%) thereafter, at an exercise price
equal to the per share Fair Market Value (as defined herein) of the Company
Common Shares that are then issued; provided, however, that the Additional
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Warrants will be issued only if the Fair Market Value of the newly issued
Company Common Shares is equal to or greater than US$15.00 per share. To the
extent that the obligations of Max Re under this Section 1.4 may infringe the
provisions of Section 39 of the Bermuda Companies ▇▇▇ ▇▇▇▇, as amended, such
obligations are subject to and therefore do not arise until the satisfaction of,
and compliance with, the exclusions or exemptions applicable to the provisions
of Section 39 of the Bermuda Companies ▇▇▇ ▇▇▇▇, as amended. At appropriate
times, Max Re shall use its best efforts to satisfy and comply with the
provisions of such Section 39 in order to effect the provisions of this Section
1.4.
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For purposes of this Section 1.4, "Fair Market Value" shall mean
with respect to any Company Common Shares: (a) if such shares are issued for
cash, the net purchase price of such shares, or (b) if such shares are issued in
exchange for consideration other than cash, the fair value of such shares as
determined by one independent, nationally recognized U.S. investment banking
firm chosen by the Company and reasonably satisfactory to the Purchaser;
provided that the calculation of the Fair Market Value of such shares made by
the appointed U.S. investment banking firm mutually selected by the Company and
the Purchaser (i) shall not include any discount relating to the absence of a
public trading market for, or any transfer restrictions on, such shares and (ii)
such calculation shall be final and the fees and expenses stemming from such
calculation shall be borne by the Company.
2. Purchase Price.
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2.1 Amount of Purchase Price.
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(a) The aggregate purchase price for the Company Shares shall be
US$21,605,010 (the "Company Purchase Price") which amount includes US$993,328.34
previously paid to the Company in connection with the initial capitalization of
the Company. The Company Purchase Price shall be payable as provided in Section
2.2 hereof.
(b) The aggregate purchase price for the Max Re Shares shall be
US$28,394,985 (the "Max Re Purchase Price"). The Max Re Purchase Price shall be
payable as provided in Section 2.2 hereof.
2.2 Payment of the Purchase Price.
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At the Closing (as defined below) (i) the Purchaser shall pay to
the Company the Company Purchase Price in United States dollars by wire transfer
of immediately available funds, or by such other method as may be reasonably
acceptable to the Company and the Purchaser, to the account designated in
Exhibit B attached hereto and (ii) the Purchaser shall pay to Max Re the Max Re
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Purchase Price in United States dollars by wire transfer of immediately
available funds, or by such other method as may be reasonably acceptable to Max
Re and the Purchaser, to the account designated in Exhibit B attached hereto. As
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soon after the Closing as practicable the Company shall deliver to the Purchaser
a certificate representing the Company Common Shares and Max Re shall deliver to
the Purchaser a certificate representing the Max Re Shares and an instrument
representing the Initial Warrant.
3. Closing.
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3.1 Closing Date.
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The closing of the sale and purchase of the securities provided
for in Sections 1.1 and 1.2 (the "Closing") shall take place simultaneously with
the execution of this Agreement and upon the satisfaction or waiver of all of
the conditions set forth in Section 9 hereof and shall occur at 9:00 a.m. at the
offices of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ (or at such other place as the parties hereto may mutually agree)
on December 22, 1999, or on such other date as the parties hereto may mutually
agree. The date on which the Closing is held is referred to in this Agreement as
the "Closing Date."
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4. Representations and Warranties of the Company.
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The Company hereby represents and warrants to the Purchaser that:
4.1 Corporate Existence and Power; Capitalization.
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(a) The Company is duly organized, validly existing and in good
standing under the laws of Bermuda (meaning that it has not failed to make any
filing with any Bermuda governmental authority or pay any Bermuda government fee
or tax which would make it liable to be struck off the Bermuda Register of
Companies and therefore cease to exist), and has all corporate powers required
to carry on its business as now being, and as proposed to be, conducted. The
Company is authorized or duly qualified to do business as a foreign corporation
and in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such qualification
necessary.
(b) The authorized share capital of the Company as of the date
hereof will be as set forth on Schedule 4.1 attached hereto. The issued and
outstanding shares of the Company immediately prior to the commencement of the
Closing will be as set forth in Schedule 4.1. Upon the consummation of this
Agreement, the final closing of the Offering and the consummation of the
securities purchase agreement with the Other Purchaser and assuming issuances
hereby and thereby of an aggregate of US$600 million of Company Common Shares
and Max Re Non-Voting Common Shares, the pro forma issued and outstanding shares
of the Company and warrants to purchase Company Common Shares will be as set
forth on Schedule 4.1 attached hereto. There are no outstanding options,
warrants, rights to subscribe to, or securities or rights convertible or
exercisable into or exchangeable for any shares of capital stock of the Company,
or arrangements by which the Company is or may become bound to issue additional
shares of its capital stock.
4.2 Corporate Authorization.
-----------------------
The execution, delivery and performance by the Company of its
obligations under this Agreement and the shareholders's agreement dated the date
hereof among the Company, Max Re and the shareholders of the Company (the
"Shareholders' Agreement") and the consummation by the Company of the
transactions contemplated hereby and thereby, are within the Company's corporate
power and have been duly authorized by all necessary corporate action on the
part of the Company. Each of this Agreement and the Shareholders' Agreement has
been duly and validly executed by the Company and constitutes the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, amalgamation,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding of law or in
equity).
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4.3 Governmental and Court Authorization.
------------------------------------
The execution, delivery and performance by the Company of this
Agreement and the Shareholders' Agreement do not require consent, approval or
authorization of, or filing, registration or qualification with, any
governmental body, agency, official, court or other authority that has not been
obtained or made.
4.4 Non-Contravention.
-----------------
The execution, delivery and performance by the Company of its
obligations under this Agreement and the Shareholders' Agreement do not and will
not (A) contravene or conflict with the Company's organizational documents or
(B) (i) contravene or conflict with or constitute a violation of any provision
of any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company, (ii) require any consent, approval or other action by
any person or constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of the
Company to a loss of any benefit to which the Company is entitled under any
provision of any agreement, contract, indenture, lease or other instrument
binding upon the Company or any license, franchise, permit or other similar
authorization held by the Company or (iii) result in the creation or imposition
of any encumbrances.
4.5 Authorization of the Company Shares.
-----------------------------------
When issued, sold, and delivered in accordance with this
Agreement, the Company Shares will be validly issued and outstanding, fully paid
and non-assessable (meaning that no further sums are required to be paid by the
holders thereof in connection with the issue thereof) with no personal liability
attaching to the ownership thereof and not subject to preemptive or similar
rights of the shareholders of the Company or others, except as provided in the
Shareholders' Agreement. Upon proper exchange of the Max Re Shares and the
obtaining of any required approvals of the Bermuda Monetary Authority, the
Company Common Shares received by the Purchaser or any Subsequent Holder (as
defined below) will be validly issued and outstanding, fully paid, and
non-assessable (meaning that no further sums are required to be paid by the
holders thereof in connection with the issue thereof) with no personal liability
attaching to the ownership thereof and not subject to preemptive or any other
similar rights of the shareholders of the Company or others, except as provided
in the Shareholders' Agreement.
4.6 Proceeds of Offering.
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The Company has consummated the initial closing of the Offering
on the Closing Date and has received gross proceeds from the subscription for
Company Common Shares in the Offering of US$[ ].
4.7 Litigation.
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There is no action, suit, investigation or proceeding pending
against, or to the best knowledge of the Company threatened against or
affecting, the Company or any of its properties before any court or arbitrator
or any governmental body, agency, official or authority that (i) could
reasonably be expected to have a material adverse effect or (ii) in any manner
would enjoin, alter, call into question, affect or delay the transactions
contemplated by this Agreement or the Shareholders' Agreement.
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4.8 Disclosure.
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No representation, warranty or statement made by the Company in
this Agreement or any agreement, certificate, statement or document furnished by
or on behalf of the Company in connection herewith or therewith, including the
Offering Memorandum (as defined below) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, misleading.
4.9 No Prior Activities.
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Except for obligations incurred in connection with its
incorporation or organization or the negotiation and consummation of this
Agreement, the Offering, and the transactions contemplated hereby and thereby
and except as set forth in Schedule 4.9 hereto or as disclosed in the private
placement memorandum delivered to investors in connection with the Offering (as
amended or supplemented on or prior to the date hereof, the "Offering
Memorandum"), the Company has neither incurred any obligation or liability nor
engaged in any business or activity of any type or kind whatsoever or entered
into any agreement or arrangement with any person or entity.
4.10 Consummation of Direct Sale to Other Purchaser.
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The Company has consummated the securities purchase agreement
with the Other Purchaser on the date hereof.
5. Representations and Warranties of Max Re.
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Max Re hereby represents and warrants to the Purchaser that:
5.1 Corporate Existence and Power; Capitalization.
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(a) Max Re is duly organized, validly existing and in good
standing under the laws of Bermuda (meaning that it has not failed to make any
filings with any Bermuda governmental authority or pay any Bermuda government
fee or tax which would make it liable to be struck off the Bermuda Register of
Companies and therefore cease to exist), and has all corporate powers required
to carry on its business as now being, and as proposed to be, conducted, except
as set forth in Schedule 5.1 hereto. Max Re is authorized or duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities make such qualification necessary.
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(b) The authorized share capital of Max Re as of the date hereof
is set forth on Schedule 5.1 attached hereto. The issued and outstanding shares
of Max Re immediately prior to the commencement of the Closing will be as set
forth in Schedule 5.1. Upon the consummation of this Agreement, the final
closing of the Offering and the consummation of the securities purchase
agreement with the Other Purchaser and issuances hereby and thereby of an
aggregate of US$600 million of Company Common Shares and Max Re Non-Voting
Common Shares, the issued and outstanding shares of the Company and warrants to
purchase shares of the Company will be as set forth on Schedule 5.1 attached
hereto. There are no outstanding options, warrants, rights to subscribe to, or
securities or rights convertible or exercisable into or exchangeable for any
shares of capital stock of Max Re, or arrangements by which Max Re is or may
become bound to issue additional shares of its capital stock.
5.2 Corporate Authorization.
-----------------------
The execution, delivery and performance by Max Re of its
obligations under this Agreement, the Warrants and the Shareholders' Agreement
and the consummation by Max Re of the transactions contemplated hereby and
thereby, are within the corporate power of Max Re and have been duly authorized
by all necessary corporate action on the part of Max Re. Each of this Agreement,
the Warrants and the Shareholders' Agreement has been duly and validly executed
by Max Re and constitute the valid and binding agreements of Max Re, enforceable
against Max Re in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, amalgamation, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding of law or in equity).
5.3 Governmental and Court Authorization.
------------------------------------
The execution, delivery and performance by Max Re of this
Agreement and the Warrants do not require consent, approval or authorization of,
or filing, registration or qualification with, any governmental body, agency,
official, court or other authority that has not been obtained or made.
5.4 Non-Contravention.
-----------------
The execution, delivery and performance by Max Re of its
obligations under this Agreement, the Warrants and the Shareholders' Agreement
do not and will not (A) contravene or conflict with Max Re's organizational
documents or (B) (i) contravene or conflict with or constitute a violation of
any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Max Re or its properties, (ii) require, except as
specified herein, in the Warrants or in the Shareholders' Agreement, any
consent, approval or other action by any person or constitute a default under or
give rise to any right of termination, cancellation or acceleration of any right
or obligation of Max Re or to a loss of any benefit to which Max Re is entitled
under any provision of any agreement, contract, indenture, lease or other
instrument binding upon Max Re or any license, franchise, permit or other
similar authorization held by Max Re or (iii) result in the creation or
imposition of any encumbrances.
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5.5 Authorization of Max Re Shares and the Warrants.
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When issued, sold, and delivered in accordance with this
Agreement, the Max Re Shares will be validly issued and outstanding, fully paid
and non-assessable (meaning that no further sums are required to be paid by the
holders thereof in connection with the issue thereof) with no personal liability
attaching to the ownership thereof and not subject to preemptive or similar
rights of the shareholders of Max Re or others, except as provided in the
Shareholders' Agreement. Upon proper exercise of the Warrants and the obtaining
of any required approvals of the Bermuda Monetary Authority, the non-voting
common shares of Max Re received by the Purchaser will be validly issued and
outstanding, fully paid, and non-assessable (meaning that no further sums are
required to be paid by the holders thereof in connection with the issue thereof)
with no personal liability attaching to the ownership thereof and not subject to
preemptive or any other similar rights of the shareholders of Max Re or others,
except as provided in the Shareholders' Agreement.
5.6 Litigation.
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There is no action, suit, investigation or proceeding pending
against, or to the best knowledge of Max Re threatened against or affecting Max
Re or any of its properties before any court or arbitrator or any governmental
body, agency, official or authority that (i) could reasonably be expected to
have a material adverse effect or (ii) in any manner would enjoin, alter, call
into question, affect or delay the transactions contemplated by this Agreement.
5.7 No Brokers.
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Max Re has not taken any action that would give rise to any claim
by any person for brokerage commissions, finders' fees or similar payments
relating to this Agreement or the transactions contemplated thereby.
5.8 Disclosure.
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No representation, warranty or statement made by Max Re in this
Agreement or any agreement, certificate, statement or document furnished by or
on behalf of Max Re in connection herewith or therewith, including the Offering
Memorandum, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, misleading.
5.9 No Prior Activities.
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Except for obligations incurred in connection with its
incorporation or organization or the negotiation and consummation of this
Agreement, the Offering, and the transactions contemplated hereby and thereby,
Max Re has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind whatsoever or entered into any material
agreement or arrangement with any person or entity, except as set forth in
Schedule 5.9 hereto or as disclosed in the Offering Memorandum.
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5.10 Consummation of Direct Sale to Other Purchaser.
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Max Re has consummated, or will contemporaneously consummate, the
securities purchase agreement with the Other Purchaser on the date hereof.
6. Representations and Warranties of the Purchaser.
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The Purchaser hereby represents and warrants to the Company and Max Re
that:
6.1 Organization; Existence; Residence Outside Bermuda.
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The Purchaser is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and the
Purchaser has all necessary corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now being conducted. The Purchaser is not a person resident in
Bermuda for exchange control purposes.
6.2 Corporate Authorization.
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The execution, delivery and performance by the Purchaser of its
obligations under this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby are within the Purchaser's corporate powers and
have been duly authorized by all necessary corporate or other action on the part
of the Purchaser.
6.3 Governmental and Court Authorization.
------------------------------------
The execution, delivery and performance by the Purchaser of this
Agreement do not require the consent, approval or authorization of, or filing,
registration or qualification with, any governmental body, agency, official,
court or authority that has not been obtained or made.
6.4 Non-Contravention.
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The execution, delivery and performance by the Purchaser of this
Agreement do not and will not (A) contravene or conflict with its organizational
documents or (B) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Purchaser or its properties.
6.5 Purchase for Investment; Legend.
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(a) The Company Shares, the Max Re Shares and the Initial
Warrant are being acquired for its own account, and not with a view to making a
public distribution thereof in violation of the Securities Act.
(b) The Purchaser is an "accredited investor" as defined in Rule
501 under the Securities Act.
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Upon original issuance thereof, and until such time as the same
is no longer required under the applicable requirements of the Securities Act,
the Company Shares, the Max Re Shares, the Initial Warrant, the Additional
Warrant, the Max Re Shares issued upon exercise of the Initial Warrant and the
Additional Warrant, if any, and the Company Common Shares exchangeable for such
Max Re Shares shall bear a legend substantially in the following form
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE
IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE COMPANY AT ITS OPTION RECEIVES
AN OPINION OF COUNSEL TO THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT AND UNLESS, WHERE APPLICABLE, HAS RECEIVED THE
PRIOR APPROVAL OF THE BERMUDA MONETARY AUTHORITY.
IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS IN THE
COMPANY'S BYE-LAWS AND PURSUANT TO A SHAREHOLDERS' AGREEMENT
DATED AS OF DECEMBER 22, 1999 AMONG THE COMPANY, MAX RE LTD.
AND CERTAIN OF THE COMPANY'S SHAREHOLDERS. A COPY OF SUCH
BYE-LAWS AND SHAREHOLDERS' AGREEMENT WILL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST."
6.6 Access to Information.
---------------------
The Purchaser has been afforded an opportunity to investigate the
properties, businesses and operations of the Company and Max Re and examine the
books, records and financial condition of the Company and Max Re and to make
extracts and copies of such books and records. No investigation by the Purchaser
prior to or after the date of this Agreement shall diminish or obviate any of
the representations, warranties, covenants or agreements of the Company or Max
Re contained in this Agreement or the documents related thereto.
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6.7 Purchaser's Status As Non-U.S. Person.
-------------------------------------
The Purchaser is not a "U.S. person," within the meaning of
Internal Revenue Code Section 957. Furthermore, not more than 20% of the capital
and profits interest of the Purchaser is owned directly or indirectly, after
application of the attribution and constructive ownership rules of Internal
Revenue Code Section 958, by a single "U.S. person."
7. Exchange Rights.
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7.1 Grant of Exchange Right.
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The Company and Max Re hereby grant to the Purchaser and any
subsequent holder (a "Subsequent Holder") of the Max Re Non-Voting Common Shares
acquired hereunder or hereafter acquired by the Purchaser the right to exchange
one (1) such Max Re Non-Voting Common Share for one (1) Company Common Share
without the payment of any additional consideration, subject to adjustment
pursuant to Section 7.4 herein, all in accordance with the provisions of this
Section 7 (the "Common Share Exchange Right") and subject to obtaining any
required approval from the Bermuda Monetary Authority and the approval of such
exchange by the Board of Directors of Max Re.
7.2 Exercise of Exchange Right.
--------------------------
Any Subsequent Holder shall, at its option, be entitled to
exercise the Common Share Exchange Right if such Subsequent Holder is not then
an affiliate of the Purchaser. In addition, at any time and from time to time
after the Company has consummated the initial registered public offering of
Common Shares in the United States, the Purchaser may exercise the Common Share
Exchange Right only in order to effect the delivery of Common Shares in
connection with sales into the public market, and such exchange shall be deemed
to have been made upon delivery of the certificate or certificates representing
such Common Shares together with an executed share transfer form.
Notwithstanding the foregoing provisions of this Section 7.2, the Common Share
Exchange Right may be exercised only to the extent that the person receiving
Company Common Shares upon the exercise of such Common Share Exchange Rights
would not, after such exchange, own more than 9.9% of the total Company Common
Shares issued and outstanding (after application of the U.S. tax attribution and
constructive ownership rules), unless such restriction is waived by the
unanimous consent of the Board of Directors of the Company. Notwithstanding the
foregoing, to the extent that after an exchange the Purchaser or any Subsequent
Holder would own more than 9.9% of the total Company Common Shares issued and
outstanding, the number of Company Common Shares that will be entitled to vote
will be limited to that number that would equal no more than 9.9% of the total
Company Common Shares issued and outstanding, unless such voting restriction is
waived by the unanimous consent of the Board of Directors of the Company. The
Purchaser or any Subsequent Holder shall exercise this Common Share Exchange
Right by surrendering to the Company at the principal offices of the Company or
the Company's registrar and transfer agent, or the Secretary of the Company in
the event that the Company does not then have a registrar and transfer agent, at
any time during normal business hours, the certificate or certificates
representing the Max Re Non-Voting Common Shares to be exchanged together with
an executed share transfer form and written notice (the "Exchange Request")
stating (a) that such exchanging holder desires to exchange all or a portion of
the Max Re Non-Voting Common Shares held by such exchanging holder, (b) the
number of Max Re Non-Voting Common Shares desired to be exchanged and (c) the
names and addresses in which each certificate for Company Common Shares issued
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upon such exchange is to be issued. As soon as is practicable but in no event
more than three (3) business days after receipt of the Exchange Request, the
Company shall acquire from the Purchaser or its assignee all of the Max Re
Non-Voting Common Shares requested to be exchanged. An exchange of Max Re
Non-Voting Common Shares for Company Common Shares pursuant to this Section 7.2
shall be deemed to have been effected on the latter of (i) the close of business
on the date on which certificates evidencing Max Re Non-Voting Common Shares and
the Exchange Request have been received; provided that each of the provisions of
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this Section 7.2 have been completed in a timely manner and (ii) the date the
transfer has been registered in the Register of Members of Max Re. Max Re shall
register the transfer to the Company of the Max Re Non-Voting Common Shares
being exchanged in the Register of Members of Max Re subject to obtaining any
required approval from the Bermuda Monetary Authority. At such time, the rights
of Max Re Non-Voting Common Shares of the Purchaser or its assignee will cease
and the person or persons in whose name or names the certificate or certificates
for Company Common Shares are to be issued upon such exchange will be deemed to
have become the holder or holders of record of the Company Common Shares
represented thereby.
7.3 Nature of Exchange Rights.
-------------------------
The Common Share Exchange Rights granted hereunder are
contractual obligations of the Company, Max Re and their respective successors,
and such Common Share Exchange Rights shall be enforceable by the holder of the
Max Re Non-Voting Common Shares purchased hereunder or hereafter acquired by the
Purchaser and shall be transferred with the transfer of such Max Re Non-Voting
Common Shares. Upon written request, the Company and Max Re shall execute and
deliver to any such Subsequent Holder agreements granting the rights conferred
under this Section 7.
7.4 Exchange Right Adjustment.
-------------------------
If the Company at any time subdivides (by any share split, stock
or bonus share dividend, recapitalization or otherwise) one or more classes of
its issued and outstanding Company Common Shares into a greater number of
shares, the number of Company Common Shares for which the Common Share Exchange
Right may be exercised shall be adjusted upward proportionately. If the Company
at any time combines (by reverse share split or otherwise) one or more classes
of its issued and outstanding Company Common Shares into a smaller number of
shares, the number of Company Common Shares for which the Common Share Exchange
Right may be exercised shall be adjusted downward proportionately. In the event
that the Company effects a reorganization, reclassification, consolidation,
amalgamation, sale of all or substantially all of the Company's assets or other
transactions, in each case which is effected in such a manner that the holders
of Common Shares are entitled to receive (either directly or upon subsequent
liquidation) shares, securities or assets with respect to or in exchange for
Company Common Shares, each Common Share Exchange Right shall be exercisable for
such shares, securities or assets that the holder thereof would have been
entitled to receive had such holder exercised such right immediately prior to
the consummation of such transaction.
12
If Max Re at any time subdivides (by any share split, stock or
bonus share dividend, recapitalization or otherwise) one or more classes of its
issued and outstanding Max Re Non-Voting Common Shares into a greater number of
shares, the number of Company Common Shares for which the Common Share Exchange
Right may be exercised shall be adjusted downward proportionately. If Max Re at
any time combines (by reverse share split or otherwise) one or more classes of
its issued and outstanding Max Re Common Shares into a smaller number of shares,
the number of Company Common Shares for which the Common Share Exchange Right
may be exercised shall be adjusted upward proportionately.
8. Further Agreements of the Parties.
---------------------------------
8.1 Covenants.
---------
For so long as the Warrants are exercisable, Max Re shall reserve
that number of its Max Re Non-Voting Shares issuable upon exercise of the
Initial Warrant and the Additional Warrant and such shares shall not be subject
to any preemptive or other similar rights (the "Max Re Reserved Shares"). The
Company agrees to reserve, for so long as the Warrants are exercisable or the
Max Re Non-Voting Shares issued hereunder are outstanding, that number of
Company Common Shares for which such Max Re Non-Voting Common Shares are
exchangeable and such Company Common Shares shall not be subject to any
preemptive or other similar rights (the "Company Reserved Shares," together with
the Max Re Reserved Shares, the "Reserved Shares"). The provisions of this
Section 8.1 shall survive the consummation of the transactions contemplated
hereby.
8.2 Other Actions.
-------------
Each of the Company, Max Re and the Purchaser agrees to execute
and deliver such other documents and take such other actions, as a party hereto
may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents relating thereto. The provisions of this Section 8.2
shall survive the consummation of the transactions contemplated hereby.
8.3 Acknowledgement of Voting Restrictions.
--------------------------------------
(a) The Purchaser acknowledges and agrees to be bound by the
voting restrictions with respect to the Company Common Shares as described in
the bye-laws of the Company attached hereto as Exhibit C. The Purchaser further
agrees that prior to the consummation of any assignment of the rights hereunder
pursuant to Section 10.7 the Purchaser shall deliver to the Company a written
acknowledgement of such voting restrictions executed by the proposed assignee.
13
(b) The Purchaser acknowledges and agrees to be bound by the
voting restrictions with respect to Max Re Non-Voting Common Shares as described
in the bye-laws of Max Re attached hereto as Exhibit D. The Purchaser further
---------
agrees that prior to the consummation of any assignment of the rights hereunder,
the Purchaser shall deliver to Max Re a written acknowledgement of such voting
restrictions executed by the proposed assignee.
8.4 Restriction on Transfers.
------------------------
The Purchaser shall not, during the period ending one year after
the date hereof (the "Lock-up Period") offer, pledge, sell, contract to sell,
sell any contract to purchase, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any Company Common
Shares, Max Re Non-Voting Common Shares or Warrants acquired pursuant to this
Agreement without the prior written consent of the Company. Notwithstanding the
foregoing, the Purchaser shall not be restricted from transferring such Company
Common Shares, Max Re Non-Voting Common Shares or Additional Warrants to any
Affiliate (as defined in the Shareholders' Agreement); provided that any
transfer of such securities shall be conditioned upon such Affiliate agreeing to
being bound by the terms of this Section 8.4. The provisions of this Section 8.4
shall survive the consummation of the transactions contemplated hereby.
9. Conditions to and Documents to be Delivered at the Closing.
----------------------------------------------------------
The obligation of the parties to consummate the transactions
contemplated by this Agreement is subject to the satisfaction on or prior to the
Closing Date of each of the conditions set forth below. Any such condition may
be waived by the other parties hereto by proceeding with the Closing.
9.1 Documents to be Delivered by the Company.
----------------------------------------
At the Closing, the Company shall deliver to the Purchaser the
following:
(a) A certificate of good standing or compliance of the Company
issued by the appropriate official from the jurisdiction of its formation issued
not more than fifteen calendar days prior to the Closing Date;
(b) A copy of the memorandum of association and bye-laws of the
Company certified by the secretary or assistant secretary of the Company, as
being true and complete as of the Closing Date;
(c) (i) A copy of resolutions of the board of directors of the
Company, authorizing the execution, delivery and performance of this Agreement
and the documents related thereto, the issuance of the Company Shares and the
reservation of the Company Reserved Shares and (ii) a certificate of the
secretary or assistant secretary of the Company, dated as of the Closing Date
certifying that such resolutions were duly adopted and are in full force and
effect and attesting to the true signatures and to the incumbency of the
officers of the Company executing this Agreement and the documents relating
thereto;
14
(d) The opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda counsel to
the Company and Max Re, dated as of the Closing Date, to the effect set forth on
Exhibit E; and
---------
(e) Such other documents as the Purchaser shall reasonably
request.
9.2 Documents to be Delivered by Max Re.
-----------------------------------
At the Closing, Max Re shall deliver to the Purchaser the
following:
(a) A certificate of good standing or compliance with respect to
Max Re issued by the appropriate official from the jurisdiction of its formation
issued not more than fifteen calendar days prior to the Closing Date;
(b) A copy of the memorandum of association and bye-laws of Max
Re certified by the secretary or assistant secretary of Max Re as being true and
complete as of the Closing Date;
(c) (i) A copy of resolutions of the board of directors of Max
Re, authorizing the execution, delivery and performance of this Agreement and
the Warrants and the documents related thereto, the issuance of the Warrants and
the reservation of the Max Re Reserved Shares and (ii) a certificate of the
secretary or assistant secretary of Max Re, dated the Closing Date certifying
that such resolutions were duly adopted and are in full force and effect and
attesting to the true signatures and to the incumbency of the officers of Max Re
executing this Agreement and the documents relating thereto;
(d) The opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda counsel to
the Company and Max Re, dated as of the Closing Date, to the effect set forth on
Exhibit E; and
---------
(e) Such other documents as the Purchaser shall reasonably
request.
9.3 Documents to be Delivered by the Purchaser.
------------------------------------------
At the Closing, the Purchaser shall deliver:
(a) to the Company the Company Purchase Price specified in
Section 2.1(a).
(b) At the Closing, the Purchase shall deliver to Max Re the Max
Re Purchase Price specified in Section 2.1(b).
10. Miscellaneous
-------------
10.1 Specific Performance.
--------------------
Each of the parties hereto acknowledge and agree that the breach
of this Agreement would cause irreparable damage to the other parties hereto and
that the other parties hereto will not have an adequate remedy at law.
Therefore, the obligations of each of the parties hereto under this Agreement
shall be enforceable by a decree of specific performance issued by any court of
competent jurisdiction, and appropriate injunctive relief may be applied for and
granted in connection therewith. Such remedies shall, however, be cumulative and
not exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
15
10.2 Notices.
-------
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery as set forth below:
To the Company: Maximus Capital Holdings, Ltd.
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
To Max Re: Max Re Ltd.
c/o Maximus Capital Holdings, Ltd.
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
In each case
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇
Clarendon House
2 Church Street
Hamilton, Bermuda
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to: Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇,L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
To the Purchaser: Capital Z Investments, L.P.
c/o Capital Z Partners, Ltd.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
16
with a copy to: Weil, Gotshal & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇, Esq.
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been
duly given when delivered by hand, if personally delivered; three business days
after being delivered to a next-day air courier; five business days after the
date of deposit in the United States air mail, if mailed; when answered back, if
faxed; and when receipt is acknowledged by the recipient telecopier machine, if
telecopied.
10.3 Entire Agreement; Amendments and Waivers.
----------------------------------------
This Agreement (including the schedules and exhibits hereto)
represents the entire understanding and agreement between the parties hereto
with respect to the subject matter hereof and can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the parties hereto. No
action taken pursuant to this Agreement, including without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, covenant or agreement contained herein. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a further or continuing waiver of such breach or as a waiver of any other or
subsequent breach. No failure on the part of any party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
10.4 Governing Law and Submission to Jurisdiction.
--------------------------------------------
This Agreement will be governed by, and construed and enforced in
accordance with, the laws of Bermuda without regard to its conflict of law
rules. To the maximum extent permitted by law, the parties hereto agree that all
actions or proceedings arising in connection with this Agreement shall be tried
and determined only in the courts of Bermuda. TO THE EXTENT APPLICABLE AND
PERMITTED, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO REQUEST A
JURY TRIAL, TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE
IN SUCH COURTS TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 10.4.
17
10.5 Section Headings.
----------------
The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise effect the meaning hereof.
10.6 Severability.
------------
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
10.7 Successors and Assigns.
----------------------
This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successor and
assigns.
10.8 Counterparts.
------------
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
* * * * *
(The Signature Page Follows)
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their respective duly authorized signatories on
the date first written above.
MAXIMUS CAPITAL HOLDINGS, LTD.
By:
-------------------------------------------------
Name:
Title:
MAX RE LTD.
By:
-------------------------------------------------
Name:
Title:
CAPITAL Z INVESTMENTS, L.P.
By: Capital Z Investments Partners, L.P.,
its General Partner
By: Capital Z Investment Management, Ltd.,
its General Partner
By:
-------------------------------------------------
Name:
Title:
19
SCHEDULE 4.1
Capitalization of Maximus Capital Holdings, Ltd.
------------------------------------------------
A. Actual Capitalization.
At the date hereof, the Company has the following authorized
capital, issued and outstanding shares and shares reserved for issuance:
The authorized share capital of the Company is US$220,000,000 divided
into 200,000,000 Company Common Shares and 20,000,000 Preferred Shares
each having a par value of US$1.00. Of the 200,000,000 Company Common
Shares authorized, 12,000 Company Common Shares are issued and
outstanding and held by Codan Trust Company Limited. No shares are
reserved for issuance and no Preferred Shares are issued and
outstanding.
B. Pro Forma Capitalization.
Assuming that US$600 million is raised in the Offering and the
direct sales as more fully described in Section 4.1 herein, the Company will
have the following authorized capital, issued and outstanding shares and shares
reserved for issuance:
The authorized share capital of the Company will be US$220,000,000
divided into 200,000,000 Common Shares and 20,000,000 Preferred Shares
each having a par value of US$1.00. Of the 200,000,000 Common Shares
authorized, 36,995,930 Common Shares will be issued and outstanding
and 7,800,000 Common Shares will be reserved for issuance upon the
exercise of warrants and the exchange of 5,400,000 Non-Voting Common
Shares of Max Re into Common Shares, including 680,000 Common Shares
reserved for issuance upon the exercise of the warrants issued to
Western General Insurance, Ltd., 720,000 Common Shares reserved for
issuance upon the exercise of Common Share purchase warrants to be
issued to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and 1,000,000 Common Shares reserved
for issuance upon the exercise of Common Share purchase warrants
issued to managers of the Company. No Preferred Shares will be issued
and outstanding or reserved for issuance and 3,004,070 Common Shares
will be reserved for issuance upon conversion of Max Re Non-Voting
Common Shares.
20
SCHEDULE 4.9
Prior Activities of Maximus Capital Holdings, Ltd.
--------------------------------------------------
None.
21
SCHEDULE 5.1
Corporate Activity and Capitalization of Max Re Ltd.
----------------------------------------------------
A. Actual Capitalization.
At the date hereof, Max Re has the following authorized capital,
issued and outstanding shares and shares reserved for issuance:
The authorized share capital of Max Re is US$30,000,000 divided
into 1,250,000 Voting Common Shares, 27,000,000 Non-Voting Common Shares and
1,750,000 Preferred Shares each having a par value of US$1.00. Of the 30,000,000
authorized shares, 1,250,000 Voting Common Shares are held by the Company. No
shares are reserved for issuance.
B. Pro Forma Capitalization.
Assuming that US$600 million is raised in the Offering and the
direct sales as more fully described in Section 5.1 herein, the Max Re will have
the following authorized capital, issued and outstanding shares and shares
reserved for issuance:
The authorized share capital of Max Re will be US$50,000,000
divided into shares each having a par value of US$1.00. Of the 50,000,000
authorized shares, 36,995,930 Voting Common Shares will be issued and
outstanding and held by the Company, 3,004,070 Non-Voting Common Shares will be
issued and outstanding and held by ▇▇▇▇▇ Holdings, LLC and 5,400,000 Non-Voting
Common Shares will be reserved for issuance upon the exercise of warrants issued
to the founding investors.
22
SCHEDULE 5.9
Prior Activities of Max Re Ltd.
-------------------------------
None
23
Exhibit A
FORM OF INITIAL WARRANT
24
Exhibit B
WIRING INSTRUCTIONS
Transfer Funds to:
The Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fed ABA ▇▇▇▇▇▇▇▇▇
Or
CHIPS ABA 0002
SWIFT ▇▇▇▇▇▇▇▇
Beneficiary Account:
Maximus Capital Holdings, Ltd.
Account No. 323892973
25
Exhibit C
BYE-LAWS OF THE COMPANY
26
Exhibit D
BYE-LAWS OF MAX RE
27
Page No.
Exhibit E
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇
28
