EXHIBIT 10.37
AMENDED AND RESTATED OPTION AGREEMENT
This AMENDED AND RESTATED OPTION AGREEMENT (this "Agreement"), dated as
of November 18, 2004, amends and restates the OPTION AGREEMENT, dated November
1, 2002 (the "Option Agreement"), between PLATINUM UNDERWRITERS HOLDINGS, LTD.,
a company organized under the laws of the Islands of Bermuda (the "Company"),
and RENAISSANCERE HOLDINGS LTD., a company organized under the laws of the
Islands of Bermuda ("RenRe").
RECITALS:
WHEREAS, the Company completed an initial public offering (the "Public
Offering") of its common shares, par value U.S.$0.01 per share (the "Common
Shares"), on November 1, 2002;
WHEREAS, RenRe and the Company entered into an Investment Agreement,
dated as of September 20, 2002 (the "Investment Agreement"), pursuant to which
RenRe agreed to purchase from the Company that number of Common Shares
determined as set forth in the Investment Agreement;
WHEREAS, pursuant to the Investment Agreement, the Company and RenRe
entered into the Option Agreement pursuant to which the Company granted to
RenRe, in respect of RenRe's initial investment in the Company, an option (the
"Original Option") to purchase up to 2,500,000 Common Shares following the
completion of the Public Offering at an exercise price of $27.00, which equals
120 percent of the Public Offering price per Common Share;
WHEREAS, RenRe has proposed that the Original Option be amended to
provide that any exercise thereof shall be on a net share settlement basis with
payment by RenRe to the Company of cash consideration per Common Share issued
upon such exercise of the then par value of such Common Share; and
WHEREAS, the Company has determined that the Company will benefit from
a reduction in the overhang on the market which arises from the Original Option,
the Company has no need of the capital represented by the aggregate Original
Option Price, and it is in the best interests of the Company to amend the
Original Option in accordance with RenRe's proposal.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree that the Option Agreement shall be amended and restated in its
entirety as follows:
THE RENRE OPTION (AS DEFINED BELOW) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933. NEITHER THE RENRE OPTION, NOR ANY INTEREST THEREIN, NOR
ANY COMMON SHARES DELIVERABLE UPON EXERCISE THEREOF MAY BE ASSIGNED OR OTHERWISE
TRANSFERRED, DISPOSED OF OR ENCUMBERED EXCEPT FOLLOWING RECEIPT BY PLATINUM
UNDERWRITERS HOLDINGS, LTD. (THE "COMPANY") OF EVIDENCE SATISFACTORY TO IT,
WHICH MAY INCLUDE AN OPINION OF UNITED STATES COUNSEL, THAT SUCH TRANSFER DOES
NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS AND
UPON OBTAINMENT OF ANY REQUIRED GOVERNMENT APPROVALS AND EXCEPT TO THE EXTENT
PERMITTED HEREIN. TRANSFER (AS DEFINED IN THE COMPANY'S BYE-LAWS) OF THE RENRE
OPTION OR ANY INTEREST THEREIN, OR ANY COMMON SHARES DELIVERABLE UPON EXERCISE
THEREOF, MAY BE DISAPPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY IF, IN ITS
REASONABLE JUDGMENT, IT HAS REASON TO BELIEVE THAT SUCH TRANSFER MAY EXPOSE THE
COMPANY, ANY SUBSIDIARY THEREOF, ANY SHAREHOLDER OR ANY PERSON CEDING INSURANCE
TO THE COMPANY OR ANY SUCH SUBSIDIARY TO ADVERSE TAX OR REGULATORY TREATMENT IN
ANY JURISDICTION. COMMON SHARES OBTAINED UPON EXERCISE OF THE RENRE OPTION ARE
SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER AS SET FORTH IN SECTION 6 OF
THIS AGREEMENT.
1. (a) The Company grants RenRe an option (the "RenRe Option") to purchase
up to 2,500,000 Common Shares (the "RenRe Option Shares") in accordance with the
terms and conditions of this Agreement.
(b) The RenRe Option is exercisable, in whole or in part at any time prior
to November 1, 2012 (the "Exercise Period"), at an exercise price per Common
Share (the "Exercise Price") equal to $27.00 less the then par value of such
Common Share, as such Exercise Price is adjusted from time to time pursuant
hereto, which Exercise Price shall be paid by reducing the number of Common
Shares obtainable upon exercise of the RenRe Option as provided in Section 1(d)
hereof. As additional consideration, in connection with any exercise of the
RenRe Option, RenRe must pay the applicable Cash Consideration to the Company in
accordance with Section 2 below.
(c) The RenRe Option may be exercised on any day during the Exercise
Period, other than a Saturday, Sunday or other day on which banking institutions
in New York City or Bermuda are authorized or obligated by law or executive
order to close (a "Business Day"). The RenRe Option may be exercised as provided
herein until 12:01 A.M., New York City time, on the first day after the
expiration of the Exercise Period.
(d) Upon any exercise of the RenRe Option, the Exercise Price shall be paid
by reducing the number of RenRe Option Shares obtainable upon such exercise so
as to yield a number of RenRe Option Shares issuable upon such exercise equal to
the product of (x) the number of RenRe Option Shares issuable as of the Notice
Date (if payment of the Exercise Price were being made in cash) and (y) the
Exchange Ratio. For purposes hereof, (i) "Exchange Ratio" means a fraction, the
numerator of which is the excess of the Market Price per Common
-2-
Share over the Exercise Price per share as of the Notice Date and the
denominator of which is the Market Price per Common Share; (ii) "Market Price"
means the average of the daily Closing Price per Common Share for each of the
five consecutive Trading Days ending on the Notice Date (the "Pre-Notice
Average") plus the average of the daily Closing Price per Common Share for each
of the five consecutive Trading Days immediately following the Notice Date (the
"Post-Notice Average") divided by two; provided, however, that the Post-Notice
Average shall not exceed the Pre-Notice Average multiplied by 1.025 nor be less
than the Pre-Notice Average multiplied by 0.975; (iii) "Trading Day" means each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which the
Common Shares are not traded on the applicable securities exchange or on the
applicable securities market; (iv) "Closing Price" means the reported last sale
price regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if the Common Shares are not listed or
admitted to trading on such Exchange, on the principal national securities
exchange on which the Common Shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the NASDAQ
National Market or, if the Common Shares are not listed or admitted to trading
on any national securities exchange or quoted on the NASDAQ National Market, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm reasonably selected from
time to time by the Board of Directors of the Company for that purpose; and (v)
"Notice Date" means the date upon which the Company receives written notice
(which shall be signed on behalf of RenRe and delivered or sent to the Company
in accordance with Section 9 hereof) from RenRe of RenRe's exercise of the RenRe
Option, provided that the Company shall receive such notice no later than 11:59
p.m. Bermuda time on such date.
(e) No fractional Common Share shall be issued upon any exercise of the
RenRe Option. In lieu of a fractional Common Share, RenRe shall be entitled to
receive cash for the value of the fractional Common Share, which cash payment
shall be equal to the product of (i) the fraction represented by the fractional
Common Share that would have been issued absent this Section 1(e) and (ii) the
Market Price.
(f) In connection with any exercise of the RenRe Option, the Market Price,
the Exercise Price, and the number of RenRe Option Shares to be issued (after
giving effect to the payment of the Exercise Price as provided in Section 1(d)
hereof) will be determined by the Company within three Business Days after the
last Trading Day included in the Post-Notice Average (the "Determination Date").
(g) Notwithstanding anything to the contrary in this Agreement, RenRe's
beneficial ownership interest in the Common Shares may not at any time and under
any circumstances exceed 19.9% of the then outstanding Common Shares or such
higher limit as the Company may approve in writing. It is agreed and understood
that, prior to any exercise of the RenRe Option, RenRe shall, if necessary,
dispose of such number of Common Shares so that, immediately after any exercise
of the RenRe Option, except with the prior written approval of the Company,
RenRe will not beneficially own more than 19.9% of the then outstanding Common
Shares.
-3-
(h) The RenRe Option Shares upon issue will rank equally in all respects
with the other Common Shares of the Company, but in no case will any RenRe
Option Shares carry any option or other right to subscribe for further
additional shares.
(i) RenRe is not, solely by virtue hereof, entitled to any rights of a
shareholder in the Company either at law or in equity.
(j) Upon any merger, amalgamation, consolidation, scheme of arrangement or
similar transaction involving the Company and any third party that is not a
subsidiary of the Company, or any sale of all or substantially all the assets of
the Company to any third party that is not a subsidiary of the Company (each, a
"Transaction") in which all holders of Common Shares become entitled to receive,
in respect of such shares, any capital stock, rights to acquire capital stock or
other securities of the Company or of any other person, any cash or any other
property, or any combination of the foregoing (collectively, "Transaction
Consideration"), the RenRe Option shall entitle RenRe, upon exercise thereof and
payment by RenRe of the Cash Consideration, to receive all Transaction
Consideration that RenRe would have been entitled to if it had exercised the
RenRe Option in full immediately prior to the Transaction (without regard to the
limitations in Section 1(g) hereof). In determining the kind and amount of
Transaction Consideration that RenRe would be entitled to receive in respect of
any Transaction pursuant to this Section 1(j), RenRe shall be entitled to
exercise any rights of election as to the kinds and amounts of consideration
receivable in such Transaction that are provided to holders of Common Shares in
such Transactions. Any adjustment in respect of a Transaction pursuant to this
Section 1(j) shall become effective immediately after the effective time of such
Transaction, retroactive to any record date therefor. The Company shall take
such action as is necessary to ensure that RenRe shall be entitled to receive
Transaction Consideration upon the terms and conditions provided in this Section
1(j). Notwithstanding the foregoing, if an adjustment is made pursuant to this
Section 1(j) in respect of a Transaction that involves a Change of Control (as
defined below), RenRe shall be entitled to exercise the RenRe Option pursuant to
this Section 1(j) without regard to Section 1(g) hereof. A Transaction is deemed
to have involved a "Change of Control" if the beneficial owners of the
outstanding Common Shares immediately prior to the effective time of such
Transaction are not the beneficial owners of a majority of the total voting
power of the surviving or acquiring entity in the Transaction, as the case may
be, immediately after such effective time.
2. (a) To exercise the RenRe Option in accordance with Section 1 hereof,
RenRe shall provide written notice to the Company of its intention to exercise
all or a portion of the RenRe Option. Such notice must indicate the number of
the RenRe Option Shares RenRe intends to purchase upon exercise of the RenRe
Option (prior to giving effect to the payment of the Exercise Price pursuant to
Section 1(d) hereof).
(b) On the Determination Date, the Company shall deliver written notice to
RenRe of the number of RenRe Option Shares to which RenRe is entitled as a
result of the exercise of the RenRe Option. Upon payment by RenRe to the Company
of the Cash Consideration (which
-4-
may be made by check, cash or wire transfer), the Company shall promptly (but in
no event later than the third Business Day after receipt of such payment from
RenRe) deliver to RenRe the RenRe Option Shares, and shall pay to RenRe the cash
in lieu of any fractional Common Share, which may be paid by check, cash or wire
transfer. The "Cash Consideration" means an amount equal to the product of (i)
the number of RenRe Option Shares to which RenRe is entitled as a result of the
exercise of the RenRe Option (after giving effect to the payment of the Exercise
Price pursuant to Section 1(d) hereof) and (ii) the then per share par value of
a Common Share. Any increase in the par value of the Common Shares from $0.01
per Common Share which would have the effect of increasing the Cash
Consideration, other than in the case of any of the actions described in
Sections 3(a)(B) and 3(a)(C) hereof which includes a proportionate adjustment in
the par value, shall be subject to the prior written consent of RenRe.
(c) Notwithstanding anything to the contrary in this Agreement, the RenRe
Option may not be exercised under this Agreement unless the required regulatory
approvals set forth in Section 5 shall have been obtained.
3. (a) In case the Company:
(A) declares or pays a dividend or makes any other distribution
with respect to its capital stock in Common Shares such that the
number of Common Shares outstanding is increased,
(B) subdivides or splits-up its outstanding Common Shares, such
that the number of Common Shares outstanding is increased,
(C) combines its outstanding Common Shares into a smaller number
of Common Shares or
(D) effects any reclassification of the Common Shares other than
a change in par value (including any such reclassification in
connection with an amalgamation or merger in which the Company is the
surviving entity or a reincorporation of the Company),
the number of RenRe Option Shares issuable upon exercise of the RenRe
Option shall be proportionately adjusted so that RenRe will be entitled to
receive the kind and number of Common Shares or other securities of the
Company which it would have been entitled to receive after the happening of
any of the events described above if the RenRe Option had been exercised
immediately prior to the happening of such event or any record date with
respect thereto. An adjustment made pursuant to this Section 3(a) shall
become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) In case the Company issues rights, options or warrants to all holders
of its outstanding Common Shares entitling them to subscribe for or purchase
Common Shares at a price per Common Share which is lower at the record date
mentioned below than the then Current Market Value (as defined in Section 3(d)),
the number of RenRe Option Shares that RenRe may purchase thereafter upon the
exercise of the
-5-
RenRe Option (prior to giving effect to the payment of the Exercise Price
pursuant to Section 1(d) hereof) will be determined by multiplying the number of
RenRe Option Shares theretofore purchasable upon exercise of the RenRe Option by
a fraction, of which the numerator is the sum of (A) the number of Common Shares
outstanding on the record date for determining shareholders entitled to receive
such rights, options or warrants plus (B) the number of additional Common Shares
offered for subscription or purchase, and of which the denominator shall be the
sum of (A) the number of Common Shares outstanding on the record date for
determining shareholders entitled to receive such rights, options or warrants
plus (B) the number of shares which the aggregate offering price of the total
number of Common Shares so offered would purchase at the Current Market Value
(as defined below in Section 3(d)) per Common Share at such record date. Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights, options or
warrants.
(c) In the event the Company distributes to all holders of its Common
Shares any of the capital stock of any of its subsidiaries (each, a
"Subsidiary"), the RenRe Option will upon such distribution be deemed to be an
option to acquire the kind and number of shares of the capital stock of the
Subsidiary which RenRe would have been entitled to receive after such
distribution had the RenRe Option been exercised immediately prior to such
distribution or any record date with respect thereto. The roll-over of the RenRe
Option into an option to acquire shares of capital stock of the applicable
Subsidiary pursuant to this Section 3(c) will become effective immediately after
the effective date of the distribution of shares of the capital stock of the
applicable Subsidiary to shareholders of the Company described above.
(d) For the purpose of any computation under Section 3(b), the "Current
Market Value" of such Common Shares on a specified date is deemed to be the
average daily Closing Price per Common Share for each of the ten consecutive
Trading Days ending on the day before the applicable record date.
(e) In the event the Company shall, in any calendar year, by dividend or
otherwise, distribute to all or substantially all holders of its Common Shares
(the "Current Distribution") (i) any dividend or other distribution of cash,
evidences of indebtedness, or any other assets or properties (other than as
described in Sections 3(a) through 3(c) above) or (ii) any options, warrants or
other rights to subscribe for or purchase any of the foregoing, with a fair
value (as determined in good faith by the Company's Board of Directors) per
Common Share that, when combined with the aggregate amount per Common Share paid
in respect of all other such distributions to all or substantially all holders
of its Common Shares within such calendar year, exceeds (1) for calendar year
2003, the Initial Dividend (as defined below) or (2) for any subsequent calendar
year, an amount equal to the Initial Dividend increased at a rate of 10% per
annum from January 1, 2003, compounded annually on December 31 of each year
commencing in 2003 (such excess of the Current Distribution being herein
referred to as the "Excess Distribution Amount"), the per share Exercise Price
in effect immediately prior to the close of business on the date fixed for such
payment shall be reduced by the Excess Distribution Amount, such reduction to
become effective immediately prior to the opening of business on the day
following the date fixed for such payment. The "Initial Dividend" means the
distributions described in items (i) and (ii) above per Common Share paid by the
Company to all or substantially all holders of its Common Shares during the 2003
calendar year as determined by the Company's Board of Directors, up to a maximum
of $0.44 per Common Share.
-6-
(f) Whenever the number of Common Shares purchasable by RenRe upon the
exercise of the RenRe Option is adjusted, as herein provided, the Exercise Price
shall be adjusted by multiplying the Exercise Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of RenRe
Option Shares purchasable upon the exercise of the RenRe Option immediately
prior to such adjustment, and of which the denominator shall be the number of
RenRe Option Shares purchasable immediately thereafter (in each case, prior to
giving effect to the payment of the Exercise Price pursuant to Section 1(d)
hereof).
(g) No adjustment in the number of RenRe Option Shares issuable upon the
exercise of the RenRe Option need be made under Section 3(b) and (c) if the
Company issues or distributes, pursuant to this Agreement, to RenRe the shares,
rights, options, warrants, securities or assets referred to in those Sections
which RenRe would have been entitled to receive had the RenRe Option been
exercised prior to the happening of such event or the record date with respect
thereto. Other than for adjustments in the Cash Consideration (which are subject
to Section 2(b) hereof), no adjustment need be made for a change in the par
value of the RenRe Option Shares.
(h) For the purpose of this Section 3, the term "Common Shares" shall mean
(i) the class of stock consisting of the Common Shares of the Company, or (ii)
any other class of stock resulting from successive changes or reclassification
of such shares other than consisting solely of changes in par value. In the
event that at any time, as a result of an adjustment made pursuant to Section
3(a) above, RenRe will become entitled to receive any securities of the Company
other than Common Shares, thereafter the number of such other securities so
receivable upon exercise of the RenRe Option and the Exercise Price of such
securities will be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
RenRe Option Shares contained in Sections 3(a) through 3(f), inclusive, above;
provided, however, that the Exercise Price will at no time be less than the
aggregate par value of the Common Shares or other securities of the Company
obtainable upon exercise of the RenRe Option.
(i) In the case of Section 3(b), upon the expiration of any rights, options
or warrants or if any thereof shall not have been exercised, the Exercise Price
and the number of Common Shares purchasable upon the exercise of the RenRe
Option shall, upon such expiration, be readjusted and shall thereafter be such
as they would have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (A) the only Common
Shares so issued were the Common Shares, if any, actually issued or sold upon
the exercise of such rights, options or warrants and (B) such Common Shares, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise plus the aggregate consideration, if any, actually received
by the Company for the issuance, sale or grant of all such rights, options or
warrants whether or not exercised; provided, further, that no such readjustment
may have the effect of increasing the Exercise Price or decreasing the number of
Common Shares purchasable upon the exercise of the RenRe Option by an amount in
excess of the amount of the adjustment initially made in respect of the
issuance, sale or grant or such rights, options or warrants.
(j) In the case of Section 3(b), on any change in the number of Common
Shares deliverable upon exercise of any such rights, options or warrants, other
than a change resulting
-7-
from the antidilution provisions hereof, the number of RenRe Option Shares
thereafter purchasable shall forthwith be readjusted to such number as would
have been obtained had the adjustment made upon the issuance of such rights,
options or warrants not converted prior to such change (or rights, options or
warrants related to such securities not converted prior to such change) been
made upon the basis of such change.
(k) The Company may at its option, at any time during the term of the RenRe
Option, reduce the then current Exercise Price to any amount and for any period
of time deemed appropriate by the Board of Directors of the Company, including
such reductions in the Exercise Price as the Company considers to be advisable
in order that any event treated for Federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the recipients.
4. The Company undertakes to use commercially reasonable efforts to increase
(if necessary) its authorized share capital to a level sufficient to satisfy any
exercise of the RenRe Option.
5. (a) For so long as the RenRe Option is exercisable hereunder, each party
hereto shall (i) use its commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all governmental authorities
and officials that may be or become necessary for the performance of its
obligations pursuant to this Agreement and (ii) cooperate reasonably with the
other party in promptly seeking to obtain all such authorizations, consents,
orders and approvals. The parties hereto agree to cooperate reasonably, complete
and file any joint applications for any authorizations from any governmental
authorities reasonably necessary or desirable to effectuate the transactions
contemplated by this Agreement. The parties hereto agree that they will keep
each other apprised of the status of matters relating to the exercise of the
RenRe Option, including reasonably promptly furnishing the other with copies of
notices or other communications received by the Company or RenRe, from all third
parties and governmental authorities with respect to the RenRe Option.
(b) For so long as the RenRe Option is exercisable, the Company and RenRe
agree to reasonably promptly prepare and file, if necessary, any filing under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act") with the Federal Trade Commission (the "FTC") and the Antitrust Division
of the Department of Justice (the "DOJ") in order to enable RenRe to exercise
such RenRe Option pursuant to this Agreement. Each party hereby covenants to
cooperate reasonably with the other such party to the extent reasonably
necessary to assist in making reasonable supplemental presentations to the FTC
or the DOJ, and, if requested by the FTC or the DOJ, to reasonably promptly
amend or furnish additional information thereunder.
(c) Any reasonable out-of-pocket costs and expenses arising in connection
with actions taken pursuant to this Section 5 shall be borne by RenRe.
6. (a) The RenRe Option and the RenRe Option Shares may not be assigned or
otherwise transferred, disposed of or encumbered by RenRe (or any subsequent
transferee) in whole or in part except as provided in this Section 6.
Notwithstanding anything to the contrary in this Agreement, RenRe may, at any
time, assign or otherwise transfer, dispose or encumber
-8-
the RenRe Option or the RenRe Option Shares in whole or in part to any direct or
indirect wholly owned subsidiary of RenRe, provided that such transferee shall
enter into an option agreement with the Company that is substantially identical
to this Agreement.
(b) In the event of a merger of RenRe into another person, or a sale,
transfer or lease to another person of all or substantially all the assets of
RenRe, the RenRe Option or the RenRe Option Shares may be transferred as part of
such transaction to the other party to such transaction.
(c) On and after November 1, 2004, RenRe may transfer the RenRe Option or
the RenRe Option Shares, in whole or in part, in one or more private
transaction(s) to up to three institutional accredited investors; provided,
however, that any proposed transfer is conditioned upon:
(i) receipt by the Company of evidence satisfactory to it, which may
include an opinion of United States counsel, that such transfer would not
require registration under the Securities Act or state securities laws and
upon the obtainment of any required government approvals (which approvals
the Company agrees to use commercially reasonable efforts to assist in
obtaining); and
(ii) the proposed transferee executing and delivering instruments
reasonably acceptable to the Company acknowledging:
(A) that the transferee may not offer, sell, assign, pledge or
otherwise transfer the RenRe Option or any RenRe Option Shares except
pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), covering such RenRe
Option Shares or pursuant to an available exemption from the
registration requirements of the Securities Act and in compliance with
all applicable state securities laws;
(B) that the Company is entitled to decline to register any
transfer (as defined in the Company's bye-laws) of RenRe Option
Shares, and any transfer of RenRe Option and RenRe Option Shares shall
be void, unless (i) such transfer is made pursuant to and in
accordance with Rule 144 (provided that the Company (or its designated
agent for such purpose) may request a certificate satisfactory to it
of compliance by the transferor with the requirements of Rule 144),
(ii) such transfer is made pursuant to another available exemption
from the registration requirements of the Securities Act (provided
that, if not already a party hereto, the intended transferee agrees to
abide by the provisions of this Section 6(c)(ii), and provided,
further, that, if the Company requests, the transferor first provides
the Company (or such agent) with evidence satisfactory to it, which
may include an opinion of U.S. counsel satisfactory to the Company, to
the effect that such transfer is made pursuant to another available
exemption from the registration requirements of the Securities Act),
(iii) such transfer is made pursuant to an effective registration
statement under the Securities Act covering the RenRe Option Shares
being transferred, including a registration statement filed pursuant
-9-
to the Transfer Restrictions, Registrations Rights and Standstill
Agreement dated November 1, 2002 between the Company and RenRe (the
"Transfer Restrictions, Registration Rights and Standstill
Agreement"), and in all cases pursuant to this clause (B) such
transfer is in compliance with all applicable state securities laws
(the Company being entitled to waive or modify the foregoing transfer
requirements, generally or in any particular case, to the extent that
it determines, on advice of U.S. counsel, that compliance with such
requirements is not necessary to ensure compliance with the Securities
Act or any applicable state securities laws, or such modification is
necessary to ensure compliance with the Securities Act or any
applicable state securities laws, as the case may be) and (iv) such
transferee agrees to be bound by the provisions of this Agreement;
(C) that, except as provided below, no RenRe Option Share shall
be held in book-entry form, and each certificate representing a RenRe
Option Share shall be evidenced by a certificate bearing a restrictive
legend (the "Legend") substantially in the form set forth below:
THE COMMON SHARES EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE HELD IN BOOK-ENTRY FORM.
SUCH SHARES ARE ALSO SUBJECT TO RESTRICTIONS ON TRANSFER (AS DEFINED
IN THE BYE-LAWS OF THE COMPANY) SET FORTH IN THE TRANSFER
RESTRICTIONS, REGISTRATION RIGHTS AND STANDSTILL AGREEMENT, DATED
NOVEMBER 1, 2002, BETWEEN PLATINUM UNDERWRITERS HOLDINGS, LTD. (THE
"COMPANY") AND RENAISSANCERE HOLDINGS LTD., WHICH MAY REQUIRE, AMONG
OTHER THINGS, THE PRIOR RECEIPT BY THE COMPANY FROM THE TRANSFEROR OR
THE TRANSFEREE OF EVIDENCE SATISFACTORY TO IT, WHICH MAY INCLUDE AN
OPINION OF U.S. COUNSEL OR UNDERTAKINGS TO BE BOUND BY SUCH AGREEMENT.
SUCH SHARES ARE ALSO SUBJECT TO RESTRICTIONS IN THE BYE-LAWS OF THE
COMPANY, INCLUDING RESTRICTIONS ON TRANSFER AND VOTING INTENDED TO
ENSURE THAT NO PERSON BECOMES OR IS DEEMED TO BECOME A 10% SHAREHOLDER
OF THE COMPANY (AS EXPLAINED IN SUCH BYE-LAWS).
(D) that the transferee shall become a party to the Transfer
Restrictions, Registration Rights and Standstill Agreement, with the
attendant rights and obligations thereunder; provided, further, that
any proposed transfer may be disapproved by the Board of Directors of
the Company if, in their reasonable judgment, they have reason to
believe that such transfer may expose
-10-
the Company, any subsidiary thereof, any shareholder or any person
ceding insurance to the Company or any such subsidiary to adverse tax
or regulatory treatment in any jurisdiction. In connection with or
following any transfer of RenRe Option Shares in accordance with
clause (i) or (iii) of Section 6(c)(ii)(B) (except in the case of a
transfer of RenRe Option Shares to an "affiliate" of RenRe, as such
term is defined in the Securities Act, in accordance with clause (i)
of Section 6(c)(ii)(B)), and upon the surrender of any certificate or
certificates representing such RenRe Option Shares to the Company (or
such agent), the Company shall cause to be issued in exchange therefor
a new certificate or certificates that represent the same Common
Shares and do not bear the Legend (or shall permit such shares to be
held in book-entry form). The Company shall use commercially
reasonable efforts to cause each RenRe Option Share transferred as
contemplated by clause (i) or (iii) of Section 6(c)(ii)(B) to be duly
listed on each securities exchange, and to be accepted for quotation
in each interdealer quotation system, on or in which any Common Shares
are listed or quoted at the time of such transfer (provided that the
approval for such listing or quotation has been obtained -------- by
the Company), in each case so that the RenRe Option Share so
transferred will be freely transferable on each such exchange and in
each such system to the same extent as the Common Shares then listed
thereon or quoted therein; and
(E) such transferee shall not become a "10% Shareholder" (as
defined below in this Section 6(c)) immediately after such transfer
(assuming for purposes of this determination that the RenRe Option
Shares were actually owned by the transferee); and
(iii) such transfer not resulting, directly or indirectly, in a
transfer to any Specified Person (as defined below) of more than 9.9% of
the Common Shares outstanding at the time of such transfer, or the right to
acquire pursuant to the RenRe Option more than 9.9% of the Common Shares
outstanding at the time of such transfer, except in the following
circumstances: (A) in connection with any tender offer or exchange offer
made to all holders of outstanding Common Shares; (B) to any Wholly Owned
Subsidiary (as defined in the Transfer Restrictions, Registration Rights
and Standstill Agreement) of RenRe provided that such Wholly Owned
Subsidiary agrees in writing with the Company to the same transfer
restrictions as are contained in this Section 6(c); or (C) a transfer by
operation of law upon consummation of a merger or consolidation of RenRe
into another Person (as defined in the Investment Agreement). For purposes
of this Section 6(c)(iii), "Specified Person" means any Person that
generates 50% or more of its gross revenue in its most recent fiscal year
for which financial statements are available by writing property or
casualty insurance or reinsurance.
As used herein, "10% Shareholder" means a person who owns, in aggregate, (i)
directly, (ii) with respect to persons who are United States persons, by
application of the attribution and constructive ownership rules of Sections
958(a) and 958(b) of the Code or (iii) beneficially, directly or indirectly,
within the meaning of Section 13(d)(3) of the United States Securities
-11-
Exchange Act of 1934, issued shares of the Company carrying 10% or more of the
total combined voting rights attaching to all issued shares.
(d) In connection with any proposed transfer of all or a portion of the
RenRe Option pursuant to Section 6(c), the Company shall prepare an option
agreement (or, in the case of a partial transfer, option agreements)
substantially identical to this Agreement with the transferee (and transferor,
in the case of partial transfer) upon surrender to the Company of the existing
option agreement prior to the consummation of the transfer. Upon the execution
of such option agreement by the transferee and the Company and the consummation
of the transfer, the transferee shall have such rights and obligations with
respect to the number of RenRe Option Shares covered by the portion of the RenRe
Option transferred to such transferee as the rights and obligations of RenRe to
such portion hereunder.
(e) Any transferee of all or part of the RenRe Option pursuant to Section
6(c) hereof (or any subsequent transferee who holds any portion of the RenRe
Option as a result of a transfer pursuant to this Section 6(e)) may transfer, in
whole but not in part, the RenRe Option to a subsequent transferee; provided
that any such transfer shall be subject to the terms and conditions set forth in
Sections 6(c) and 6(d) hereof.
7. The issuance of share certificates upon the exercise of the RenRe Option
shall be without charge to RenRe. The Company shall pay, and indemnify RenRe
from and against, any issuance, stamp, documentary or other taxes (other than
transfer taxes and income taxes), or charges imposed by any governmental body,
agency or official by reason of the exercise of the RenRe Option or the
resulting issuance of RenRe Option Shares.
8. This Agreement may not be amended except in a written instrument signed by
the Company and RenRe.
9. All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be given by facsimile and by e-mail transmission
addressed as follows (or to such other address as a party may designate by
written notice to the others) and shall be deemed given on the date on which
such notice is received:
-12-
If to RenRe:
RenaissanceRe Holdings Ltd.
Xxxxxxxxxxx Xxxxx
0-00 Xxxx Xxxxxxxx
Xxxxxxxx XX 00 Xxxxxxx
Xxxxxxxxx: Xxxxxxx X. Xxxxxxxxx
General Counsel
Facsimile: (000) 000-0000
E-mail: xxx@xxxxx.xxx
with a copy to:
Xxxx X. X'Xxxxxxxx
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
E-mail: xx'xxxxxxxx@xxxxxxx.xxx
If to the Company:
Platinum Underwriters Holdings, Ltd.
Xxx Xxxxxxxxx Xxxxxxxx
00 Xxxxx Xxx Xxxx
Xxxxxxxx XX00
Xxxxxxx
Attention: Xxxxxxx X. Xxxxxxxxxxx
Executive Vice President, General Counsel
and Secretary
Facsimile: (000) 000-0000
E-mail: xxxxxxxxxxxx@xxxxxxxxxx.xxx
with a copy to:
Xxxxx X. Xxxxxx
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
E-mail: xxxxxxx@xxxxx.xxx
10. This Agreement, the Transfer Restrictions, Registration Rights and
Standstill Agreement (which, for the avoidance of doubt, shall apply to any
Common Share issued under this Agreement in the same manner as to any Common
Shares that were issuable the Option Agreement) and the Investment Agreement
constitute the entire agreement between the parties
-13-
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.
11. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
12. This Agreement may not be assigned by any party hereto, except to a party
to whom RenRe transfers the RenRe Option or RenRe Option Shares in accordance
with Section 6 of this Agreement or Section 2 of the Transfer Restrictions,
Registration Rights and Standstill Agreement, and then only in accordance with
those sections.
13. The headings contained in this Agreement are for convenience only and do
not affect the meaning or interpretation of this Agreement.
14. (a) This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York (without regard to principles of conflict of
laws).
(b) The parties hereto shall promptly submit any dispute, claim, or
controversy arising out of or relating to this Agreement, including effect,
validity, breach, interpretation, performance, or enforcement (collectively, a
"Dispute") to binding arbitration in New York, New York at the offices of
Judicial Arbitration and Mediation Services, Inc. ("JAMS") before an arbitrator
(the "Arbitrator") in accordance with JAMS' Comprehensive Arbitration Rules and
Procedures and the Federal Arbitration Act, 9 U.S.C. xx.xx. 1 et seq. The
Arbitrator shall be a former judge selected from JAMS' pool of neutrals. The
parties agree that, except as otherwise provided herein respecting temporary or
preliminary injunctive relief, binding arbitration shall be the sole means of
resolving any Dispute. Judgment on any award of the Arbitrators may be entered
by any court of competent jurisdiction.
(c) The costs of the arbitration proceeding and any proceeding in court to
confirm or to vacate any arbitration award or to obtain temporary or preliminary
injunctive relief as provided in Section 14(d) below, as applicable (including,
without limitation, actual attorneys' fees and costs), shall be borne by the
unsuccessful party and shall be awarded as part of the Arbitrator's decision,
unless the Arbitrator shall otherwise allocate such costs in such decision.
(d) This Section 14 shall not prevent the parties hereto from seeking or
obtaining temporary or preliminary injunctive relieve in a court for any breach
or threatened breach of any provision hereof pending the hearing before and
determination of the Arbitrator. The parties hereby agree that they shall
continue to perform their obligations under this Agreement pending the hearing
before and determination of the Arbitrator, it being agreed and understood that
the failure to so provide will cause irreparable harm to the other party hereto
and that the putative breaching party has assumed all of the commercial risks
associated with such breach or threatened breach of any provision hereof by such
party.
-14-
(e) The parties agree that the State and Federal courts in The City of New
York shall have jurisdiction for purposes of enforcement of their agreement to
submit Disputes to arbitration and of any award of the Arbitrator.
-15-
IN WITNESS WHEREOF, each of the parties hereto has caused this
AGREEMENT to be duly executed by a duly authorized officer as of the date and
year first above written.
PLATINUM UNDERWRITERS
HOLDINGS, LTD.
By: /s/ Xxxxxxx X.X. Xxxxxxxx
--------------------------------------------
Name: Xxxxxxx X.X. Xxxxxxxx
Title: President and Chief Executive Officer
RENAISSANCERE HOLDINGS LTD.
By: /s/ Xxxx X. Xxxxxxx Xx.
--------------------------------------------
Name: Xxxx X. Xxxxxxx Xx.
Title: Executive Vice President
-16-
