1
Exhibit 1.2
GLOBAL MARKETS ACCESS LTD.
(a Bermuda corporation)
3,000,000 Common Shares
(Par Value $1.00 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
March __, 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
Prudential-Bache Securities (U.K.) Inc.
as Joint Lead Managers and Joint Bookrunners
Bear, ▇▇▇▇▇▇▇ International Limited
Baring Brothers Limited, as agent for ING Bank N.V.
Salomon Brothers International Limited
UBS AG, acting through its division Warburg Dillon Read
as Lead Managers of the several International Managers
c/o Merrill ▇▇▇▇▇ International
Ropemaker Place
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Ladies and Gentlemen:
Global Markets Access Ltd., a Bermuda corporation (the "Company"),
confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ International ("▇▇▇▇▇▇▇ ▇▇▇▇▇"),
Prudential-Bache Securities (U.K.) Inc., as Joint Lead Managers and Joint
Bookrunners, and each of the other international underwriters named in Schedule
A hereto (collectively, the "International Managers", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, Prudential-Bache Securities (U.K.) Inc., Bear,
▇▇▇▇▇▇▇ International Limited, Baring Brothers Limited, as agent for ING Bank
N.V., Salomon Brothers International Limited and UBS AG, acting through its
division Warburg Dillon Read, are acting as representatives (in such capacity,
the "Lead Managers"), with respect to the issue and sale by the Company and the
purchase by the International Managers,
2
acting severally and not jointly, of the respective numbers of Common Shares,
par value $1.00 per share, of the Company (the "Common Shares") set forth in
said Schedule A, and with respect to the grant by the Company to the
International Managers, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of 450,000
additional Common Shares to cover over-allotments, if any. The aforesaid
3,000,000 Common Shares (the "Firm International Securities") to be purchased by
the International Managers and all or any part of the 450,000 Common Shares
subject to the option described in Section 2(b) hereof (the "International
Option Securities") are hereinafter called, collectively, the "International
Securities".
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Underwriting Agreement") providing
for the offering by the Company of an aggregate of 17,000,000 Common Shares (the
"Firm U.S. Securities") through arrangements with certain underwriters in the
United States and Canada (the "U.S. Underwriters") for which ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, Prudential Securities Incorporated, Bear,
▇▇▇▇▇▇▇ & Co. Inc., ING Baring ▇▇▇▇▇▇ ▇▇▇▇ LLC, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and
Warburg Dillon Read LLC are acting as representatives (the "U.S.
Representatives") and the grant by the Company to the U.S. Underwriters, acting
severally and not jointly, of an option to purchase all or any part of the U.S.
Underwriters' pro rata portion of up to 2,550,000 additional Common Shares
solely to cover over-allotments, if any (the "U.S. Option Securities" and,
collectively with the International Option Securities, the "Option Securities").
The Firm U.S. Securities and the U.S. Option Securities are collectively
referred to herein as the "U.S. Securities". It is understood that the Company
is not obligated to sell and the International Managers are not obligated to
purchase, any Firm International Securities unless all of the Firm U.S.
Securities are contemporaneously purchased by the U.S. Underwriters.
The International Managers and the U.S. Underwriters are
collectively referred to herein as the "Underwriters", the Firm International
Securities and the Firm U.S. Securities are collectively referred to herein as
the "Firm Securities", and the International Securities and the U.S. Securities
are collectively referred to herein as the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated and Prudential Securities Incorporated (in such capacity, the
"Global Coordinators").
The Company understands that the International Managers propose to
make a public offering of the International Securities as soon as the Lead
Managers deem advisable after this Agreement has been executed and delivered.
It is understood that the Company has agreed, immediately prior to
the issuance, offering and sale of the Securities to the Underwriters by the
Company pursuant to this Agreement and the U.S. Underwriting Agreement, to issue
and sell directly to The PMI Group, Inc., High Ridge Capital Partners Limited
Partnership, Rolaco Holding S.A., Third Avenue Value Fund and Third Avenue
Small-Cap Value Fund (collectively, the "Strategic Investors") an aggregate of
3,900,706 Common Shares (the "Strategic Securities") and Class B Warrants to
2
3
purchase an aggregate of 550,000 Common Shares (the "Class B Warrants") and to
certain individuals affiliated with Inter-Atlantic Capital Partners, Inc. (the
"Sponsor-Affiliated Purchasers", and collectively with the Strategic Investors,
the "Private Investors") an aggregate of 90,000 Common Shares (the
"Sponsor-Affiliated Securities", and collectively with the Strategic Securities
and the Class B Warrants, the "Private Securities") and to offer directly to
certain of its directors and officers (the "Affiliated Purchasers") an aggregate
of 305,500 Common Shares (the "Affiliated Securities", and collectively with the
Private Securities, the "Direct Securities") as described in the Prospectuses
(as hereinafter defined) or, if the Prospectuses are not in existence, the most
recent Preliminary Prospectuses (as hereinafter defined), under the caption
"Direct Sales".
Two forms of prospectus are to be used in connection with the
offering and sale of the Securities through the Underwriters: one relating to
the International Securities (the "Form of International Prospectus") and one
relating to the U.S. Securities (the "Form of U.S. Prospectus"). The Form of
International Prospectus is identical to the Form of U.S. Prospectus, except for
the front cover and back cover pages and the information under the caption
"Underwriting". A third form of prospectus is to be used in connection with the
offering and sale of the Affiliated Securities (the "Form of Direct Sales
Prospectus"). The Form of Direct Sales Prospectus is identical to the Form of
U.S. Prospectus, except for the front cover and back cover pages and except that
the section under the caption "Underwriting" in the Form of U.S. Prospectus is
replaced by a section under the caption "Plan of Distribution" in the Form of
Direct Sales Prospectus. As used in this Agreement, the term "Original
Registration Statement" means the registration statement initially filed
relating to the Securities and the Affiliated Securities, as amended at the time
when it was or is declared effective, including all financial schedules and
exhibits thereto and including any information omitted therefrom at the time it
became effective but deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A under the
Securities Act of 1933, as amended (the "Act"), (the "Rule 430A Information") or
(b) pursuant to paragraph (d) of Rule 434 under the Act (the "Rule 434
Information") and included in the Prospectuses; the term "Rule 462(b)
Registration Statement" means any registration statement filed with the
Securities and Exchange Commission (the "Commission") pursuant to Rule 462(b)
under the Act (including the Registration Statement and any preliminary
prospectus or Prospectus incorporated therein at the time such Registration
Statement becomes effective); the term "Registration Statement" includes both
the Original Registration Statement and any Rule 462(b) Registration Statement;
the terms "International Preliminary Prospectus", "U.S. Preliminary Prospectus"
and "Direct Sales Preliminary Prospectus" (collectively, the "Preliminary
Prospectuses") mean, respectively, the Form of International Prospectus, the
Form of U.S. Prospectus and the Form of Direct Sales Prospectus contained in
Amendments No. 3 and No. 4 to the Original Registration Statement and used
before such Registration Statement became effective, and any Form of
International Prospectus, Form of U.S. Prospectus or Form of Direct Sales
Prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement; the terms "International Prospectus",
"U.S. Prospectus" and "Direct Sales Prospectus" (collectively, the
"Prospectuses") mean, respectively:
3
4
(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the International Preliminary Prospectus, the
U.S. Preliminary Prospectus and the Direct Sales Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the Form of
International Prospectus, the Form of U.S. Prospectus and the Form of
Direct Sales Prospectus first filed with the Commission pursuant to Rule
424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the Act,
the Form of International Prospectus, the Form of U.S. Prospectus and the
Form of Direct Sales Prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet. For purposes
of this Agreement, all references to the Registration Statement, any preliminary
prospectus, the International Prospectus, the U.S. Prospectus, the Direct Sales
Prospectus or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
SECTION 1. Representations and Warranties by the Company. The
Company represents and warrants to, and agrees with, each of the several
International Managers that:
(a) A registration statement on Form S-1 (File No. 333-62785) with
respect to the Securities, including the related Preliminary Prospectuses, has
been filed by the Company with the Commission under the Act, and amendments to
such registration statement have been so filed on October 30, 1998, December 23,
1998, March 1, 1999 and March 19, 1999. After the execution of this Agreement,
the Company will file with the Commission either (i) if such registration
statement, as it may have been amended, has been declared by the Commission to
be effective under the Act, either (A) if the Company relies on Rule 434 under
the Act, a Term Sheet relating to the Securities, that shall identify the
Preliminary Prospectuses that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) under the Act or (B) if the
Company does not rely on Rule 434 under the Act, prospectuses in the form most
recently included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or permitted by
Rule 424(b) under the Act, and in the case of either clause (i) (A) or (i) (B)
of this sentence as have been provided to and approved by the Global
Coordinators and counsel to the International Managers prior to the execution of
this Agreement, or (ii) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under the Act,
an amendment to such registration statement, including the respective forms of
prospectus, a copy of which amendment has been furnished to and approved by the
Global Coordinators and counsel
4
5
to the International Managers prior to the execution of this Agreement. The
Company may also file a Rule 462(b) Registration Statement for the purpose of
registering certain additional Securities, which registration shall be effective
upon filing with the Commission.
(b) The Commission has not issued any order preventing or suspending
the use of any preliminary prospectus. When the Preliminary Prospectus was filed
with the Commission it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was or is
declared effective, including the Rule 430A Information and Rule 434
Information, it (i) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (ii) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectuses or any Term Sheet that
is a part thereof or any amendment or supplement to the Prospectuses are filed
with the Commission pursuant to Rule 424(b) (or, if the Prospectuses or any Term
Sheet that is a part thereof or such amendment or supplement is not required to
be so filed, when the Registration Statement or the amendment thereto containing
such amendment or supplement to the Prospectuses was or is declared effective)
and on the Firm Closing Date and any Option Closing Date (both as hereinafter
defined), the Prospectuses, as amended or supplemented at any such time, (i)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in the International Preliminary
Prospectus, the Registration Statement or any amendment thereto or the
International Prospectus or any amendment or supplement thereto in reliance upon
and in conformity with written information furnished to the Company by any
International Manager through the Lead Managers specifically for use therein.
Each International Preliminary Prospectus, U.S. Preliminary
Prospectus, International Prospectus and U.S. Prospectus delivered to the
Underwriters for use in connection with the offering of the Securities for sale
to the public and each Direct Sales Preliminary Prospectus and Direct Sales
Prospectus to be used in connection with the offering of the Affiliated
Securities for sale to the Affiliated Purchasers was identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective (i) the Company
has filed a Rule 462(b)
5
6
Registration Statement in compliance with and that is effective upon filing
pursuant to Rule 462(b) and has received confirmation of its receipt and (ii)
the Company has given irrevocable instructions for transmission of the
applicable filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 promulgated under the Act or
the Commission has received payment of such filing fee.
(d) The issuance, offering and sale of the Private Securities to the
Private Investors and of the Company's Class A Warrants (the "Class A Warrants")
to the holders thereof (the "Class A Warrant Holders") by the Company, and the
issuance of the Common Shares issuable upon exercise of the Class A Warrants and
the Class B Warrants, in the manner described in the Registration Statement and
the Prospectuses or, if the Prospectuses are not in existence, the most recent
Preliminary Prospectuses, were, are and will be exempt from the registration and
prospectus delivery requirements of the Act and any similar requirements under
any applicable securities, blue sky or insurance laws of any applicable
jurisdiction, subject to the accuracy of the representations made by the
purchasers thereof. Neither the Company nor any "affiliate" of the Company
within the meaning of Rule 501(b) under the Act or any person acting on behalf
of the Company or any such affiliate, directly or indirectly, (i) has made or
will make offers or sales of, or solicitations of offers to buy, the Private
Securities or the Class A Warrants (or any securities of the same or similar
respective classes) to any prospective purchaser under circumstances that would
require registration of the Private Securities or the Class A Warrants under the
Act or (ii) has engaged in any form of "general solicitation" or "general
advertising" within the meaning of Rule 502(c) under the Act with respect to the
Private Securities or the Class A Warrants.
(e) Each of the Company, Global Markets Guaranty Ltd., a Bermuda
corporation (the "Insurance Subsidiary"), and GMG Marketing Ltd., a Bermuda
corporation (the "Marketing Subsidiary", and, together with the Insurance
Subsidiary, the "Subsidiaries"), has been duly organized and is validly existing
as a corporation in good standing under the laws of Bermuda and is duly
qualified as a foreign corporation to transact business and is in good standing
under the laws of all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified or to be in good standing would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
(f) The Company has no subsidiaries other than the Insurance
Subsidiary and the Marketing Subsidiary.
(g) Except as disclosed in the Prospectuses or, if the Prospectuses
are not in existence, the most recent Preliminary Prospectuses, each of the
Company and its Subsidiaries has full corporate power to own or lease its
properties and to conduct its business as described in the Registration
Statement and the Prospectuses or, if the Prospectuses are not in existence, the
most recent Preliminary Prospectuses; and the Company has full corporate power
to enter into this Agreement and the U.S. Underwriting Agreement and to carry
out all the terms and provisions hereof and thereof to be carried out by it.
6
7
(h) Except as disclosed in the Prospectuses or, if the Prospectuses
are not in existence, the most recent Preliminary Prospectuses, the issued
shares of capital stock of the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and are owned beneficially by
the Company free and clear of any security interests, liens, encumbrances,
equities or claims.
(i) The Company has an authorized, issued and outstanding
capitalization as set forth on a historical basis in the Prospectuses or, if the
Prospectuses are not in existence, the most recent Preliminary Prospectuses. All
of the issued shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. The Firm Securities and
the Option Securities have been duly authorized and at the Firm Closing Date or
the related Option Closing Date (as the case may be), after payment therefor in
accordance herewith and with the U.S. Underwriting Agreement, will be validly
issued, fully paid and nonassessable. The Private Securities and the Affiliated
Securities have been duly authorized and, after payment therefor in accordance
with the separate securities purchase agreements entered or anticipated to be
entered into by the Company with (i) each of the Private Investors or (ii) each
of the Affiliated Purchasers (such securities purchase agreements, the "Direct
Agreements"), will be validly issued, fully paid and nonassessable. No holders
of outstanding shares of capital stock of the Company are entitled as such to
any preemptive or other rights to subscribe for any of the Securities or Direct
Securities, and no holder of securities of the Company has any right which has
not been fully exercised or waived to require the Company to register the offer
or sale of any securities owned by such holder under the Act in the public
offering contemplated by this Agreement.
(j) The capital stock of the Company conforms to the description
thereof contained in the Prospectuses or, if the Prospectuses are not in
existence, the most recent Preliminary Prospectuses.
(k) Except as disclosed in the Prospectuses or, if the Prospectuses
are not in existence, the most recent Preliminary Prospectuses, there are no
outstanding (A) securities or obligations of the Company or its Subsidiaries
convertible into or exchangeable for any capital stock of the Company or its
Subsidiaries, (B) warrants, rights or options to subscribe for or purchase from
the Company or its Subsidiaries any such capital stock or any such convertible
or exchangeable securities or obligations, or (C) obligations of the Company or
its Subsidiaries to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or options.
(l) The consolidated financial statements of the Company and its
Insurance Subsidiary included in the Registration Statement and the Prospectuses
or, if the Prospectuses are not in existence, the most recent Preliminary
Prospectuses, fairly presents the financial position of the Company and its
Insurance Subsidiary and the results of operations as of the dates and for the
periods therein specified. Such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein). The
unaudited pro forma consolidated balance sheet of the
7
8
Company and its Insurance Subsidiary included in the Registration Statement and
the Prospectuses or, if the Prospectuses are not in existence, the most recent
Preliminary Prospectuses, complies to the extent required in form in all
material respects with the applicable accounting requirements of Rule 11-02 of
Regulation S-X and the pro forma adjustments have been properly applied to the
historical amounts in the compilation of such balance sheet.
(m) KPMG Peat Marwick, who have certified the consolidated financial
statements of the Company and its Insurance Subsidiary and delivered their
report with respect to the audited consolidated financial statements included in
the Registration Statement and the Prospectuses or, if the Prospectuses are not
in existence, the most recent Preliminary Prospectuses, are independent public
accountants as required by the Act and the applicable rules and regulations
thereunder.
(n) The execution and delivery of this Agreement and the U.S.
Underwriting Agreement have been duly authorized by the Company and this
Agreement and the U.S. Underwriting Agreement have been duly executed and
delivered by the Company, and are the valid and binding agreements of the
Company, enforceable against the Company in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally, and subject, as to enforceability, to public policy or Federal
or state securities law limitations on the indemnification and contribution
provisions contained herein and therein and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(o) No legal or governmental proceedings are pending to which the
Company or its Subsidiaries are parties or to which the property of the Company
or its Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectuses and are not described therein, or if
the Prospectuses are not in existence, in the most recent Preliminary
Prospectuses, and, to the best of the Company's knowledge, no such proceedings
have been threatened against the Company or its Subsidiaries or with respect to
any of their respective properties, except as described in the Registration
Statement or the Prospectuses, or if the Prospectuses are not in existence, the
most recent Preliminary Prospectuses; and no contract or other document is
required to be described in the Registration Statement or the Prospectuses or to
be filed as an exhibit to the Registration Statement that is not described
therein, or if the Prospectuses are not in existence, the most recent
Preliminary Prospectuses, or filed as required.
(p) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement and the U.S. Underwriting
Agreement and of the Direct Securities to the Private Investors and the
Affiliated Purchasers by the Company pursuant to the Direct Agreements and the
issuance of Common Shares issuable upon the exercise of the Class A Warrants and
Class B Warrants, the compliance by the Company with the other provisions of
this Agreement, the U.S. Underwriting Agreement, the Direct Agreements and the
Class A Warrants and Class B Warrants and the consummation of the other
transactions herein and therein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as
8
9
may be required under state securities or blue sky laws and, if the Registration
Statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement and the U.S. Underwriting
Agreement) under the Act, or (ii) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company or its Subsidiaries are parties or by which the Company or
its Subsidiaries or any of their respective properties are bound, or the
Memorandum of Association or Bye-Laws of the Company or its Subsidiaries, or any
statute or any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to the Company or its
Subsidiaries, except that enforcement of rights to indemnity and contribution
hereunder or thereunder may be limited by Federal or state securities laws or
principles of public policy.
(q) The Insurance Subsidiary has full corporate power to enter into
each of the Quota Share Reinsurance Treaty dated as of November 25, 1998 and the
respective Master Facultative Reinsurance Agreements each dated as of November
25, 1998 (collectively, the "Reinsurance Treaties") with ACA Financial Guaranty
Corporation ("ACA") and to carry out all the terms and provisions thereof to be
carried out by it; the execution and delivery of the Reinsurance Treaties have
been duly authorized by the Insurance Subsidiary, and the Reinsurance Treaties
have been duly executed and delivered by the Insurance Subsidiary and are the
valid and binding agreements of the Insurance Subsidiary, enforceable against
the Insurance Subsidiary in accordance with their terms, subject to any
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law); the compliance by the Insurance Subsidiary with the provisions of the
Reinsurance Treaties and the consummation of the transactions contemplated
therein do not (i) require the Insurance Subsidiary to obtain the consent,
approval, authorization, registration or qualification of or with any
governmental authority, including without limitation, any insurance regulatory
authority of Bermuda, Maryland or New York, except such as have been obtained,
or (ii) conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company or its
Subsidiaries is a party or by which the Company or its Subsidiaries or any of
their respective properties are bound, or the Memorandum of Association or
Bye-Laws of the Company or its Subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental authority
or any arbitrator applicable to the Company or its Subsidiaries; the Reinsurance
Treaties are in full force and effect, and the Insurance Subsidiary is not in
violation of, or in default in the due performance, observance or fulfillment
of, any obligation, agreement, term, covenant or condition contained in the
Reinsurance Treaties; neither the Company nor either of its Subsidiaries has
received any notice from ACA or any of its affiliates or otherwise has any
knowledge that ACA intends not to perform its obligations under the Reinsurance
Treaties or will be unable to perform such obligations.
(r) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectuses or, if the Prospectuses
are not in existence, the most
9
10
recent Preliminary Prospectuses, neither the Company nor its Subsidiaries have
sustained any material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the condition
(financial or otherwise), management, business prospects, net worth, or results
of operations of the Company or its Subsidiaries, except in each case as
described in or contemplated by the Prospectuses or, if the Prospectuses are not
in existence, the most recent Preliminary Prospectuses.
(s) The Company has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company, except as
contemplated by this Agreement and the U.S. Underwriting Agreement and, in the
case of clause (ii) hereof with respect to Inter-Atlantic Securities
Corporation, as described in or contemplated by the Prospectuses or, if the
Prospectuses are not in existence, the most recent Preliminary Prospectuses.
(t) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectuses or, if the Prospectuses
are not in existence, the most recent Preliminary Prospectuses, (1) the Company
and its Subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business which is required to be disclosed in the
Prospectuses or the most recent Preliminary Prospectuses and is not so
disclosed; (2) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock; and (3) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
Subsidiaries, except in each case as described in or contemplated by the
Prospectuses or, if the Prospectuses are not in existence, the most recent
Preliminary Prospectuses.
(u) The Company and its Subsidiaries have good and marketable title
in fee simple to all items of real property and marketable title to all material
personal property owned by each of them, in each case free and clear of any
security interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not interfere in any material respect with the use made or proposed to be
made of such property by the Company or its Subsidiaries, and any real property
and buildings held under lease by the Company or its Subsidiaries are held under
valid, subsisting and enforceable leases, with such exceptions as are not
material and do not interfere in any material respect with the use made or
proposed to be made of such property and buildings by the Company or its
Subsidiaries, in each case except as described in or contemplated by the
Prospectuses or, if the Prospectuses are not in existence, the most recent
Preliminary Prospectuses.
10
11
(v) The Company's Subsidiaries are not currently prohibited,
directly or indirectly, from paying any dividends to the Company, from making
any other distribution on its capital stock, from repaying to the Company any
loans or advances to it from the Company or from transferring any of its
property or assets to the Company, except as described in or contemplated by the
Prospectuses or, if the Prospectuses are not in existence, the most recent
Preliminary Prospectuses.
(w) The Company and its Subsidiaries will conduct their respective
businesses in a manner that will not subject either of them to registration as
an investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and the transactions contemplated by this Agreement, the U.S.
Underwriting Agreement, the Direct Agreements, the Class A Warrants and the
Class B Warrants will not cause the Company or either of its Subsidiaries to
become an investment company or an entity controlled by an investment company
subject to registration under the 1940 Act. The Company has filed Form
F-N with the Commission, and such Form accurately sets forth all information
required to be included therein and complies in all material respects with the
applicable requirements of the Act and the rules and regulations of the
Commission thereunder.
(x) Each certificate signed by any officer of the Company or its
Subsidiaries and delivered to the Global Coordinators, the Lead Managers or
counsel for the International Managers shall be deemed to be a representation
and warranty by the Company to each International Manager as to the matters
covered thereby.
(y) The Company and its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (3) access to assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) The Company has not distributed and, prior to the later of (i)
the Firm Closing Date or the Option Closing Date and (ii) the completion of the
distribution of the Securities, will not distribute any offering material in
connection with the offering and sale of the Securities other than the
Registration Statement or any amendment thereto, any preliminary prospectus or
the Prospectuses or any amendment or supplement thereto, or other materials, if
any, permitted by the Act.
(aa) Except as disclosed in the Prospectuses, or if the Prospectuses
are not in existence, the most recent Preliminary Prospectuses, neither the
Company nor its Subsidiaries are
11
12
(i) in violation of its Memorandum of Association or Bye-Laws or other
organizational documents, (ii) in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to it or any of its
properties, except where any such violation or violations in the aggregate would
not reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), management, business prospects, net worth or results
of operations of the Company and its Subsidiaries, taken as a whole, (iii) in
violation of any judgment, injunction, order or decree of any court,
governmental agency or body (including, without limitation, any insurance
regulatory agency or body) or arbitrator having jurisdiction over it, except
where any such violation or violations in the aggregate would not reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), management, business prospects, net worth or results of operations
of the Company and its Subsidiaries, taken as a whole. No default exists, and no
event has occurred which, with notice or lapse of time or both, would constitute
a default in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or its Subsidiaries are parties or by which the
Company or its Subsidiaries or any of their respective properties is bound,
except where any such default or event or defaults or events in the aggregate
would not reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), management, business prospects, net worth or
results of operations of the Company and its Subsidiaries, taken as a whole.
(bb) The forms of certificate for the Securities conform to the
requirements of The Companies Act 1981 of Bermuda, and the Securities have been
approved for quotation on the Nasdaq Stock Market's National Market (the "Nasdaq
National Market"), subject to official notice of issuance.
(cc) No currency exchange control laws or withholding taxes of
Bermuda or elsewhere apply to the payment of dividends (i) on the Securities by
the Company or (ii) by the Subsidiaries to the Company, except in each case as
described in or contemplated by the Prospectuses or, if the Prospectuses are not
in existence, the most recent Preliminary Prospectuses.
(dd) The Insurance Subsidiary has been duly registered by the
Bermuda Minister of Finance as a Class 3 insurer under the Insurance ▇▇▇ ▇▇▇▇ of
Bermuda (the "Insurance Act") and is in compliance with the requirements of the
Insurance Act and any applicable rules and regulations thereunder and has filed
all statutory financial returns, reports, documents and other information
required to be filed thereunder, except where the failure to comply or to file
would not reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), management, business prospects, net worth,
or
12
13
results of operations of the Company and its Subsidiaries, taken as a whole. The
Company is a holding company and is not subject to Bermuda insurance
regulations. The Company and its Subsidiaries are in compliance with all other
insurance laws and regulations of the jurisdictions that apply to them,
including laws that relate to companies that control insurance companies, except
where the failure to comply would not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), management, business
prospects, net worth, or results of operations of the Company and its
Subsidiaries, taken as a whole. Neither the Company nor either of its
Subsidiaries has received any notification from any insurance authority,
commission or other insurance regulatory body in Bermuda or elsewhere to the
effect that the Insurance Subsidiary is not in compliance with any insurance law
or regulation.
(ee) Each of the Company and its Subsidiaries possesses all
certificates, authorizations and permits issued by the appropriate Bermuda, U.S.
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor the Subsidiaries have
received any notice of proceedings relating to the revocation, modification or
nonrenewal of any such certificate, authorization or permit which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would reasonably be expected to result in a material adverse effect on the
condition (financial or otherwise), management, business prospects, net worth or
results of operations of the Company and the Subsidiaries, taken as a whole,
except as described in or contemplated by the Prospectuses or, if the
Prospectuses are not in existence, the most recent Preliminary Prospectuses.
(ff) Neither the Company nor either of its Subsidiaries is required
to be licensed or admitted as an insurer or an insurance holding company, as
applicable, in, or to otherwise comply with the insurance laws and regulations
of, any jurisdiction other than Bermuda in order to conduct their respective
businesses as described in the Prospectuses or, if the Prospectuses are not in
existence, the most recent Preliminary Prospectuses.
(gg) No relationship, direct or indirect, exists between or among
the Company or its Subsidiaries on the one hand, and the directors, officers,
promoters, affiliates or shareholders of the Company or its Subsidiaries on the
other hand, that is required to be described in the Registration Statement or
the Prospectuses or, if the Prospectuses are not in existence, the most recent
Preliminary Prospectuses, which is not so described.
(hh) None of the Underwriters or any purchaser from the Underwriters
of the Securities (other than purchasers resident in Bermuda for Bermuda
exchange control purposes) will be subject to any stamp duty, excise or similar
tax imposed in Bermuda solely as a consequence of the offering, sale or purchase
of the Securities.
(ii) To the knowledge of the Company and its Subsidiaries, no change
in any insurance law or regulation is pending that would reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the
condition (financial or otherwise), business prospects, net worth or results of
operations of the Company and its Subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectuses or, if the Prospectuses are not
in existence, the most recent Preliminary Prospectuses.
(jj) Each of the Company and its Subsidiaries has received from the
Bermuda Minister of Finance an assurance under The Exempted Undertakings Tax
Protection Act 1966 of Bermuda to the effect set forth in the Prospectuses or,
if the Prospectuses are not in existence, the most recent Preliminary
Prospectuses, under the caption "Certain Tax Considerations--Taxation of GMA,
the Operating Company and the Marketing Company--Bermuda."
13
14
(kk) The Company has duly and irrevocably appointed CT Corporation
System, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, as its agent to receive service of
process with respect to actions arising out of or in connection with violations
of United States federal securities laws relating to offers and sales of the
Securities.
(ll) The Bermuda Monetary Authority has designated the Company and
its Subsidiaries as nonresident for exchange control purposes and has granted
permission for the issue and transfer of the Securities. The Company and its
Subsidiaries are "exempted companies" under Bermuda law and have not (i)
acquired and do not hold any land in Bermuda, other than that required for their
business and held by way of lease or tenancy for terms of not more than 21
years, without the express authorization of the Bermuda legislature, (ii) taken
mortgages on land in Bermuda to secure an amount in excess of $50,000 without
the consent of the Bermuda Minister of Finance, (iii) acquired any bonds or
debentures secured by any land in Bermuda (other than certain types of Bermuda
government securities), or (iv) conducted their businesses in a manner that is
prohibited for "exempted companies" under Bermuda law. Neither the Company nor
its Subsidiaries have received notification from the Bermuda Monetary Authority
or any other Bermuda governmental authority of proceedings relating to the
modification or revocation of its designation as nonresident for exchange
control purposes, its permission to issue and transfer the Securities, or its
status as an "exempted company".
SECTION 2. Sale and Delivery to the International Managers; Closing.
(a) On the basis of the representations, warranties, agreements and covenants
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the International Managers, and each
of the International Managers, severally and not jointly, agrees to purchase
from the Company, at a purchase price of $_____ per share, the number of Firm
International Securities set forth opposite the name of such International
Manager in Schedule A hereto. One or more certificates in definitive form for
the Firm International Securities that the several International Underwriters
have agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Lead Managers request upon written
notice to the Company at least 48 hours prior to the Firm Closing Date, shall be
delivered by or on behalf of the Company to the Lead Managers for the respective
accounts of the International Managers, against payment by or on behalf of the
International Managers of the purchase price therefor by wire transfer in
same-day funds (the "Wired Funds") to the account of the Company. Such delivery
of and payment for the Firm International Securities shall be made at the
offices of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One Liberty Plaza, New York, New
York, at 9:00 A.M., New York time, on March __, 1999, or at such other place,
time or date as the Global Coordinators and the Company may agree upon or as the
Lead Managers may determine pursuant to Section 10 hereof, such time and date of
delivery against payment being herein referred to as the "Firm Closing Date".
The Company will make such certificate or certificates for the Firm
International Securities available for checking and packaging by the Lead
Managers at the offices in New York, New York of the Company's transfer agent or
registrar or of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated at least 24
hours prior to the Firm Closing Date.
14
15
(b) For the purpose solely of covering any over-allotments in
connection with the distribution and sale of the Firm International Securities
as contemplated by the International Prospectus, the Company hereby grants to
the several International Managers an option to purchase, severally and not
jointly, the International Option Securities. The purchase price to be paid for
any International Option Securities shall be the same price per share as the
price per share for the Firm International Securities set forth above in
paragraph (a) of this Section 2. The option granted hereby may be exercised as
to all or any part of the International Option Securities from time to time
within thirty (30) days after the date of the International Prospectus (or, if
such 30th day shall be a Saturday or Sunday or a holiday, on the next business
day thereafter when the New York Stock Exchange is open for trading). The
International Managers shall not be under any obligation to purchase any of the
International Option Securities prior to the exercise of such option. The Global
Coordinators may from time to time exercise the option granted hereby by giving
notice in writing or by telephone (confirmed in writing) to the Company setting
forth the aggregate number of International Option Securities as to which the
several International Managers are then exercising the option and the date and
time for delivery of and payment for such International Option Securities. Any
such date of delivery shall be determined by the Global Coordinators but shall
not be earlier than two business days or later than five business days after
such exercise of the option and, in any event, shall not be earlier than the
Firm Closing Date. The time and date set forth in such notice, or such other
time or such other date as the Global Coordinators and the Company may agree
upon or as the Lead Managers may determine pursuant to Section 10 hereof, is
herein called the "Option Closing Date" with respect to such International
Option Securities. Subject to the terms and conditions herein set forth, upon
exercise of the option as provided herein, the Company shall become obligated to
sell to each of the several International Managers, and each of the
International Managers, severally and not jointly, shall become obligated to
purchase from the Company, the same percentage of the total number of the
International Option Securities as to which the several International Managers
are then exercising the option as such International Managers is obligated to
purchase of the aggregate number of Firm International Securities, as adjusted
by the Global Coordinators in such manner as deemed advisable to avoid
fractional shares. If the option is exercised as to all or any portion of the
International Option Securities, one or more certificates in definitive form for
such International Option Securities, and payment therefor, shall be delivered
on the related Option Closing Date in the manner, and upon the terms and
conditions, set forth in paragraph (a) of this Section 2, except that reference
therein to the Firm International Securities and the Firm Closing Date shall be
deemed, for purposes of this paragraph (b), to refer to such International
Option Securities and Option Closing Date, respectively.
(c) The Company hereby acknowledges that the wire transfer by or on
behalf of the International Managers of the purchase price for any of the
International Securities does not constitute closing of a purchase and sale of
the International Securities. Only execution and delivery of a receipt for the
International Securities by the International Managers indicates completion of
the closing of a purchase of the International Securities from the Company.
Furthermore, in the event that the International Managers wire funds to the
Company prior to the completion of the closing of a purchase of the
International Securities, the Company hereby acknowledges that until the
International Managers execute and deliver a receipt for the
15
16
International Securities, by facsimile or otherwise, the Company will not be
entitled to the Wired Funds and shall return the Wired Funds to the
International Managers as soon as practicable (by wire transfer of same-day
funds) upon demand. In the event that the closing of a purchase of the
International Securities is not completed and the Wired Funds are not returned
by the Company to the International Managers on the same day the Wired Funds
were received by the Company, the Company agrees to pay to the International
Managers in respect of each day the Wired Funds are not returned by it, in
same-day funds, interest on the amount of such Wired Funds in an amount
representing the International Managers' cost of financing as reasonably
determined by ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(d) It is understood that each International Manager has authorized
the Lead Managers, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Firm International Securities and the
International Option Securities, if any, which it has agreed to purchase. No
such payment shall relieve such International Manager or International Managers
from any of its or their obligations hereunder.
SECTION 3. Covenants of the Company. The Company covenants and
agrees with each of the International Managers that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement and the
U.S. Underwriting Agreement, and any amendments thereto to become effective as
promptly as possible. If required, the Company will file the Prospectuses or any
Term Sheet that constitutes a part thereof and any amendment or supplement
thereto with the Commission in the manner and within the time period required by
Rules 434 and 424(b) under the Act. During any time when a prospectus relating
to the Securities is required to be delivered under the Act, the Company (i)
will comply with all requirements imposed upon it by the Act and the rules and
regulations of the Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities in accordance with the
provisions of this Agreement and the U.S. Underwriting Agreement and of the
Prospectuses, as then amended or supplemented, and (ii) will not file with the
Commission the Prospectuses, Term Sheet or the amendment referred to in the
second sentence of Section 1(a) hereof, any amendment or supplement to such
Prospectuses, Term Sheet or any amendment to the Registration Statement or any
Rule 462(b) Registration Statement of which the Global Coordinators previously
have been advised and furnished with a copy for a reasonable period of time
prior to the proposed filing and as to which filing the Global Coordinators or
counsel for the International Managers shall not have given their consent (which
consent will not be unreasonably withheld or delayed). The Company will prepare
and file with the Commission, in accordance with the rules and regulations of
the Commission, promptly upon the reasonable request by the Global Coordinators
or counsel for the International Managers, any amendments to the Registration
Statement or amendments or supplements to the Prospectuses that may be necessary
or advisable in connection with the distribution of the Securities by the
several Underwriters, and will use its best efforts to cause any such amendment
to the Registration Statement to be declared effective by the Commission as
promptly as possible. The Company will advise the Global Coordinators, promptly
after receiving notice thereof, of the
16
17
time when the Registration Statement or any amendment thereto has been filed or
declared effective or the Prospectuses or any amendment or supplement thereto
has been filed and will provide evidence satisfactory to the Global Coordinators
of each such filing or effectiveness.
(b) The Company will advise the Global Coordinators, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
preliminary prospectus or the Prospectuses or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, (iii) the institution, threatening or contemplation
of any proceeding for any such purpose or (iv) any request made by the
Commission for amending the Original Registration Statement or any Rule 462(b)
Registration Statement, for amending or supplementing the Prospectuses or for
additional information. The Company will use its best efforts to prevent the
issuance of any such stop order and, if any such stop order is issued, to obtain
the withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the insurance and securities or blue sky laws of
such jurisdictions as the Global Coordinators may designate and will continue
such qualifications in effect for as long as may be necessary to complete the
distribution of the Securities; provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectuses, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Prospectuses to comply with the Act or the
rules or regulations of the Commission thereunder, the Company will promptly
notify the Global Coordinators thereof and, subject to Section 3(a) hereof, will
prepare and file with the Commission, at the Company's expense, an amendment to
the Registration Statement or an amendment or supplement to the Prospectuses
that corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the Lead
Managers and to counsel for the International Managers a signed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto) (ii) to each other
International Manager, a conformed copy of such registration statement or any
Rule 462(b) Registration Statement and each amendment thereto (in each case
without exhibits thereto) and (iii) so long as a prospectus relating to the
Securities is required to be delivered under the Act, as many copies of each
Preliminary Prospectus or the Prospectuses or any amendment or supplement
thereto as the Lead Managers may reasonably request; without limiting the
application of clause (iii) of this sentence, the Company, not later than (A)
6:00
17
18
P.M., New York City time, on the date of determination of the public offering
price, if such determination occurred at or prior to 10:00 A.M., New York City
time, on such date or (B) 2:00 P.M., New York City time, on the business day
following the date of determination of the public offering price, if such
determination occurred after 10:00 A.M., New York City time, on such date, will
deliver to the International Managers, without charge, as many copies of the
Prospectuses and any amendment or supplement thereto as the Lead Managers may
reasonably request for purposes of confirming orders that are expected to settle
on the Firm Closing Date. The copies of the Registration Statement and each
amendment thereto and the International Preliminary Prospectuses, International
Prospectuses and any amendments or supplements thereto furnished to the
International Managers will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(f) The Company, as soon as practicable, will make generally
available to its securityholders and to the Lead Managers a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under the caption "Use of Proceeds" in the Prospectuses.
The Company and the Subsidiaries will comply with their respective operating,
investment and underwriting guidelines, as each are in effect from time to time.
(h) The Company will not, directly or indirectly, without the prior
written consent of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and
Prudential Securities Incorporated, on behalf of the International Managers,
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 to sell, contract of sale, transfer, assignment,
pledge, hypothecation, grant of any option to purchase or other sale or
disposition) of any Common Shares or other capital stock of the Company or any
other securities convertible into, or exercisable or exchangeable for, any
Common Shares or other capital stock of the Company for a period of one year
after the date hereof, except (i) pursuant to this Agreement and the U.S.
Underwriting Agreement, (ii) pursuant to the Direct Agreements and (iii) the
issuance of options pursuant to the Global Markets Access Ltd. Initial Stock
Option Plan as may be amended from time to time, which options shall not be
exercisable until one year after the date hereof, except as otherwise provided
in such plan as of the date hereof upon the occurrence of certain events. The
Company will not accelerate the exercisability of the registration rights
granted to the Strategic Investors, the Class A Warrant Holders and the Class B
Warrant Holders and will not file any registration statement on Form S-8 with
respect to, or otherwise register for resale with the Commission, the Private
Securities or the Common Shares underlying any options or warrants, including,
without limitation, the Class A Warrants or the Class B Warrants, issued by the
Company for a period of one year from the date hereof, in each case, without the
prior written consent of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and
Prudential Securities Incorporated on behalf of the International Managers.
18
19
(i) The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or which would reasonably be expected
to constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities or (ii) (A) sell,
bid for, purchase, or pay anyone any compensation for soliciting purchases of,
the Securities or (B) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company, except as
contemplated by this Agreement and the U.S. Underwriting Agreement and, in the
case of clause (ii) hereof with respect to Inter-Atlantic Securities
Corporation, as described in or contemplated by the Prospectuses or, if the
Prospectuses are not in existence, the most recent Preliminary Prospectuses.
(j) The Company will obtain the agreements described in Section 5(h)
and Section 5(i) hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date, any
rumor, publication or event relating to or affecting the Company or its
Subsidiaries shall occur as a result of which in your reasonable opinion the
market price of the Common Shares has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectuses), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(l) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111
promulgated under the Act by the earlier of (i) 10:00 P.M., Eastern time, on the
date of this Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
(m) The Company will cause the Securities to be duly included for
quotation on the Nasdaq National Market subject to official notice of issuance
prior to the Firm Closing Date. The Company will use its best efforts to ensure
that the Securities remain included for quotation on the Nasdaq National Market
or listed on a nationally recognized stock exchange for at least the first two
fiscal years following the Firm Closing Date.
SECTION 4. Payment of Expenses. The Company will pay all costs and
expenses incident to the performance of its obligations under this Agreement,
whether or not the transactions contemplated herein are consummated or this
Agreement is terminated pursuant to Section 9 hereof, including all costs and
expenses incident to (i) the printing or other production of documents with
respect to the transactions, including any costs of printing the registration
statement originally filed with respect to the Securities and any amendment
thereto, any Rule 462(b) Registration Statement, any preliminary prospectus and
the Prospectuses and any amendment or supplement thereto, this Agreement and any
blue sky memoranda, (ii) all
19
20
arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including transfer agent's and registrar's fees and
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters and the
transfer of the Securities between the International Managers and the U.S.
Underwriters, (v) the qualification of the Securities under state or foreign
insurance or securities and blue sky laws, including filing fees and reasonable
fees and disbursements of counsel for the Underwriters relating thereto, (vi)
the filing fees of the Commission and the National Association of Securities
Dealers, Inc. (the "NASD") relating to the Securities, (vii) any quotation of
the Securities on the Nasdaq National Market, (viii) any meetings with
prospective investors in the Securities (other than as shall have been
specifically approved by the Global Coordinators to be paid for by the
Underwriters) and (ix) advertising relating to the offering of the Securities
(other than as shall have been specifically approved by the Global Coordinators
to be paid for by the Underwriters). If the sale of the International Securities
provided for herein is not consummated because any condition to the obligations
of the International Managers set forth in Section 5 hereof is not satisfied,
because this Agreement is terminated pursuant to Section 9 hereof or because of
any failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder other than by reason of a default by any of the International
Managers, the Company will reimburse the International Managers severally upon
demand for all reasonable out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the International Securities. The Company shall
not in any event be liable to any of the International Managers for the loss of
anticipated profits from the transactions covered by this Agreement.
SECTION 5. Conditions of the International Managers' Obligations.
The obligations of the several International Managers to purchase and pay for
the Firm International Securities shall be subject, in the Lead Managers' sole
discretion, to the accuracy of the representations and warranties of the Company
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's officers made pursuant to the provisions hereof, to the
performance by the Company of its covenants and agreements hereunder and to the
following additional conditions:
(a) If the Original Registration Statement, as amended through the
Firm Closing Date, has not been declared effective as of the time of execution
hereof, the Registration Statement, as amended, and, if the Company has elected
to rely upon Rule 462(b), the Rule 462(b) Registration Statement, shall have
been declared effective not later than the earlier of (i) 11:00 A.M., New York
time, on the date on which the amendment to the registration statement
originally filed with respect to the Securities or to the Rule 462(b)
Registration Statement, as the case may be, containing information regarding the
initial public offering price of the Securities has been filed with the
Commission and (ii) the time confirmations are sent or given as specified by
Rule 462(b)(2), or with respect to the Original Registration Statement, or such
later time and
20
21
date as shall have been consented to by the Global Coordinators; if required,
the Prospectuses and any amendment or supplement thereto shall have been filed
with the Commission, or shall have been filed at such later time and date as
shall have been consented to by the Global Coordinators; if required, the
Prospectuses or any Term Sheet that constitutes a part thereof and any amendment
or supplement thereto shall have been filed with the Commission in the manner
and within the time period required by Rules 434 and 424(b) under the Act; no
stop order suspending the effectiveness of the Registration Statement or any
amendment thereto shall have been issued, and no proceedings for that purpose
shall have been instituted or threatened or, to the knowledge of the Company or
the Global Coordinators, shall be contemplated by the Commission; and the
Company shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectuses or
otherwise).
(b) The Lead Managers shall have received an opinion, dated the Firm
Closing Date, of Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, United States counsel for the
Company, substantially to the effect that:
(i) this Agreement and the U.S. Underwriting Agreement have been
duly executed and delivered by the Company;
(ii) the form of certificates for the Securities conforms to the
requirements of the Nasdaq National Market;
(iii) all of the issued shares of capital stock of the Company have
been issued in compliance with all applicable United States federal
securities laws; and, to the best knowledge of such counsel, no
holders of securities of the Company are entitled to have such
securities registered under the Registration Statement;
(iv) the statements set forth in the Prospectuses under the
headings, "Risk Factors--Income Tax Risks", "Risk Factors--Shares
Eligible for Future Sale", "Management's Discussion and Analysis of
Financial Condition and Plan of Operations--Taxation",
"Business--Legal Proceedings", "Shares Eligible for Future Sale",
"Certain Tax Considerations--Taxation of GMA, the Operating Company
and the Marketing Company--United States", and "Certain Tax
Considerations--Taxation of Shareholders--United States Taxation",
insofar as such statements constitute a summary of provisions of
United States federal law and the legal or governmental proceedings
referred to therein, provide a fair summary of such legal matters
and proceedings;
(v) to the best knowledge of such counsel, (A) no legal or
governmental proceedings are pending in the United States to which
the Company or its Subsidiaries are parties or to which the property
of the Company or its Subsidiaries is subject that are required to
be described in the Registration Statement or the Prospectuses and
are not described therein, and no such proceedings have been
threatened against the Company or its Subsidiaries or with
21
22
respect to any of their respective properties and (B) no contract or
other document is required to be described in the Registration
Statement or the Prospectuses or to be filed as an exhibit to the
Registration Statement that is not described therein or filed as
required;
(vi) the issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement and the U.S.
Underwriting Agreement and of the Direct Securities to the Private
Investors and the Affiliated Purchasers by the Company pursuant to
the Direct Agreements and the issuance of Common Shares issuable
upon the exercise of the Class A Warrants and Class B Warrants, the
compliance by the Company with the other provisions of this
Agreement, the U.S. Underwriting Agreement, the Direct Agreements
and the Class A Warrants and Class B Warrants and the consummation
of the other transactions herein and therein contemplated, and the
compliance by the Insurance Subsidiary with the provisions of the
Reinsurance Treaties and the consummation of the transactions
contemplated therein do not (A) require the consent, approval,
authorization, registration or qualification of or with any United
States or Pennsylvania governmental authority, except such as have
been obtained, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, lease or
other agreement or instrument, known to such counsel, to which the
Company or its Subsidiaries is a party or by which the Company or
its Subsidiaries or any of their respective properties are bound, or
any United States or Pennsylvania statute or any judgment, decree,
order, rule or regulation of any United States or Pennsylvania court
or other United States or Pennsylvania governmental authority or any
arbitrator known to such counsel and applicable to the Company or
its Subsidiaries, except that enforcement of rights to indemnity and
contribution thereunder may be limited by Federal or state
securities laws or principles of public policy;
(vii) the Original Registration Statement, any Rule 462(b)
Registration Statement and the Prospectuses, each as of their
respective effective or issue dates (in each case, other than the
financial statements and the notes thereto and the schedules and
other financial information contained therein or omitted therefrom,
as to which such counsel need express no opinion), comply as to form
in all material respects with the applicable requirements of the Act
and the rules and regulations of the Commission thereunder;
(viii) no registration of the Private Securities or the Class A
Warrants under the Act is required for the offer and sale of the
Private Securities to the Private Investors or of the Class A
Warrants to the Class A Warrant Holders by the Company, in the
manner described in the Registration Statement and the Prospectuses;
22
23
(ix) neither the Company nor either of its Subsidiaries is required
to be licensed or admitted as an insurer or an insurance holding
company, as applicable, in the Commonwealth of Pennsylvania in order
to conduct their respective businesses as described in the
Prospectuses;
(x) no authorization of, and no filing with or notice to, any
governmental or regulatory authority of the Commonwealth of
Pennsylvania or the United States federal government, or any
self-regulatory organization or any court or other tribunal of the
Commonwealth of Pennsylvania or the United States federal government
is required by either the Company or the Subsidiaries to own, lease,
license and operate its properties or to conduct its business as
described in the Prospectuses;
(xi) each of the Company and its Subsidiaries has, to the fullest
extent permitted by law, validly and irrevocably submitted to the
jurisdiction of any federal or state court sitting in the City of
New York and waived any objections that it may have to the laying of
venue of any such suit, action or proceeding brought in any such
court based on or arising under this Agreement or any claims that
any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum, and has validly appointed CT
Corporation System as its authorized agent to receive service of
process in any such suit, action or proceeding; and the choice of
the law of New York as the governing law of this Agreement would be
recognized by a Pennsylvania court as a valid and effective choice
of law;
(xii) neither the Company nor its Subsidiaries are, nor will the
transactions contemplated by this Agreement or the U.S. Underwriting
Agreement cause either the Company or its Subsidiaries to be
required to register as an investment company under the 1940 Act or
to be controlled by an investment company subject to such
registration; the Insurance Subsidiary is a "foreign insurance
company" within the meaning of Rule 3a-6 under the 1940 Act, and the
conduct of the respective businesses of the Company and its
Subsidiaries as described in the Prospectuses will qualify the
Insurance Subsidiary as a "foreign insurance company" within the
meaning of such Rule; Form F-N has been filed with the Commission,
and such Form to the best of such counsel's knowledge accurately
sets forth all information required to be included therein and
complies as to form in all material respects with the applicable
requirements of the Act and the rules and regulations of the
Commission thereunder; and
(xiii) to the best knowledge of such counsel, no relationship,
direct or indirect, exists between or among the Company or its
Subsidiaries on the one hand, and the directors, officers,
promoters, affiliates or shareholders of the Company or its
Subsidiaries on the other hand, that is required to be described in
the Registration Statement or the Prospectuses which is not so
described.
23
24
Such counsel shall also state that, based solely upon a telephone
conversation with a member of the staff of the Commission, the Registration
Statement has become effective under the Act and no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto has been
issued and no proceedings for that purpose are pending before or, to the best
knowledge of such counsel, are threatened or are contemplated by the Commission.
Such counsel shall also state that it has been notified that the
Securities have been included for trading on the Nasdaq National Market subject
to official notice of issuance.
Such counsel shall also state that any required filing of the
Prospectuses, or any Term Sheet that constitutes a part thereof, pursuant to
Rules 424(b) and 434 has been made in the manner and within the time periods
required by such Rules.
Such counsel shall also state that it has participated in the
preparation of the Registration Statement and the Prospectuses and in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda and Cayman Islands counsel
for the Company, representatives of ▇▇▇▇▇▇▇▇ Chance, United Kingdom counsel for
the Company, representatives of Crills Advocates, Jersey counsel for the
Company, and your representatives and your counsel at which the contents of the
Registration Statement, the Prospectuses and related matters were discussed and,
although such counsel has not passed upon or assumed any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses, and although such counsel has not
undertaken to verify independently the accuracy or completeness of the
statements in the Registration Statement and the Prospectuses and, therefore,
would not necessarily have become aware of any material misstatement of fact or
omission to state a material fact, on the basis of and subject to the foregoing,
such counsel does not believe that either the Registration Statement or the
Prospectuses (other than the financial statements and the notes or the schedules
thereto and other financial information and supplemental schedules included
therein or omitted therefrom, as to which such counsel need not express any
opinion) contained as of its date or contains as of the date of such opinion any
untrue statement of a material fact or omitted as of its date or omits as of the
date of such opinion to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deem proper, on the accuracy of the
representations and warranties made by the parties to this Agreement, the U.S.
Underwriting Agreement and the Direct Agreements, certificates of responsible
officers of the Company and public officials and statements made to such counsel
in discussions with responsible officers of the Company.
References to the Registration Statement and the Prospectuses in
this paragraph (b) shall include any amendment or supplement thereto at the date
of such opinion.
24
25
(c) The Lead Managers shall have received an opinion, dated the Firm
Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda and Cayman Islands counsel for
the Company, substantially to the effect that:
(i) the Company and its Subsidiaries have been duly incorporated,
are validly existing and in good standing (meaning that they have
not failed to make any filing with any Bermuda governmental
authority or to pay any Bermuda government fee or tax which might
make them liable to be struck off the Register of Companies and
thereby cease to exist under the laws of Bermuda) under the laws of
Bermuda;
(ii) the Company has the necessary corporate power and authority,
pursuant to its Memorandum of Association, to own and hold the
issued shares in the Subsidiaries; the Insurance Subsidiary has the
necessary corporate power and authority, pursuant to its Memorandum
of Association, to carry on insurance and reinsurance business as
described in the Prospectuses, was registered as an insurer in terms
of the Insurance Act of 1978, effective August 28, 1998, and is
authorized to carry on business in that capacity as described in the
Prospectuses, subject to the provisions of the Insurance Act of 1978
and the regulations promulgated thereunder, and to the conditions
set out in Schedule I to the Certificate of Registration, issued by
the Bermuda Registrar of Companies to the Insurance Subsidiary,
dated October 5, 1998, a copy of which, together with the said
Schedule I, shall be attached to such counsel's opinion;
(iii) the authorized share capital of the Insurance Subsidiary
established under its Memorandum of Association is U.S.$120,000,
divided into 120,000 shares, par value U.S.$1.00 per share; based
solely on the review of the Register of Members, the Insurance
Subsidiary has issued 120,000 shares, par value U.S.$1.00 per share,
to the Company and all such shares have been duly authorized and
validly issued, are fully paid and nonassessable (meaning that no
further sums are payable with respect to the holding of shares now
or in the future) and are registered in the name of the Company; the
authorized share capital of the Marketing Subsidiary established
under its Memorandum of Association is U.S.$_____, divided into
_____ shares, par value U.S.$[1.00] per share; based solely on the
review of the Register of Members, the Marketing Subsidiary has
issued _____ shares, par value U.S.$[1.00] per share, to the Company
and all such shares have been duly authorized and validly issued,
are fully paid and nonassessable (meaning that no further sums are
payable with respect to the holding of shares now or in the future)
and are registered in the name of the Company;
(iv) the authorized share capital of the Company established under
its Memorandum of Association is U.S.$150,000,000, divided into
100,000,000 Common Shares, par value U.S.$1.00 per share, and
50,000,000 Preferred Shares, par value U.S.$1.00 per share; without
giving effect to the issuance of Common
25
26
Shares contemplated by this Agreement, the U.S. Underwriting
Agreement and the Direct Agreements and based solely on the review
of the Register of Members, the Company has issued 12,000 Common
Shares, par value U.S.$1.00 per share, to Pembroke Company Limited
as nominee for Codan Trust Company Limited as trustee of the Global
Purpose Trust and all such Common Shares have been duly authorized
and validly issued, and are fully paid and nonassessable (meaning
that no further sums are payable with respect to the holding of such
Common Shares now or in the future);
(v) the Company has the necessary corporate power and authority to
enter into and perform its obligations under this Agreement, the
U.S. Underwriting Agreement, the Direct Agreements, the Class A
Warrants and the Class B Warrants and to issue the Securities, the
Direct Securities and the Class A Warrants; the execution and
delivery of this Agreement, the U.S. Underwriting Agreement, the
Direct Agreements, the Class A Warrants and the Class B Warrants by
the Company, and the performance of its obligations thereunder, do
not violate, and are not subject to preemptive rights under, the
Company's Memorandum of Association or Bye-Laws or any applicable
law, regulation, order or decree in Bermuda;
(vi) the Company has taken all corporate action required to
authorize its execution, delivery and performance of this Agreement,
the U.S. Underwriting Agreement, the Direct Agreements, the Class A
Warrants and the Class B Warrants; this Agreement, the U.S.
Underwriting Agreement, the Direct Agreements, the Class A Warrants
and the Class B Warrants have been duly executed and delivered by or
on behalf of the Company and constitute the valid and binding
obligations of the Company in accordance with the terms thereof;
(vii) the Securities and Direct Securities have been duly
authorized, and upon issue and payment for the Securities and Direct
Securities in accordance with this Agreement, the U.S. Underwriting
Agreement and the Direct Agreements, as applicable, and Registration
in the Register of Members of the Company, the Securities and Direct
Securities will be validly issued, fully paid and nonassessable
(meaning that no further sums are payable with respect to the
holding of such Securities or Direct Securities now or in the
future); upon issuance and payment for the Common Shares issued
pursuant to the Class A Warrants and the Class B Warrants, such
Common Shares will be validly issued, fully paid and nonassessable
(meaning that no further sums are payable with respect to the
holding of such Common Shares now or in the future); the holders of
Common Shares, including the Global Purpose Trust, are not entitled
to any preemptive or other rights to subscribe for shares in the
capital of the Company under the Memorandum of Association or the
Bye-Laws of the Company, this Agreement, the U.S. Underwriting
Agreement, the Direct Agreements, the Class
26
27
A Warrants or the Class B Warrants, or any applicable law,
regulation, order or decree in Bermuda;
(viii) pursuant to Section 16 in the Companies ▇▇▇ ▇▇▇▇, the
Bye-Laws of the Company and its Subsidiaries have been duly adopted
by the directors and the members of the Company and its
Subsidiaries, respectively, and bind the Company and its
Subsidiaries and the members thereof to the same extent as if the
Bye-Laws had been signed and sealed by each said member, and
contained covenants on the part of each member to observe all the
provisions of the Bye-Laws;
(ix) no order, consent, approval, license, authorization or
validation of or exemption by any government or public body or
authority of Bermuda or any subdivision thereof is required to
authorize or is required in connection with the execution, delivery,
performance and enforcement of this Agreement, the U.S. Underwriting
Agreement, the Direct Agreements, the Class A Warrants and the Class
B Warrants, except such as have been duly obtained in accordance
with Bermuda law;
(x) it is not necessary or desirable to ensure the enforceability in
Bermuda of this Agreement, the U.S. Underwriting Agreement, the
Direct Agreements, the Class A Warrants or the Class B Warrants that
they be registered in any register kept by, or filed with, any
governmental authority or regulatory body in Bermuda;
(xi) there are no Bermuda stamp, transfer or similar taxes payable
in respect of the issuance and delivery of the Securities, the
Direct Securities or the Class A Warrants to the Underwriters, the
Private Investors, the Affiliated Purchasers or the Class A Warrant
Holders (assuming that such each such Underwriter, Private Investor,
Affiliated Purchaser or Class A Warrant Holder is not resident in
Bermuda for exchange control purposes) pursuant to this Agreement,
the U.S. Underwriting Agreement, the Direct Agreements, the Class A
Warrants or the Class B Warrants, as the case may be; this
Agreement, the U.S. Underwriting Agreement, the Direct Agreements,
the Class A Warrants and the Class B Warrants will not be subject to
ad valorem stamp duty in Bermuda, and no registration, documentary,
recording, transfer or other similar tax, fee or charge by any
Bermuda Government authority is payable in connection with the
execution, delivery, filing, registration or performance of this
Agreement, the U.S. Underwriting Agreement, the Direct Agreements,
the Class A Warrants and the Class B Warrants;
(xii) the Company and its Subsidiaries have been designated as
nonresident for the purposes of the Exchange Control Act, 1972 and
as such are free to acquire, hold and sell foreign currency and
securities; no currency exchange control laws or withholding taxes
of Bermuda or elsewhere apply to the payment of dividends
27
28
(a) on the Securities by the Company or (b) by the Subsidiaries to
the Company, except in each case as described in or contemplated by
the Prospectuses; and the Subsidiaries are not currently prohibited
by any Bermuda law or governmental authority, directly or
indirectly, from paying any dividends to the Company, from making
any other distributions on its capital stock, from repaying to the
Company any loans or advances to it from the Company or from
transferring any of its property or assets to the Company, except as
described or contemplated in the Prospectuses;
(xiii) the Insurance Subsidiary has the necessary corporate power
and authority to enter into and perform its obligations under the
Reinsurance Treaties with ACA; the Insurance Subsidiary has taken
all corporate action required to authorize its execution, delivery
and performance of the Reinsurance Treaties, and the Reinsurance
Treaties have been duly executed and delivered by the Insurance
Subsidiary and constitute the valid and binding obligations of the
Insurance Subsidiary in accordance with the terms thereof; the
compliance by the Insurance Subsidiary with the provisions of the
Reinsurance Treaties and the consummation of the transactions
contemplated therein do not (i) require the consent, approval,
authorization, registration or qualification of or with any Bermuda
governmental authority, except such as have been obtained, or (ii)
conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument to
which the Company or its Subsidiaries is a party or by which the
Company or its Subsidiaries or any of their respective properties
are bound, or the Memorandum of Association or Bye-Laws of the
Company or its Subsidiaries, or any Bermuda statute or any judgment,
decree, order, rule or regulation of any Bermuda court or other
governmental authority or any arbitrator applicable to the Company
or its Subsidiaries;
(xiv) at the date hereof, there is no Bermuda income, corporation or
profits tax, withholding tax, capital gains tax, capital transfer
tax, estate duty or inheritance tax payable by the Company and its
Subsidiaries or by any Underwriter, Private Investor, Affiliated
Purchaser or Class A Warrant Holder, except where such Underwriter,
Private Investor, Affiliated Purchaser or Class A Warrant Holder is
ordinarily resident in Bermuda for exchange control purposes; each
of the Company and its Subsidiaries has received, pursuant to the
Exempted Undertakings Tax Protection Act, 1966, an assurance from
the Minister of Finance of Bermuda that, in the event of there being
enacted in Bermuda any legislation imposing tax computed on profits
or income, or computed on any capital asset, gain or appreciation,
or any tax in the nature of estate duty or inheritance tax, such tax
shall not be applicable to it or to any of its operations or the
shares, debentures or other obligations of it except insofar as such
tax applies to persons ordinarily resident in Bermuda holding such
shares, debentures or other
28
29
obligations of it or any land leased or let to it, which assurance
shall be in effect and apply to it until March 28, 2016;
(xv) based solely on a search of the Register of Charges, maintained
by the Registrar of Companies pursuant to Section 55 of the
Companies ▇▇▇ ▇▇▇▇, conducted at 10:00 a.m. on ______, 1999, there
are no registered charges registered against the Company or its
Subsidiaries;
(xvi) based solely upon a search of the Cause Book of the Supreme
Court of Bermuda conducted at 10:00 a.m. on _____, 1999, there are
no judgments, nor legal or governmental proceedings pending in
Bermuda to which the Company or its Subsidiaries are parties;
(xvii) the Underwriters, Private Investors, Affiliated Purchasers
and Class A Warrant Holders will not be deemed to be resident
(including for exchange control purposes), domiciled or carrying on
business in Bermuda by reason only of the execution, performance and
enforcement of this Agreement, the U.S. Underwriting Agreement, the
Direct Agreements, the Class A Warrants or the Class B Warrants, as
applicable;
(xviii) each of the Underwriters, Private Investors, Affiliated
Purchasers and Class A Warrant Holders has standing to bring an
action or proceedings before the appropriate courts in Bermuda for
the enforcement of this Agreement, the U.S. Underwriting Agreement,
the Direct Agreements, the Class A Warrants or the Class B Warrants,
as applicable; it is not necessary or advisable in order for any
such Underwriter, Private Investor, Affiliated Purchaser or Class A
Warrant Holder to enforce its rights under this Agreement, the U.S.
Underwriting Agreement, the Direct Agreements, the Class A Warrants
or the Class B Warrants, as applicable, including the exercise of
remedies thereunder, that it be licensed, qualified or otherwise
entitled to carry on business in Bermuda;
(xix) the statements set forth under the heading "Description of
Capital Stock" in the Prospectuses, insofar as such statements
purport to summarize certain provisions of the capital stock of the
Company, the Class A Warrants and the Class B Warrants provide a
fair summary of such provisions, and the statements set forth under
the headings "Enforceability of Civil Liabilities Under United
States Federal Securities Laws", "Risk Factors -- Dependence on Key
Employees", "Risk Factors -- Regulation; Restrictions on Insurance
and Reinsurance Operations -- Bermuda", "Risk Factors -- Income Tax
Risks -- Bermuda Taxes", "Risk Factors -- Limitations on Ownership,
Transfers and Voting Rights", "Risk Factors -- Holding Company
Structure", "Risk Factors -- Foreign Corporation, Service of Process
and Enforcement of Judgments", "Management's Discussion and Analysis
of Financial Condition and Plan of Operations -- Taxation",
"Business -- Regulation -- Bermuda", "Description of
29
30
Capital Stock", "Certain Tax Considerations -- Taxation of GMA, the
Operating Company and the Marketing Company -- Bermuda" and "Certain
Tax Considerations -- Taxation of Shareholders -- Bermuda Taxation"
in the Prospectuses, insofar as such statements constitute a summary
of provisions of Bermuda law or the Company's Memorandum of
Association and Bye-Laws, provide a fair summary of such legal
matters or the Memorandum of Association and Bye-Laws;
(xx) each of the Company and its Subsidiaries has validly and
irrevocably submitted to the nonexclusive jurisdiction of any
federal or state court sitting in the City of New York, has validly
and irrevocably waived, to the fullest extent permitted by law, any
objections that it may now or hereafter have to the laying of venue
of any such suit, action or proceeding brought in any such court
based on or arising under this Agreement or the U.S. Underwriting
Agreement or any claims that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum,
and has validly appointed CT Corporation System as its authorized
agent to receive service of process in any such suit, action or
proceeding; and the choice of the law of New York as the governing
law of this Agreement is a valid and effective choice of law;
(xxi) the courts of Bermuda would recognize as a valid judgment, a
final and conclusive judgment in personam obtained in any federal or
state court sitting in the State of New York against the Company
based upon this Agreement, the U.S. Underwriting Agreement, the
Direct Agreements, the Class A Warrants or the Class B Warrants
under which a sum of money is payable (other than a sum of money
payable in respect of multiple damages, taxes or other charges of a
like nature or in respect of a fine or other penalty) and would give
a judgment based thereon provided that (a) such courts had proper
jurisdiction over the parties subject to such judgment, (b) such
courts did not contravene the rules of natural justice of Bermuda,
(c) such judgment was not obtained by fraud, (d) the enforcement of
the judgment would not be contrary to the public policy of Bermuda,
(e) no new admissible evidence relevant to the action is submitted
prior to the rendering of the judgment by the courts of Bermuda and
(f) the due compliance with the correct procedures under the laws of
Bermuda; and
(xxii) the restrictions on transfer of the Common Shares and the
requirements for compulsory sale or surrender of the Common Shares
provided in the Company's Bye-Laws are valid and enforceable under
Bermuda law.
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials.
30
31
References to the Registration Statement and the Prospectuses in
this paragraph (c) shall include any amendment or supplement thereto at the date
of such opinion.
(d) The Lead Managers shall have received an opinion, dated the Firm
Closing Date, of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel for American Capital Access
Holdings, L.L.C. ("ACA LLC") and ACA, substantially to the effect that:
(i) ACA has full power (corporate and otherwise) to enter into the
Reinsurance Treaties with the Insurance Subsidiary and to carry out
all the terms and provisions thereof to be carried out by it;
(ii) the execution and delivery of the Reinsurance Treaties have
been duly authorized by ACA, and the Reinsurance Treaties have been
duly executed and delivered by ACA and are the valid and binding
agreements of ACA, enforceable against ACA in accordance with their
terms, subject to any applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law);
(iii) the compliance by ACA with the provisions of the Reinsurance
Treaties and the consummation of the transactions contemplated
therein do not (i) require the consent, approval, authorization,
registration or qualification of or with any governmental authority,
except such as have been obtained, or (ii) conflict with or result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
lease or other agreement or instrument to which ACA or any of its
affiliates is a party or by which ACA LLC, ACA or any of their
affiliates or any of their respective properties are bound, or the
Articles of Incorporation, By-Laws or similar organizational
documents of ACA LLC, ACA or any of their affiliates, or any statute
or any judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to ACA
LLC, ACA or any of their affiliates;
(iv) each of ACA LLC and ACA has full power (corporate and
otherwise) to enter into the letter agreements of even date herewith
among ACA LLC, ACA and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated and Prudential Securities Incorporated, as U.S.
Representatives and as representatives of the U.S. Underwriters, and
among ACA LLC, ACA, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Prudential-Bache
Securities (U.K.) Inc., as Lead Managers and as representatives of
the International Managers (collectively, the "ACA Letter
Agreements"), and to carry out all the respective terms and
provisions thereof to be carried out by it;
(v) the execution and delivery of the ACA Letter Agreements have
been duly authorized by ACA LLC and ACA, and the ACA Letter
Agreements have been duly executed and delivered by ACA LLC and ACA
and are the valid and binding agreements of ACA LLC and ACA,
enforceable against ACA LLC and ACA in
31
32
accordance with their respective terms, subject to any applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law), except that enforcement of rights
to indemnity and contribution thereunder may be limited by Federal
or state securities laws or principles of public policy; and
(vi) ACA is duly licensed or authorized as an insurer in all fifty
states of the United States, the District of Columbia and the
territories of Guam, the United States Virgin Islands and Puerto
Rico.
Such counsel shall also state that it has participated in the
preparation of the Registration Statement and the Prospectuses and in
conferences with officers and other representatives of the Company,
representatives of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, Bermuda and Cayman Islands counsel
for the Company, representatives of ▇▇▇▇▇▇▇▇ Chance, United Kingdom counsel to
the Company, representatives of Crills Advocates, Jersey counsel for the
Company, representatives of the independent public accountants for the Company,
and your representatives and your counsel at which the contents of the
Registration Statement, the Prospectuses and related matters were discussed and,
although such counsel has not passed upon or assumed any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses, and although such counsel has not
undertaken to verify independently the accuracy or completeness of the
statements in the Registration Statement and the Prospectuses and, therefore,
would not necessarily have become aware of any material misstatement of fact or
omission to state a material fact, on the basis of and subject to the foregoing,
such counsel does not believe that the statements set forth with respect to ACA
LLC or ACA in either the Registration Statement or the Prospectuses under the
captions "Prospectus Summary--Reinsurance Treaties with ACA" (second paragraph
only), "Business--ACA Financial Guaranty Corporation" and, insofar as may relate
to the regulatory status or operations of ACA LLC or ACA, "Prospectus
Summary--Reinsurance Treaties with ACA" (first paragraph) and
"Business--Reinsurance Treaties with ACA" (other than the financial information
therein or omitted therefrom, as to which such counsel need not express any
opinion) contained as of its date or contains as of the date of such opinion any
untrue statement of a material fact or omitted as of its date or omits as of the
date of such opinion to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deem proper, on the accuracy of the
representations and warranties made by the parties to this Agreement and the
International Underwriting Agreement and certificates of responsible officers of
the Company, ACA LLC, ACA and public officials.
References to the Registration Statement and the Prospectuses in
this paragraph (d) shall include any amendment or supplement thereto at the date
of such opinion.
32
33
(e) The Lead Managers shall have received an opinion, dated the Firm
Closing Date, of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, One Liberty Plaza, New
York, New York, counsel for the International Managers, with respect to the
issuance and sale of the Securities, the Registration Statement and the
Prospectuses, and such other related matters as the Lead Managers may reasonably
require, and the Company shall have furnished to such counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Lead Managers shall have received from KPMG Peat Marwick a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Lead Managers, to the effect
that:
(i) they are independent accountants with respect to the Company and
its Subsidiaries within the meaning of the Act and the applicable
rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial statements
examined by them and included in the Registration Statement and the
Prospectuses comply in form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations;
(iii) on the basis of a reading of the unaudited pro forma
consolidated balance sheet included in the Registration Statement
and the Prospectuses, carrying out certain specified procedures that
would not necessarily reveal matters of significance with respect to
the comments set forth in this paragraph (iii), inquiries of certain
officials of the Company and its Subsidiaries who have
responsibility for financial and accounting matters and proving the
arithmetic accuracy of the application of the pro forma adjustments
to the historical amounts in the unaudited pro forma consolidated
condensed financial statements, nothing came to their attention that
caused them to believe that the unaudited pro forma consolidated
balance sheet does not comply in form in all material respects with
the applicable accounting requirements of Rule 11-02 of Regulation
S-X or that the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of such balance sheet;
(iv) on the basis of carrying out certain specified procedures
(which do not constitute an examination made in accordance with
generally accepted auditing standards) that would not necessarily
reveal matters of significance with respect to the comments set
forth in this paragraph (iv), a reading of the minute books of the
shareholders, the board of directors and any committees thereof of
the Company and its Subsidiaries, and inquiries of certain officials
of the Company and its Subsidiaries who have responsibility for
financial and accounting matters, nothing came to their attention
that caused them to believe that at a specific date not more than
five business days prior to the date of such letter, there were any
changes in
33
34
the capital stock or long-term debt of the Company and the Insurance
Subsidiary or any decreases in net current assets or stockholders'
equity of the Company and the Insurance Subsidiary, in each case
compared with amounts shown on the December 31, 1998 audited
consolidated balance sheet included in the Registration Statement
and the Prospectuses, except in all instances for changes, decreases
or increases set forth in such letter; and
(v) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general
accounting records of the Company and its Subsidiaries and are
included in the Registration Statement and the Prospectuses under
the captions "Prospectus Summary", "Capitalization", "Risk Factors",
"Dilution", "Unaudited Pro Forma Consolidated Balance Sheet",
"Management", "Principal Stockholders", "Certain Relationships and
Related Party Transactions" and "Description of Capital Stock", and
have compared such amounts, percentages and financial information
with such records of the Company and its Subsidiaries and with
information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the International Managers that (A) such letters shall be
accompanied by a written explanation of the Company as to the significance
thereof, unless the Lead Managers deem such explanation unnecessary, and (B)
such changes, decreases or increases do not, in the sole judgment of the Lead
Managers, make it impractical or inadvisable to proceed with the purchase and
delivery of the International Securities as contemplated by the Registration
Statement, as amended as of the date hereof.
References to the Registration Statement and the Prospectuses in
this paragraph (f) with respect to either letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
(g) The Lead Managers shall have received a certificate, dated the
Firm Closing Date, of the Chief Executive Officer and the Chief Financial
Officer of the Company (in his or her capacity as an officer of the Company and
without personal liability) to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and the Prospectuses, as amended or supplemented as of the Firm
Closing Date, do not include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and the Company has performed all
34
35
covenants and agreements and satisfied all conditions on its part
required by this Agreement and the U.S. Underwriting Agreement to be
performed or satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or,
to the best of the Company's knowledge, are contemplated by the
Commission; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectuses, neither
the Company nor either of its Subsidiaries has sustained any
material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or
any legal or governmental proceeding, and there has not been any
material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or otherwise),
management, business prospects, net worth or results of operations
of the Company or its Subsidiaries, except in each case as described
in or contemplated by the Prospectuses (exclusive of any amendment
or supplement thereto).
(h) The Lead Managers shall have received from each of the
Sponsor-Affiliated Purchasers, each of the Affiliated Purchasers, each of the
Class A Warrant Holders and each person who is a director or officer of the
Company or who owns any outstanding Common Shares or any securities convertible
into, or exchangeable or exercisable for, any Common Shares, including, without
limitation, the Class A Warrants and the Class B Warrants, an agreement to the
effect that such person will not, directly or indirectly, without the prior
written consent of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and
Prudential Securities Incorporated, on behalf of the International Managers,
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 to sell, contract of sale, transfer, assignment,
pledge, hypothecation, grant of any option to purchase or other sale or
disposition) of any Common Shares or other capital stock of the Company or any
securities convertible into, or exercisable or exchangeable for, any Common
Shares or other capital stock of the Company for a period of one year after the
date of this Agreement.
(i) The Lead Managers shall have received from each of the Strategic
Investors that purchases Strategic Securities and Class B Warrants an agreement
to the effect that such person will not, directly or indirectly, without the
prior written consent of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and
Prudential Securities Incorporated, on behalf of the International Managers, 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 offer, sale, offer to sell, contract of sale, transfer,
assignment, pledge, hypothecation, grant of any option to purchase or other sale
or disposition) of any Common
35
36
Shares or other capital stock of the Company or any securities convertible into,
or exercisable or exchangeable for, any Common Shares or other capital stock of
the Company for a period of nine months after the date of this Agreement.
(j) Prior to the commencement of the offering of the Securities, the
Securities shall have been included for trading on the Nasdaq National Market
subject to official notice of issuance.
(k) The Strategic Investors shall have purchased Common Shares and
Class B Warrants pursuant to certain of the Direct Agreements with an aggregate
purchase price of at least $50.0 million.
(l) Contemporaneously with the purchase by the International
Managers of the Firm International Securities under this Agreement, the U.S.
Underwriters shall have purchased the Firm U.S. Securities under the U.S.
Underwriting Agreement.
(m) The Lead Managers shall have received from
PricewaterhouseCoopers LLP a letter or letters dated, respectively, the date
hereof and the Firm Closing Date, in form and substance satisfactory to the Lead
Managers, to the effect that:
(i) they are independent accountants with respect to ACA LLC and its
consolidated subsidiaries within the meaning of the Act and the
applicable rules and regulations thereunder;
(ii) on the basis of a reading of the amounts for premiums, admitted
assets, total liabilities and total surplus as regards policyholders
as of and for the year ended December 31, 1998 included in the
Registration Statement and the Prospectuses and of the audited
consolidated financial statements of ACA LLC and its consolidated
subsidiaries as of and for the year ended December 31, 1998 from
which such amounts are derived, carrying out certain specified
procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would
not necessarily reveal matters of significance with respect to the
comments set forth in this paragraph (ii), a reading of the minute
books of the shareholders, the board of directors and any committees
thereof of ACA LLC and its consolidated subsidiaries, and inquiries
of certain officials of ACA LLC and its consolidated subsidiaries
who have responsibility for financial and accounting matters,
nothing came to their attention that caused them to believe that the
amounts for premiums, admitted assets, total liabilities and total
surplus as regards policyholders included in the Registration
Statement and the Prospectuses do not agree with the amounts set
forth in the audited consolidated financial statements as of and for
the year ended December 31, 1998 of ACA LLC and its consolidated
subsidiaries; and
(iii) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that
36
37
are derived from the general accounting records of ACA LLC and its
consolidated subsidiaries and are included in the Registration
Statement and the Prospectuses under the captions "Prospectus
Summary -- Reinsurance Treaties with ACA", "Business -- Reinsurance
Treaties with ACA" and "Business -- ACA Financial Guaranty
Corporation" and have compared such amounts, percentages and
financial information with such records of ACA LLC and its
consolidated subsidiaries and with information derived from such
records and have found them to be in agreement, excluding any
questions of legal interpretation.
References to the Registration Statement and the Prospectuses in
this paragraph (m) with respect to either letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
(n) The Lead Managers shall have received a certificate, dated the
Firm Closing Date, of the Chief Executive Officer and the Chief Financial
Officer of ACA LLC and ACA (in his or her capacity as an officer of such
entities and without personal liability) to the effect that:
(i) the representations and warranties of ACA LLC and ACA in the ACA
Letter Agreements are true and correct as if made on and as of the
Firm Closing Date; the statements set forth in the Registration
Statement, as amended as of the Firm Closing Date, under the
captions "Prospectus Summary--Reinsurance Treaties with ACA" (second
paragraph only), "Business--ACA Financial Guaranty Corporation" and,
insofar as may relate to the regulatory status or operations of ACA,
"Prospectus Summary--Reinsurance Treaties with ACA" (first
paragraph) and "Business--Reinsurance Treaties with ACA" do not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein with respect to ACA LLC or ACA not misleading,
and the statements set forth in the Prospectuses, as amended or
supplemented as of the Firm Closing Date, under the captions
"Prospectus Summary--Reinsurance Treaties with ACA" (second
paragraph only), "Business--ACA Financial Guaranty Corporation" and,
insofar as may relate to the regulatory status or operations of ACA
LLC or ACA, "Prospectus Summary--Reinsurance Treaties with ACA"
(first paragraph) and "Business--Reinsurance Treaties with ACA" do
not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein
with respect to ACA LLC or ACA, in the light of the circumstances
under which they were made, not misleading; and each of ACA LLC and
ACA has performed all covenants and agreements on its part to be
performed at or prior to the Firm Closing Date pursuant to the ACA
Letter Agreements; and
(ii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectuses, neither
ACA LLC nor its subsidiaries, including ACA, has sustained any
material loss or interference with
37
38
their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or
any development involving a prospective material adverse change, in
the condition (financial or otherwise), management, business
prospects, net worth or results of operations of ACA LLC or its
subsidiaries, including ACA, except in each case as described in or
contemplated by the Prospectuses (exclusive of any amendment or
supplement thereto).
(o) ACA LLC and ACA shall have entered into the ACA Letter
Agreements with, respectively, each of the Lead Managers, as representatives of
the International Managers, and the U.S. Representatives, as representatives of
the U.S. Underwriters, and the representations and warranties of ACA LLC and ACA
contained in the ACA Letter Agreements and the statements of ACA LLC's and ACA's
officers made pursuant to the provisions hereof shall be, as determined in the
sole discretion of the Lead Managers, accurate as of the date hereof and as of
the Firm Closing Date, as if made on and as of the Firm Closing Date, and each
of ACA LLC and ACA shall have performed, as determined in the sole discretion of
the Lead Managers, its covenants and agreements pursuant to the ACA Letter
Agreements.
(p) On or before the Firm Closing Date, the Lead Managers and
counsel for the International Managers shall have received such further
certificates, documents or other information as they may have reasonably
requested from the Company.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Lead Managers and
counsel for the International Managers. The Company shall furnish to the Lead
Managers such conformed copies of such opinions, certificates, letters and
documents in such quantities as the Lead Managers and counsel for the
International Managers shall reasonably request.
The respective obligations of the several International Managers to
purchase and pay for any International Option Securities shall be subject, in
their discretion, to each of the foregoing conditions to purchase the Firm
International Securities, except that all references to the Firm International
Securities and the Firm Closing Date shall be deemed to refer to such
International Option Securities and the related Option Closing Date,
respectively.
SECTION 6. Indemnification. (a) The Company agrees to indemnify and
hold harmless each International Manager and each person, if any, who controls
any International Manager within the meaning of Section 15 of the Act or Section
20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement made by the Company in Section 1 of this
Agreement;
38
39
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable,
or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectuses (or any amendment or
supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company;
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
Prudential-Bache Securities (U.K.) Inc.), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under
(i), (ii) or (iii) above; and
(v) any untrue statement or alleged untrue statement of any material
fact contained in any audio or visual materials based upon
information provided by the Company, ACA LLC or ACA used in
connection with the marketing of the Securities, including without
limitation, slides, videos, films and tape recordings;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the International Prospectus (or any amendment or supplement
thereto); and provided, further, that the Company will not be liable to any
International Manager with respect to any preliminary prospectus to the extent
that the Company shall sustain the burden of proving that any such loss,
liability, claim, damage or expense resulted from the fact that such
International Manager, in contravention of a requirement of this Agreement or
applicable law, sold Securities to a person to whom such International Manager
failed to send or
[/R]
39
40
give, at or prior to the Closing Date, a copy of the Final Prospectus, as then
amended or supplemented if: (i) the Company has previously furnished copies
thereof (sufficiently in advance of the Closing Date to allow for distribution
by the Closing Date) to the International Manager and the loss, liability,
claim, damage or expense of such International Manager resulted from an untrue
statement or omission of a material fact contained in or omitted from any
preliminary prospectus which was corrected in the Final Prospectus as, if
applicable, amended or supplemented prior to the Closing Date and such Final
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person and (ii) the giving or sending of such Final
Prospectus by the Closing Date to the party or parties asserting such loss,
liability, claim, damage or expense would have constituted the sole defense to
the claim asserted by such person.
(b) Each International Manager severally agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section 6, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any Preliminary International Prospectus or the International Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such International Manager
through the Lead Managers expressly for use in the Registration Statement (or
any amendment thereto) or such Preliminary Prospectus or the International
Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 6(a) above, counsel to the indemnified
parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Prudential-Bache Securities
(U.K.) Inc., and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties
40
41
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(iii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the International Managers on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the International Managers on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and
the International Managers on the other hand in connection with the offering of
the International Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the International Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the total underwriting discount received
by the International Managers, in each case as set forth on the cover of the
International Prospectus, or, if Rule 434 is used, the corresponding location on
the Term Sheet, bear to the aggregate initial public offering price of the
International Securities as set forth on such cover.
The relative fault of the Company on the one hand and the
International Managers on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by the International Managers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
41
42
The Company and the International Managers agree that it would not
be just and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation (even if the International Managers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Managers has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Managers within the meaning of Section 15 of the Act or Section 20
of the Exchange Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act shall have the same rights to contribution as the Company.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Firm International
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Company, its officers and the several
International Managers set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any International Manager or any controlling
person referred to in Section 6 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 4, 6 and 7 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
42
43
SECTION 9. Termination of Agreement. (a) The Lead Managers may
terminate this Agreement, by notice to the Company, at any time at or prior to
the Firm Closing Date (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
International Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the International Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of ACA LLC and ACA considered
as one enterprise, whether or not arising in the ordinary course of business, or
(iii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Lead Managers, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iv) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (v) if
a banking moratorium has been declared by either Federal, New York or Bermuda
authorities.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof, and provided further that Sections 1, 6, 7 and 8
shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the International Managers. If
one or more International Managers default in their obligations to purchase Firm
International Securities or International Option Securities hereunder and the
aggregate number of such Securities that such defaulting International Manager
or International Managers agreed but failed to purchase is ten percent or less
of the aggregate number of Firm International Securities or International Option
Securities to be purchased by all of the International Managers at such time
hereunder, the other International Managers may make arrangements satisfactory
to the Lead Managers for the purchase of such Securities by other persons (who
may include one or more of the non-defaulting International Managers, including
the Lead Managers), but if no such arrangements are made by the Firm Closing
Date or the related Option Closing Date, as the case may be, the other
International Managers shall be obligated severally in proportion to their
respective commitments hereunder to purchase the Firm International Securities
or International Option Securities that such defaulting International Manager or
International Managers agreed but failed to purchase. If one or more
International Managers so default with respect to an aggregate number of
Securities that is more than ten percent of the aggregate number of Firm
International
43
44
Securities or International Option Securities, as the case may be, to be
purchased by all of the International Managers at such time hereunder, and if
arrangements satisfactory to the Lead Managers are not made within 36 hours
after such default for the purchase by other persons (who may include one or
more of the non-defaulting International Managers, including the Lead Managers)
of the Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting International
Manager or the Company other than as provided in Section 8 hereof. In the event
of any default by one or more International Managers as described in this
Section 10, the Lead Managers shall have the right to postpone the Firm Closing
Date or the Option Closing Date, as the case may be, established as provided in
Section 2 hereof for not more than seven business days in order that any
necessary changes may be made in the arrangements or documents for the purchase
and delivery of the Firm International Securities or International Option
Securities, as the case may be. As used in this Agreement, the term
"International Manager" includes any person substituted for an International
Manager under this Section 10. Nothing herein shall relieve any defaulting
International Manager from liability for its default.
SECTION 11. Notices. All communications hereunder shall be in
writing and, if sent to any of the International Managers, shall be delivered or
sent by mail, telex or facsimile transmission and confirmed in writing to
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, North Tower, World Financial
Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ and Prudential
Securities Incorporated, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Equity Transactions Group; and if sent to the Company, shall be
delivered or sent by mail, telex or facsimile transmission and confirmed in
writing to the Company at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇,
▇▇▇▇▇▇▇.
SECTION 12. Information Supplied by the International Managers. The
statements set forth in the last paragraph on the front cover page, the
stabilization legend on the inside cover page and under the heading
"Underwriting" (to the extent such statements relate to the International
Managers) or under the heading "Business--Investment Managers" (to the extent
such statements describe the relationship between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset
Management, L.P. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc., and between The Prudential
Investment Corporation and The Prudential Insurance Company of America) in any
International Preliminary Prospectus or the International Prospectus constitute
the only information furnished by any International Manager through the Lead
Managers to the Company for the purposes of Sections 1(b), 6 and 7 hereof. The
International Managers confirm that such statements (to such extent) are
correct.
SECTION 13. Parties. This Agreement shall inure to the benefit of
and shall be binding upon the several International Managers, the Company and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Sections 6 and 7 of this Agreement
shall also be for the benefit of any
44
45
person or persons who control any International Manager within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act and (ii) the indemnities
of the International Managers contained in Sections 6 and 7 of this Agreement
shall also be for the benefit of the directors of the Company, the officers of
the Company who have signed the Registration Statement and any person or persons
who control the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act. No purchaser of Securities from any International
Manager shall be deemed a successor because of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
SECTION 16. Consent to Jurisdiction and Service of Process. All
judicial proceedings arising out of or relating to this Agreement may be brought
in any state or federal court of competent jurisdiction in the State of New
York, and by execution and delivery of this Agreement, the Company irrevocably
accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably waives any defense of forum non conveniens and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with this
Agreement. The Company designates and appoints CT Corporation System, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, and such other persons as may hereafter be
selected by the Company irrevocably agreeing in writing to so serve, as its
agent to receive on its behalf service of all process in any such proceedings in
any such court, such service being hereby acknowledged by the Company to be
effective and binding service in every respect. A copy of any such process so
served shall be mailed by registered mail to the Company at its address provided
in Section 11 hereof; provided, however, that, unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity of
service of such process. If any agent appointed by the Company refuses to accept
service, the Company hereby agrees that service of process sufficient for
personal jurisdiction in any action against the Company in the State of New York
may be made by registered or certified mail, return receipt requested, to the
Company at its address provided in Section 11 hereof, and the Company hereby
acknowledges that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any International Manager to bring
proceedings against the Company in the courts of any other jurisdiction.
45
46
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the International Managers and the Company in accordance with its terms.
Very truly yours,
GLOBAL MARKETS ACCESS LTD.
By
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
BEAR, ▇▇▇▇▇▇▇ INTERNATIONAL LIMITED
BARING BROTHERS LIMITED, as agent for ING BANK N.V.
SALOMON BROTHERS INTERNATIONAL LIMITED
UBS AG, acting through its division WARBURG DILLON READ
By ▇▇▇▇▇▇▇ ▇▇▇▇▇ INTERNATIONAL
By
---------------------------------------
Name:
Title:
By PRUDENTIAL-BACHE SECURITIES (U.K.) INC.
By
---------------------------------------
Name:
Title:
For themselves and as Lead Managers of the several
International Managers named in Schedule A hereto.
47
Draft of 3/18/99
SCHEDULE A
Number of Firm
International
Securities to
Name of International Manager be Purchased
--------------------------------------------------------------- --------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ International.................................
Prudential-Bache Securities (U.K.) Inc. ....................
Bear, ▇▇▇▇▇▇▇ International Limited.........................
Baring Brothers Limited, as agent for ING Bank N.V..........
Salomon Brothers International Limited......................
UBS AG, acting through its division Warburg Dillon Read ....
............................................................
............................................................
............................................................
............................................................
............................................................
............................................................
............................................................
............................................................
............................................................
............................................................
............................................................
............................................................
--------
Total...........................
========
