Exhibit 10.18
Execution Copy
================================================================================
PUT OPTION AGREEMENT
between
RAM REINSURANCE COMPANY LTD.
and
BLUE WATER TRUST I
Dated as of December 23, 2003
================================================================================
PUT OPTION AGREEMENT dated as of December 23, 2003
(this "Agreement"), between RAM Reinsurance Company Ltd., a
company organized under the laws of Bermuda (the "Company"),
and Blue Water Trust I, a Delaware statutory trust (the
"Trust").
WHEREAS, the Company is authorized to issue 500.01 shares of
non-cumulative, redeemable, perpetual preference shares, par value U.S. $1,000
per share, designated as "Class B Preference Shares" (the "Preference Shares"),
which shares have not been and will not be registered with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Securities Act"); and
WHEREAS, the Company and the Trust desire to enter into this Agreement
pursuant to which the Company will have the right to sell, at its option, the
Preference Shares to the Trust, and the Trust will have an obligation to
purchase the Preference Shares upon the Company's exercise of its option and
upon the other terms and conditions agreed upon by the parties and set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and for other
valuable consideration, the adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definitions; Interpretation
1.1 The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular section,
clause or other subdivision, and references to "Sections" refer to sections of
this Agreement except as otherwise expressly provided.
1.2 In this Agreement the following terms have such meanings as set forth
below:
"1940 Act" means the Investment Company Act of 1940, as amended.
"Agreement" has the meaning set forth above in the Preamble.
"Auction Date" has the meaning set forth in the General Terms.
"Auction Rate" has the meaning set forth in the General Terms.
"Broker-Dealer" has the meaning set forth in the Declaration.
"Business Day" has the meaning set forth in the Declaration.
"Class A Preference Shares" means such Class A Preference Shares of
the Company as issued and outstanding from time to time.
"Company" has the meaning set forth above in the preamble.
"Company Bye-laws" means the bye-laws of the Company, a copy of which
is attached hereto as Annex C.
"CPS Securities" has the meaning set forth in the Declaration.
"Declaration" means the Amended and Restated Declaration of Trust
governing the Trust and dated as of the date hereof, as the same may be amended
or restated from time to time under the terms thereof and hereof.
"Delaware Statutory Trust Act" means the Delaware Statutory Trust Act,
12 Del. C. ss. 3801, et seq.
"Delayed Auction" has the meaning set forth in the General Terms.
"Delayed Auction Date" has the meaning set forth in the General Terms.
"Delayed Auction Period" has the meaning set forth in the General
Terms.
"Delayed Auction Rate" has the meaning set forth in the General Terms.
"Delayed Put Option Premium" has the meaning set forth in Section 5.2.
"Delayed Put Option Premium Certificate" has the meaning set forth in
Section 5.3.
"Distribution Payment Date" has the meaning set forth in the General
Terms.
"Distribution Period" has the meaning set forth in the General Terms.
"Dividend" has the meaning set forth in the Preference Share
Designation.
"Eligible Assets" means, as applicable, (i) commercial paper and any
other investments that conform to the guidelines set forth in Exhibit I to the
Declaration, (ii) Preference Shares, (iii) this Agreement, (iv) the Property
Account (as defined in the Declaration), and (v) any and all distributions of
principal and interest and any other payments made on the foregoing.
"Expense Reimbursement Agreement" has the meaning set forth in Section
3.2(a).
"Federal Funds Effective Rate" has the meaning set forth in the
Declaration.
"Fixed-Rate Distribution Event" has the meaning set forth in the
Preference Share Designation.
"Fixed-Rate Election" means an election by the Company to pay
Dividends on the Preference Shares at the rate described in clause (iii) of the
definition of "Dividend Rate" set forth in the Preference Share Designation.
1
"General Terms" means the General Terms of the CPS Securities attached
to the Declaration as Appendix A.
"Holder" has the meaning set forth in the Declaration.
"Liquidation Preference" has the meaning set forth in the Preference
Share Designation.
"Maximum Rate" has the meaning set forth in the Preference Share
Designation.
"Moody's" means Xxxxx'x Investors Service, Inc., and its successors.
"Overnight Rate of Return" means the rate earned on the interest and
on the principal of the Eligible Assets during the period from each Auction Date
until the related Distribution Payment Date and during any Delayed Auction
Period, which rate shall be equal to the Federal Funds Effective Rate then in
effect (as adjusted to reflect any applicable reserve requirement).
"Preference Share Designation" means the Certificate of Designation,
Preferences and Rights of Class B Preference Shares of the Company, as set forth
in the Company Bye-laws.
"Preference Shares" has the meaning set forth above in the recitals.
"Preference Shares Payment Date" has the meaning set forth in Section
3.2(a).
"Preference Shares Purchase Price" has the meaning set forth in
Section 4.1.
"Proceedings" has the meaning set forth in Section 16.
"Put Notice" means a written notice substantially in the form attached
hereto as Annex A.
"Put Option Premium" has the meaning set forth in Section 5.1.
"Put Option Premium Certificate" has the meaning set forth in Section
5.3.
"Ratings Agencies" means collectively Moody's and Standard & Poor's.
"Redemption Price" has the meaning set forth in the Preference Share
Designation.
"Redemption Proceeds" has the meaning set forth in Section 3.2(d).
"SEC" has the meaning set forth above in the recitals.
"Securities Act" has the meaning set forth above in the recitals.
2
"Senior Note Issuance" means the initial issuance of senior notes of
the Company substantially on the terms described in the preliminary offering
memorandum of the Company dated October 2003, as the same may be amended or
modified.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc., and its successors.
"Stated Yield" means all amounts of interest (including accreted
interest) and other payments due and payable (upon maturity or otherwise) on the
principal amount of the Eligible Assets (excluding any repayment of principal)
held by the Trust during a Distribution Period, plus the amount of interest to
be earned based on the Overnight Rate of Return, as calculated on or prior to
11:00 a.m. on the Auction Date for each respective Distribution Period.
"Tax Matters Partner" has the meaning set forth in the Declaration.
"Trust" has the meaning set forth above in the preamble.
"Trustee" has the meaning set forth in the Declaration.
1.3 In this Agreement, any reference to a "company" shall be construed so
as to include any corporation, trust, partnership, limited liability company or
other legal entity, wheresoever incorporated or established.
1.4 In this Agreement, save where the contrary is indicated, any reference
to:
(a) this Agreement or any other agreement or document shall be
construed as a reference to this Agreement or, as the case may be, such
other agreement or document as the same may have been, or may from time to
time be, amended, varied, novated or supplemented in accordance with its
terms; and
(b) a statute shall be construed as a reference to such statute as the
same may have been, or may from time to time be, amended or re-enacted.
1.5 In this Agreement, any definition shall be equally applicable to both
the singular and plural forms of the defined terms.
Section 2. Put Option; Agreement Term
2.1 In consideration of the payment of the Put Option Premium, or the
Delayed Put Option Premium, as the case may be, the Trust hereby grants to the
Company the right to cause the Trust to purchase the Preference Shares on the
terms set forth herein.
2.2 The put option created hereby shall remain in effect and be exercisable
by the Company at any time prior to termination of this Agreement.
2.3 This Agreement shall terminate upon the earliest to occur of any of the
following events:
3
(a) the Company delivers a written termination notice to the Trust
while the Trust is holding Eligible Assets, stating that the Company is
electing not to pay the Put Option Premium for the next succeeding
Distribution Period that follows the termination notice by at least three
Business Days and indicating the Distribution Payment Date on which the
termination shall become effective (delivery of such a termination notice
by the Company shall be irrevocable);
(b) the Company fails to pay the Put Option Premium or the Delayed Put
Option Premium, if any, for a Distribution Period on the related
Distribution Payment Date, and such failure has not been cured within three
Business Days following notice thereof;
(c) the Company makes a Fixed-Rate Election;
(d) the Company fails to pay Dividends on the Preference Shares, or
the fees and expenses of the Trust pursuant to the Expense Reimbursement
Agreement for a Distribution Period on the related Distribution Payment
Date and such failure continues for three Business Days following notice
thereof;
(e) the Company fails to pay the Redemption Price and such failure has
not been cured within three Business Days following notice thereof;
(f) the aggregate face amount of the outstanding CPS Securities is
less than Twenty million U.S. dollars (U.S. $20,000,000);
(g) at any time that the Trust owns any Preference Shares, the
aggregate Liquidation Preference thereof is less than Twenty million U.S.
dollars (U.S. $20,000,000); or
(h) at any time that the Trust owns any Eligible Assets within the
meaning of clause (i) of the definition thereof, the principal amount
thereof is less than Ten million U.S. dollars (U.S. $10,000,000).
Section 3. Exercise of Put Option; Redemption
3.1 The Trust agrees that it shall, upon exercise of the put option as
provided in Section 3.2, purchase the Preference Shares from the Company for a
purchase price equal to the Preference Shares Purchase Price, which Preference
Shares Purchase Price shall be payable on the Preference Shares Payment Date in
accordance with Section 4.
3.2 (a) The Company may exercise the put option (with respect to all or a
portion of the Preference Shares covered thereby) at any time by delivering
(i) a Put Notice to the Trustee, specifying (x) the number of Preference
Shares with respect to which the put option is exercised and (y) a payment
date (the "Preference Shares Payment Date"), which shall be the next
succeeding Distribution Payment Date after the date on which the Put Notice
is delivered to the Trustee, and (ii) the Expense Reimbursement Agreement
to the Trust in the form attached hereto as Annex E (the "Expense
Reimbursement
4
Agreement"), in either case not more than fifteen days but not less than
ten days prior to the next succeeding scheduled Distribution Payment Date.
(b) On the Preference Shares Payment Date, after payment of the Put
Option Premium by the Company to the Trust and payment of the distribution
amount by the Trust to the Holders of the CPS Securities, in each case for
the immediately preceding Distribution Period, the Company shall issue and
deliver to the Trust, or its designee, Preference Shares with an aggregate
Liquidation Preference equal to the applicable Preference Shares Purchase
Price. The Preference Shares shall be delivered free and clear of any
defect in title, together with all transfer and registration documents (or
all notices, instructions or other communications) as are necessary to
convey title to the Preference Shares to the Trust (or its nominee).
(c) For the avoidance of doubt, (i) any cash received by the Trust as
interest or other payments earned on the principal amount of the Eligible
Assets (net of fees and expenses and excluding any repayment of principal)
and not previously distributed to the Holders of CPS Securities shall be
distributed to the Holders of CPS Securities prior to payment by the Trust
of the Preference Shares Purchase Price, and shall not be used to purchase
Preference Shares, (ii) the aggregate Liquidation Preference of Preference
Shares purchased from the Company shall be reduced by the amount, if any,
by which the aggregate face amount of CPS Securities is reduced as a result
of losses of principal of or interest on Eligible Assets as required by
Section 6.01(g) of the Declaration and Section 6(b) of the General Terms,
and (iii) the maximum aggregate amount of proceeds which the Company shall
receive upon exercise of the put option hereunder, in whole or in part,
shall not exceed the aggregate face amount of CPS Securities then
outstanding reduced, as applicable, as a result of losses of principal of
or interest on Eligible Assets as required by Section 6.01(g) of the
Declaration and Section 6(b) of the General Terms (taking into account
aggregate Redemption Proceeds received by the Trust).
(d) The Company shall have the right to redeem all or a portion of the
Preference Shares on any Distribution Payment Date upon payment of the
Redemption Price for the Preference Shares to be redeemed (the "Redemption
Proceeds"). Notwithstanding the foregoing, the Company shall not redeem any
Preference Shares if after giving effect to a partial redemption, the
aggregate Liquidation Preference of the Preference Shares outstanding
immediately after such partial redemption would be less than Twenty million
U.S. dollars (U.S. $20,000,000). Payment of the Redemption Price will be
made on the first Distribution Payment Date after the Company elects to
redeem Preference Shares in accordance with Section 3.2(e).
(e) The Company may redeem all or a portion of the Preference Shares
at any time by providing notice to the Trustee, specifying a redemption
date, which shall be the next succeeding Distribution Payment Date after
the date of such notice, not less than twenty days prior to the next
succeeding scheduled Distribution Payment Date. Notice of any redemption of
Preference Shares shall be mailed to the holders of the Preference Shares
not less than ten days nor more than fifteen days prior to the date fixed
for such redemption. At any time before or after a notice of redemption has
been given, the Company shall deposit the aggregate Redemption Price of the
Preference Shares to be
5
redeemed with any bank or trust company in New York, New York, with
directions to pay the holders of the Preference Shares being redeemed the
Redemption Proceeds in exchange for the Preference Shares.
(f) Upon a partial redemption of the Preference Shares held by the
Trust prior to a Fixed-Rate Distribution Event, the Trust shall apply the
Redemption Proceeds to the purchase of Eligible Assets (it being understood
that no partial redemption may be made by the Company if after giving
effect thereto, the aggregate Liquidation Preference of the Preference
Shares outstanding immediately thereafter would be less than Twenty million
U.S. dollars (U.S. $20,000,000)).
(g) Upon a complete redemption of all Preference Shares held by the
Trust prior to a Fixed-Rate Distribution Event, the Trust shall apply the
Redemption Proceeds to the purchase of a portfolio of Eligible Assets.
(h) For the avoidance of doubt, there is no limitation on the number
of times the Company may put the Preference Shares to the Trust and no
limitation on the number of times the Company may redeem Preference Shares,
in each case pursuant to and in accordance with the terms of this
Agreement.
(i) Following a Fixed-Rate Distribution Event, the Company shall not
redeem the Preference Shares for a period of two years thereafter.
Section 4. Payments for Preference Shares
4.1 On the Preference Shares Payment Date, after payment of the Put Option
Premium by the Company to the Trust and payment of the distribution amount by
the Trust to the Holders of the CPS Securities, in each case for the immediately
preceding Distribution Period, the Trust will deliver in U.S. dollars to the
Company an amount equal to the product of (x) the proceeds attributable to
principal received upon the maturity of the Eligible Assets of the Trust (and,
if applicable, principal proceeds attributable to the liquidation of defaulted
Eligible Assets), net of fees and expenses of the Trust and after any principal
is returned to Holders of the CPS Securities pursuant to Section 6.01(g) of the
Declaration and Section 6(b) of the General Terms and (y) a fraction the
numerator of which is the aggregate Liquidation Preference of the number of
Preference Shares with respect to which the put option is then being exercised
and the denominator of which is the aggregate Liquidation Preference of the
number of Preference Shares the put option would be exercised with respect to if
the put option were then being exercised in full (the "Preference Shares
Purchase Price").
4.2 Payment by the Trust of the Preference Shares Purchase Price shall be
made on or prior to 2:00 p.m. on the Preference Shares Payment Date and to the
account of the Company as specified in the Put Notice.
4.3 Payment of the Preference Shares Purchase Price by the Trust shall be
made as provided in Section 4.1 and Section 4.2 without setoff, claim,
recoupment, deduction or counterclaim; provided, however, that if the Company
exercises its put option under Section 3 hereof at any time that it has failed
to pay all or a portion of the Put Option Premium, and such failure has not been
cured on or before the Preference Shares Payment Date, the Trust shall be
6
entitled to setoff against the Preference Shares Purchase Price such unpaid
portion of the Put Option Premium.
Section 5. Put Option Premium
5.1 In consideration of the Trust's agreement to purchase the Preference
Shares in accordance with the terms of this Agreement, the Company will pay an
amount to the Trust, in U.S. dollars, on each Distribution Payment Date during
which the put option remains in effect and is exercisable as set forth in
Section 2.2 hereof (such amount, the "Put Option Premium"), equal to the product
of (A) the Auction Rate on the CPS Securities for the respective Distribution
Period less the excess of (i) the Stated Yield for such Distribution Period over
(ii) the expenses of the Trust for such Distribution Period, provided that such
expenses shall be annualized and expressed as an annual rate with respect to the
face amount of the CPS Securities outstanding on the date the Put Option Premium
is determined, (B) the aggregate face amount of the CPS Securities outstanding
at the time the Put Option Premium is calculated and (C) a fraction, the
numerator of which will be the actual number of calendar days in the respective
Distribution Period, and the denominator of which will be 360 days. The Put
Option Premium for each Distribution Period will be calculated on the Auction
Date.
5.2 If as a result of losses of principal of or interest on Eligible Assets
there is a Delayed Auction, the Company will pay an amount to the Trust, in U.S.
dollars, on each Distribution Payment Date during which the put option remains
in effect and is exercisable as set forth in Section 2.2 hereof, (such amount,
the "Delayed Put Option Premium"), equal to the product of (A) the Delayed
Auction Rate on the CPS Securities for the Delayed Auction Period less the
excess of (i) the Stated Yield for such Delayed Auction Period over (ii) the
expenses of the Trust for such Delayed Auction Period, provided that such
expenses shall be annualized and expressed as an annual rate with respect to the
face amount of the CPS Securities outstanding on the date the Put Option Premium
is determined, (B) the aggregate face amount of the CPS Securities outstanding
at the time the Delayed Put Option Premium is calculated and (C) a fraction, the
numerator of which will be the actual number of calendar days in the respective
Delayed Auction Period, and the denominator of which will be 360 days. The
Delayed Put Option Premium for each Delayed Auction Period will be calculated on
the Delayed Auction Date.
5.3 The amount of the Put Option Premium shall be calculated by the Trustee
and delivered in writing (the "Put Option Premium Certificate") to the Company
prior to 5:00 p.m. on each Auction Date. The amount of the Delayed Put Option
Premium shall be calculated by the Trustee and delivered in writing (the
"Delayed Put Option Premium Certificate") to the Company prior to 5:00 p.m. on
the Delayed Auction Date. The Put Option Premium Certificate, and any Delayed
Put Option Premium Certificate, also shall set forth the Eligible Assets held by
the Trust, the Stated Yield on each Eligible Asset, any fees to be incurred or
accrued by the Trustee on behalf of the Trust and the computation of the Put
Option Premium, or the Delayed Put Option Premium, as the case may be, in each
case for the respective Distribution Period and the Delayed Auction Period,
respectively, and shall be in the form attached hereto as Annex B.
5.4 The Company shall have three Business Days from notice thereof by the
Trust to cure any failure to pay when due the Put Option Premium or Delayed Put
Option Premium, if
7
any; provided that the Put Option Premium during such cure period will be set at
the Maximum Rate then in effect.
5.5 The Company shall have three Business Days from notice thereof by the
Trust to cure any failure to pay when due the Redemption Price; provided that
the Put Option Premium during such cure period will be set at the Maximum Rate
then in effect.
Section 6. Obligations Absolute
6.1 The Trust acknowledges that, provided the Company has complied with the
terms of this Agreement, the obligations of the Trust undertaken under this
Agreement are absolute, irrevocable and unconditional irrespective of any
circumstances whatsoever, including any defense otherwise available to the
Trust, in equity or at law, including, without limitation, the defense of fraud,
any defense based on the failure of the Company to disclose any matter, whether
or not material, to the Trust or any other person, and any defense of breach of
warranty or misrepresentation, and irrespective of any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of an
insurer, surety or guarantor under any and all circumstances. The enforceability
and effectiveness of this Agreement and the liability of the Trust, and the
rights, remedies, powers and privileges of the Company under this Agreement
shall not be affected, limited, reduced, discharged or terminated, and the Trust
hereby expressly waives, to the fullest extent permitted by applicable law, any
defense now or in the future arising by reason of:
(a) the illegality, invalidity or unenforceability of all or any part
of the Declaration;
(b) any action taken by the Company;
(c) any change in the direct or indirect ownership or control of the
Company or of any shares or ownership interests thereof; and
(d) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of or for the Trust;
provided, however, that notwithstanding the provisions of this Section 6.1, the
Trust shall have no further obligations under this Agreement after the
termination of this Agreement pursuant to Section 2.3. In addition, the breach
of any covenant made in this Agreement by the Trust shall not terminate this
Agreement or limit the rights of the Company hereunder.
6.2 For the avoidance of doubt, no failure or delay by the Company in
exercising its rights hereunder shall operate as a waiver of its rights
hereunder (except as specifically provided in this Agreement, including, without
limitation, in respect of the notice periods and payment dates set forth in
Section 3.2(a)) and, subject to the termination of this Agreement not having
occurred, the Company may continue to exercise its rights hereunder at any time.
8
Section 7. Covenants
7.1 The Company hereby covenants and agrees that, at all times prior to the
earlier of the termination of this Agreement (a) it shall not amend, restate,
revise or otherwise alter the rights, terms and preferences of the Preference
Shares, whether by operation of merger, reorganization or otherwise, without the
prior consent of the Trust, and (b) it will not register the Preference Shares
with the SEC under the Securities Act. Notwithstanding the foregoing, nothing
contained in this Section 7.1 shall be deemed to prohibit the Company from
taking any action allowed to be taken pursuant to Section 14.2.
7.2 The Trust hereby covenants and agrees that, at all times prior to the
termination of this Agreement, it shall not amend, restate, revise or otherwise
alter the rights, terms and preferences of the CPS Securities, whether by
operation of merger, reorganization or otherwise, and it will not register the
CPS Securities with the SEC under the Securities Act.
7.3 The Company hereby covenants and agrees that any Preference Shares
delivered to the Trust shall rank, at the time of delivery (a) senior to the
common shares of the Company and (b) senior to or pari passu with the most
senior preference shares of the Company then authorized by its Bye-laws or then
issued and outstanding; provided, however, that Class A Preference Shares shall
rank senior to the Preference Shares and any such rights and preferences of
holders of Class A Preference Shares shall in no way be affected by the rights
and preferences of holders of the Preference Shares, except that upon the
occurrence of a voluntary or involuntary liquidation, dissolution or winding up
of the Company, the Class A Preference Shares shall rank in all respects pari
passu with the Preference Shares; provided, further, that this Section 7.3 may
be amended with the consent of the Company and at least a majority of the face
amount of the CPS Securities.
7.4 The Company hereby covenants and agrees that prior to any issuance of
Class A Preference Shares not made in connection with the Senior Note Issuance,
it shall notify the Ratings Agencies and shall obtain a confirmation of the
rating of the CPS Securities, which shall have a rating of at least "A2" by
Moody's and "A+" by Standard & Poor's, respectively.
7.5 The Company hereby covenants and agrees that if the Company's financial
strength rating is lowered while this Agreement remains effective, the Company
shall provide written notice to the Trust of such lowered rating.
7.6 The Company agrees to notify the Trust and the Broker-Dealer not less
than five nor more than thirty days in advance if any Distribution Payment Date
is scheduled to occur on a day on which banks in City of New York are scheduled
to be open, but banks in the city of Xxxxxxxx, Bermuda are authorized or
obligated by law to be closed; provided, however, that if a Delayed Auction Date
occurs, the Company agrees to notify the Trust and the Broker-Dealer on such
date if the day which would otherwise be a Distribution Payment Date (but for
the requirement that banks in the city of Xxxxxxxx, Bermuda must be open in
order for such day to be considered a Business Day) is a day on which banks in
the City of New York are scheduled to be open, but banks in the city of
Xxxxxxxx, Bermuda are authorized or obligated by law to be closed.
9
Section 8. Inconsistency
If there is any inconsistency between any provision of this Agreement
and any other agreement, the provisions of this Agreement shall prevail to the
extent of such inconsistency but not otherwise.
Section 9. Representations and Warranties
9.1 The Trust represents and warrants to the Company that, as of the date
hereof:
(a) it is duly organized and validly existing under the Delaware
Statutory Trust Act and has the power and authority to own its assets and
to conduct the activities which it conducts;
(b) its entry into, exercise of its rights and performance of and
compliance with its obligations under this Agreement and the transactions
contemplated hereby, do not and will not violate (i) any law to which it is
subject, (ii) any of its constituent documents or (iii) any agreement to
which it is a party or which is binding on it or its assets;
(c) it has the power to enter into, exercise its rights and perform
and comply with its obligations under this Agreement and has taken all
necessary action to authorize the execution, delivery and performance of
this Agreement;
(d) it will obtain and maintain in effect and comply with the terms of
all necessary consents, registrations and approvals of or with any
government or other regulatory body or authority applicable to this
Agreement or required in connection with fulfilling its obligations
hereunder or effecting the transactions contemplated hereby;
(e) its obligations under this Agreement are valid, binding and
enforceable;
(f) it is not in default under any agreement to which it is a party or
by which it or its assets is or are bound and no litigation, arbitration or
administrative proceedings are current or pending;
(g) it is not necessary or advisable in order to ensure the validity,
effectiveness, performance or enforceability of this Agreement or required
in connection with it fulfilling its obligations hereunder or effecting the
transactions contemplated hereby, that any document be filed, registered or
recorded in any public office or elsewhere (other than filings, resolutions
and recordings as have been made);
(h) each of the above representations and warranties will be true and
correct in all respects during the term of this Agreement;
(i) no consent, approval, authorization or order of any court or
governmental authority, agency, commission or commissioner or other
regulatory authority is required for the consummation by the Trust of any
of the transactions contemplated by this Agreement; and
10
(j) assuming compliance with the transfer restrictions with respect to
the CPS Securities set forth in the Declaration, the Trust is not required
to register with the SEC as an investment company under the Investment
Company Act of 1940, as amended (the "1940 Act").
9.2 The Company represents and warrants to the Trust that, as of the date
hereof:
(a) it is duly organized and validly existing as a company under the
laws of Bermuda and has the power and authority to own its assets and to
conduct its activities;
(b) its entry into, exercise of its rights and performance of and
compliance with its obligations under this Agreement and the transactions
contemplated hereby, do not and will not violate (i) any law to which it is
subject, (ii) any of its constituent documents or (iii) any agreement to
which it is a party or which is binding on it or its assets;
(c) it has the power to enter into, exercise its rights and perform
and comply with its obligations under this Agreement and has taken all
necessary action to authorize the execution, delivery and performance of
this Agreement;
(d) it will obtain and maintain in effect and comply with the terms of
all necessary consents, registrations and approvals of or with any
government or other regulatory body or authority applicable to this
Agreement or required in connection with fulfilling its obligations
hereunder or effecting the transactions contemplated hereby;
(e) its obligations under this Agreement are valid, binding and
enforceable;
(f) it is not in default under any agreement to which it is a party or
by which it or its assets is or are bound and no litigation, arbitration or
administrative proceedings are current or pending, which default,
litigation, arbitration or administrative proceedings are material in the
context of this Agreement;
(g) it is not necessary or advisable in order to ensure the validity,
effectiveness, performance or enforceability of this Agreement or required
in connection with fulfilling its obligations hereunder or effecting the
transactions contemplated hereby, that any document be filed, registered or
recorded in any public office or elsewhere (other than filings, resolutions
and recordings as have been made);
(h) each of the above representations and warranties will be true and
correct in all respects during the term of this Agreement;
(i) no consent, approval, authorization or order of any court or
governmental authority, agency, commission or commissioner or other
regulatory authority is required for the consummation by the Company of the
transactions contemplated by this Agreement and the sale of the Preference
Shares, pursuant to the terms hereof, need not be registered with the SEC
under the Securities Act; and
11
(j) as of the date of this Agreement, the Preference Shares will be
duly authorized for issuance and sale, pursuant to the terms hereof, and,
when issued and delivered by the Company, pursuant to the terms of this
Agreement, against payment of the Preference Shares Purchase Price, will be
validly issued, fully paid and nonassessable; the Preference Shares will
conform in all respects to the terms of the Preference Shares set forth in
the Preference Share Designation of the Company attached hereto as Annex D;
and the Preference Shares will not be subject to preemptive or other
similar rights.
Section 10. Severability
Any provision of this Agreement which is or becomes illegal, invalid
or unenforceable in any jurisdiction may be severed from the other provisions of
this Agreement without invalidating the remaining provisions hereof, and any
such illegality, invalidity or unenforceability shall not invalidate or render
illegal or unenforceable such provision in any other jurisdiction.
Section 11. Notices
Each communication to be made hereunder shall be deemed to have been
given (i) three Business Days after deposit of such communication with a
reputable national courier service addressed to such party at its address
specified below (or at such other address as such party shall specify to the
other party hereto in writing) or (ii) when transmitted by facsimile to such
party at its facsimile number specified below (or at such other facsimile number
as such party shall specify to the other party hereto in writing):
If to the Company at: If to the Trust at:
RAM Reinsurance Company Ltd. The Bank of New York (Delaware)
RAM Re House P.O. Box 6973
00 Xxxx Xxxxxx Xxxxx Xxxx Center, Xxxxx 000
Xxxxxxxx, Xxxxxxx XX 00 Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel Attention: Xxxxxxxx Xxxxx
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Facsimile: _____________
Copy to: The Bank of New York
Copy to: Xxxxxxx Xxxxx, Esq. Corporate Trust Division
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P. 000 Xxxxxx Xxxxxx, 0xx Xxxxx
000 Xxxx 00xx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxx, Xxx Xxxx 00000 Attention: Dealing & Trading Group
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
In the case of any event under Sections 2.3, 7.3 or 14 of this Agreement,
the Company shall give notice to:
12
Moody's at: Standard & Poor's at:
Xxxxx'x Investors Service, Inc. Standard & Poor's Ratings Services
00 Xxxxxx Xxxxxx 00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Section 12. Counterparts
This Agreement may be executed in any number of counterparts each of
which when executed and delivered shall constitute an original, but all the
counterparts shall together constitute one and the same instrument.
Section 13. Benefit of Agreement and Disclaimer
This Agreement shall enure to the benefit of each party hereto and its
successors and assigns and transferees; provided that neither party hereto may
transfer its rights and obligations hereunder, by operation of law or otherwise,
except in accordance with Section 14 or upon obtaining the prior written consent
of the other party.
Section 14. Amendment and Assignment
14.1 This Agreement may not be amended or modified in any respect, nor may
any provision be waived, without the written agreement of both parties. No
waiver by one party of any obligation of the other hereunder shall be considered
a waiver of any other obligation of such party.
14.2 Neither the Trust nor the Company may assign its rights or obligations
under this Agreement to any other person, except that the Company may assign its
rights and obligations under this Agreement to another person as a result of a
merger or consolidation of the Company with another person or as a result of the
transfer or sale of all or substantially all of the assets of the Company to
another person, in a single transaction or series of transactions, if such other
person expressly assumes all of the rights and obligations of the Company under
this Agreement, and immediately following the merger, amalgamation or
consolidation, transfer or sale of substantially all of the assets of the
Company, the rating of the substitute preference shares or the general unsecured
debt obligations of the other person is at least as high as the rating of the
Preference Shares or the general unsecured debt obligations of the Company (or
if no such ratings exist, the financial strength rating of the Company), in each
case as in effect immediately prior to the merger or consolidation, transfer or
sale.
Section 15. Governing Law
THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING ALL OTHER CHOICE OF LAW AND
CONFLICTS OF LAW RULES).
13
Section 16. Jurisdiction
Each of the parties hereto irrevocably submits to the non-exclusive
jurisdiction of the courts of the State of New York in respect of any action or
proceeding arising out of or in connection with this Agreement ("Proceedings").
Each of the parties hereto irrevocably waives, to the fullest extent permitted
by applicable law, any objection that it may now or hereafter have to the laying
of the venue of any such Proceedings in the courts of the State of New York and
any claim that any Proceeding brought in any such court has been brought in an
inconvenient forum. Each of the Trust and the Company agrees that it shall at
all times have an authorized agent in the State of New York upon whom process
may be served in connection with any Proceedings, and each of the Trust and the
Company hereby authorizes and appoints the Trustee to accept service of all
legal process arising out of or connected with this Agreement in the State of
New York and service on such person (or substitute) shall be deemed to be
service on the Trust or the Company, as the case may be (provided in the case of
service upon the Company, the Trust provides prompt notification of such
service, and delivery of any documents in connection therewith, to the Company).
Except upon the substitution of another person for the Trustee as authorized
agent, the Trust and the Company shall not revoke any such authority or
appointment and in any event shall at all times maintain an agent for service of
process in the State of New York. If for any reason the Trustee (or any
substitute therefore) shall cease to act as agent for the service of process,
the Trust and/or the Company shall promptly appoint another such agent, and
shall forthwith notify each other of such appointment. The submission to
jurisdiction reflected in this paragraph shall not (and shall not be construed
so as to) limit the right of any person to take Proceedings in any court of
competent jurisdiction, nor shall the taking of Proceedings in any one or more
jurisdictions preclude the taking of Proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by law.
Section 17. Limitation of Liability
It is expressly understood that (a) this Agreement is executed and
delivered by The Bank of New York (Delaware), not individually or personally but
solely as Trustee, in the exercise of the powers and authority conferred and
vested in it under the Declaration, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust, is made and
intended not as personal representations, undertakings and agreements by The
Bank of New York (Delaware), but is made and intended for the purpose of binding
only the Trust, and (c) under no circumstances shall The Bank of New York
(Delaware) be personally liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust, under this
Agreement or the other related documents, except as otherwise expressly provided
in the Declaration.
Section 18. Tax Confidentiality Waiver
Notwithstanding anything to the contrary contained in this Agreement
all persons may disclose to any and all persons, without limitation of any kind,
the U.S. federal, state and local tax treatment of the Trust and the CPS
Securities, any fact relevant to understanding the U.S. federal, state and local
tax treatment of the Trust and the CPS Securities, and all materials of any kind
(including opinions or other tax analyses) relating to such U.S. federal, state
and
14
local tax treatment other than the name of any of the parties referenced herein
or information that would permit identification of any of the parties referenced
herein.
Section 19. Replacement of Broker-Dealer
19.1 The Company shall have the right to direct the Trust to replace the
Broker-Dealer at any time that the Company believes, in the reasonable good
faith exercise of its discretion, the continued service of such Broker-Dealer
could have an adverse effect on the rights and benefits conferred on the Company
pursuant to this Agreement.
19.2 In the event the Company elects to exercise its right set forth in
Section 19.1, the Company shall propose to the Trust a replacement
Broker-Dealer. The Trust shall enter into an agreement with such replacement
Broker-Dealer, unless it has a reasonable basis for failing to do so, in which
case the parties shall repeat such process until an acceptable Broker-Dealer is
so selected.
15
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BLUE WATER TRUST I
By: The Bank of New York (Delaware), not
in its individual capacity but
solely as Trustee
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
RAM REINSURANCE COMPANY LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
16
ANNEX A
Form of Put Notice
To: Blue Water Trust I
x/x Xxx Xxxx xx Xxx Xxxx (Delaware), as Trustee
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
with a copy to:
The Bank of New York
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group
Date: _____________
Ladies and Gentlemen:
We refer to the put option agreement dated as of December 23, 2003,
between us and you (as heretofore amended, the "Put Option Agreement"). Terms
defined therein shall have the same respective meanings herein.
This notice is the notice for the purposes of Section 3.2(a) of the
Put Option Agreement. We hereby elect to exercise the put option with regard to
Preference Shares having a liquidation preference of [__$ integral multiple of
$100,000], and hereby require you to pay the Preference Shares Purchase Price on
the Preference Shares Payment Date, which shall be [___], to the following
account:
[__________________]
[__________________]
[__________________]
RAM REINSURANCE COMPANY LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ANNEX B
Put Option Premium Certificate/
Delayed Put Option Premium Certificate
Class B Preference Shares of RAM Reinsurance Company Ltd.
1. Distribution Period: [first day of Period]-[last day of Period]: [number
of days in period - 28]
2. Auction Rate determined for the Distribution Period on [insert Auction
Date]. 0.000000%
3. Eligible Assets:
Issuer Ratings Purchase Price Yield to Maturity Interest
------ ---------------- ----- --------------------------
4. Applicable Federal Funds Effective Rate: 0.00% 0.0 % $0.0
5. Broker-Dealer Fees 0.0 % $0.0
6. Trustee and Custodian Fees 0.0 % $0.0
7. Investment Manager Fee 0.0 % $0.0
8. Tax Matters Partner Fee 0.0 % $0.0
9. Servicing Agent Fee 0.0 % $0.0
10. Rating Agency Fees 0.0 % $0.0
11. Tax Fees (including preparation of returns) 0.0 % $0.0
12. Other Fees and Expenses, if any,
as specified in an attachment hereto. 0.0 % $0.0
13. Computation of Put Premium Due on [insert
Distribution Payment Date] by 11:00 a.m. NYT: 0.0 % $0.0
14. The Investment Manager is in compliance with the Investment Management
Agreement.
ANNEX C
Bye-laws of
RAM Reinsurance Company Ltd.
ANNEX D
Certificate of Designation, Preferences and Rights
of
Class B Preference Shares
of
RAM Reinsurance Company Ltd.
ANNEX E
Expense Reimbursement Agreement
