EXHIBIT 1.3
[IPC HOLDINGS, LTD. LETTERHEAD]
October 31, 2005
American International Group, Inc.,
00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000
Re: IPC Holdings, Ltd. -- Public Offering of Common Shares
Ladies and Gentlemen:
This letter agreement sets forth the terms under which American
International Group, Inc., a Delaware corporation ("AIG"), will participate in
the proposed public offering (the "Public Offering") by IPC Holdings, Ltd., a
Bermuda exempted company (the "Company"), of a total of 13,820,000 of the
Company's common shares, par value $0.01 per share (the "Common Shares"), and of
up to an additional 1,382,000 Common Shares if the underwriters exercise in full
their over-allotment option (the "Over-Allotment Option") provided in the
underwriting agreement relating to the Public Offering (the "Underwriting
Agreement").
Of the total of 13,820,000 Common Shares offered by the Company, 10,479,000
(the "Firm Underwritten Shares") will be underwritten by Citigroup Global
Markets, Inc., Xxxxxx Xxxxxxx & Co. Incorporated and the other underwriters (the
"Underwriters") named in the Underwriting Agreement. To the extent the
Underwriters exercise the Over-Allotment Option, up to an additional 1,048,000
Common Shares (the "Optional Underwritten Shares") will be underwritten by the
Underwriters.
The Company hereby agrees that, contingent upon the consummation of the
offering of the Firm Underwritten Shares, it shall sell and deliver to AIG at
the time of the delivery of the Firm Underwritten Shares, and AIG agrees that at
such time it shall purchase from the Company, 3,341,000 Common Shares (the "Firm
AIG Shares") at a price per share equal to $26.25 (the "Public Offering Price").
The Company hereby further agrees that, contingent upon the consummation of the
Public Offering and any exercise of the Over-Allotment Option by the
underwriters in the underwriters' discretion in whole or in part, the Company
shall sell and deliver to AIG at the time of delivery of the Optional
Underwritten Shares, and AIG agrees that at such time it shall purchase
from the Company, up to 334,000 additional Common Shares (the "Optional AIG
Shares") at the Public Offering Price, the precise number of Optional AIG Shares
to be so sold and purchased to be in the same proportion as the proportion to
which the Over-Allotment Option is exercised (rounded down to the nearest round
lot number of shares) in order that AIG maintain its current beneficial
ownership of approximately 24.2% of the outstanding Common Shares of the
Company.
In consideration of AIG's participation in the Public Offering, the Company
hereby agrees to provide AIG, over the seven-year period commencing at the
expiration of the sixty-day lock-up period specified in the Underwriting
Agreement (i.e., on December 31, 2005) and ending December 31, 2012, three
demand registration rights with respect to the Common Shares AIG owns as of
November 4, 2005 (e.g., the 11,722,000 outstanding shares currently owned by AIG
and the Firm AIG Shares and any AIG Optional Shares purchased by AIG in the
Offering, and any splits, subdivisions or recapitalizations thereof). Such
rights shall be provided by the Company to AIG on the terms and subject to the
conditions specified with respect to demand registration rights held by AIG with
respect to outstanding shares as set forth in the previously in-force
Registration Rights Agreement, dated as of March 13, 1996, among the
rightsholders (including AIG) named therein and the Company (the "Registration
Rights Agreement"), which terms and conditions are hereby incorporated herein
except to the extent inconsistent herewith; provided, however, that AIG shall be
obligated to pay all the Company's out-of-pocket expenses (as well as AIG's
expenses) in connection with the performance of these obligations (including any
and all fees of the Company's counsel and accountants, registration and listing
fees, underwriting fees and discounts, and any printing and roadshow expenses)
and AIG shall not be entitled to piggy-back registration rights.
This letter will be governed by the laws of the State of New York.
Please acknowledge your acceptance of and agreement with the terms set
forth in this letter by countersigning in the space provided below.
Very truly yours,
IPC HOLDINGS, LTD.
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title: Chief Financial Officer
Accepted and agreed as of the date hereof:
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President - Strategic Planning
