EXHIBIT 10.10
SUBSCRIPTION AGREEMENT
Maximus Capital Holdings, Ltd.
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇
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Ladies and Gentlemen:
Western General Insurance Ltd., a Bermuda insurance company (the
"Subscriber"), desires to purchase Common Shares (each having a par value of
US$1.00) in the share capital of Maximus Capital Holdings, Ltd., a company
organized under the laws of Bermuda (the "Company"), and the Company has agreed
that in connection with such subscription the Company will issue a warrant to
purchase Common Shares as more fully disclosed herein. The Subscriber and the
Company hereby agree as follows:
1. Subscription For Common Shares. The Subscriber hereby subscribes for and
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agrees to accept the issue by the Company of the number of Common Shares
set forth in the Subscriber Signature Page attached hereto or such lesser
number allotted by the Company (the "Shares") and agrees to pay the
purchase price of US$15.00 per share. The aggregate purchase price (the
"Purchase Price") for the number of Shares subscribed for has been set
forth in the Subscriber Signature Page.
2. Issuance of Warrants. The Company shall issue and deliver to the Subscriber
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a warrant, substantially in the form attached hereto as Exhibit D (the
"Initial Warrant"), to purchase 368,359 Common Shares at an exercise price
of US$15.00 per share on the terms and conditions set forth therein. The
Company shall issue and deliver to the Subscriber an additional warrant on
each subsequent closing of the private placement of Common Shares of which
this subscription is a part (the "Offering") or any subsequent issuance
(each a "Subsequent Offering") of Common Shares or Non-Voting Common Shares
of Max Re Ltd., the subsidiary of the Company ("Max Re"), in each case
substantially in the form attached hereto as Exhibit D (each an "Additional
Warrant" and, together with the Initial Warrant, the "Warrants"), to
purchase that number of Common Shares equal to 1.7% of the aggregate number
of Common Shares (including Common Shares issuable upon the exchange of
Non-Voting Common Shares of Max Re) issued at such subsequent closing of
the Offering or Subsequent Offering at an exercise price equal to the price
per share of the securities then offered on the terms and conditions set
forth therein; provided, however, that noAdditional Warrants shall be
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issued to the extent that the Company and Max Re have raised in excess of
US$600 million through the issuance of shares or two years has elapsed from
the date hereof.
3. Purchase Procedure. The Subscriber acknowledges that, in order to subscribe
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for the Shares, such Subscriber must, and such Subscriber does hereby,
deliver to the Company:
(a) Two (2) executed counterparts of the Signature Page attached to this
Subscription Agreement (the "Agreement");
(b) Two (2) completed copies of the Subscriber Questionnaire attached
hereto as Exhibit A; and
(c) Payment of the Purchase Price to the Company in United States dollars
by wire transfer of immediately available funds, must be received on
or before December 22, 1999. Attached hereto as Exhibit C are wiring
instructions.
4. Acceptance Procedure. It shall be a condition precedent to the Company's
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acceptance of this Subscription that (i) the Company has received and
accepted subscriptions for Common Shares and Non-Voting Common Shares of
Max Re for at least US$300 million in the aggregate and (ii) the US$150
million from the direct sales described in the Memorandum (as defined in
Section 5(a) herein) shall have been fully funded; provided, that, for the
purpose of calculating the amount in clause (i) above, the -------- Company
shall include the amount of this Subscription and other subscriptions in
the Offering that are similarly conditioned to the extent that the Company
intends to accept any such subscriptions. After this Subscrition Agreement
has been accepted by the Company, the Company shall notify the Subscriber
of the satisfaction of the the conditions set forth in this Section 4, and
the Subscriber shall promptly deliver the Purchase Price to the Company in
accordance with Section 3(c) herein. If the Company rejects this
subscription, in whole or in part, after the Subscriber has paid the
Purchase Price to the Company, the Company shall promptly refund, at the
cost of the Subscriber, any unused portion of the subscription payment to
the Subscriber with any interest earned thereon.
5. Representations and Covenants of Subscriber. By executing this Agreement,
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the Subscriber makes the following representations, declarations and
warranties to the Company, with the intent and understanding that the
Company will rely thereon:
(a) The Subscriber has received and carefully read the Company's
Confidential Private Placement Memorandum dated December 17, 1999 as
the same may have been supplemented or amended on or prior to the date
hereof (the "Memorandum") and acknowledges that it has been furnished
by or on behalf of the Company during the course of this transaction
with all information regarding the Company that the Subscriber
requested or desired to know; that all documents which could be
reasonably provided have been made available for the Subscriber's
inspection and review; and that the Subscriber has been afforded the
opportunity to ask questions of and receive answers from duly
authorized officers or other representatives of the Company concerning
the terms and conditions of the Offering and any additional
information which the Subscriber has requested. The Subscriber has not
relied on any written or oral representation or information not
contained in the Memorandum. The Subscriber acknowledges that any
projections which it has been furnished do not constitute a
representation or warranty as to the anticipated future financial
performance of the Company.
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(b) The Subscriber understands that there is no public market for the
Shares or Warrants and that there is no assurance that a public market
will develop.
(c) The Subscriber understands that (i) the Shares being purchased and the
Warrants being issued hereunder have not been registered under the
Securities Act of 1933, as amended, of the United States of America
(the "Securities Act") or under the securities and public offering
laws of any other jurisdiction ("securities laws"); (ii) the
Subscriber cannot sell such Shares, Warrants or Common Shares
underlying the Warrants (the "Warrant Shares") unless they are
registered under the Securities Act or any other applicable securities
laws or unless exemptions from such registration requirements are
available; (iii) a legend will be placed on any certificate or
certificates evidencing the Shares, Warrants and Warrant Shares
stating that, among other matters, such securities have not been
registered under the Securities Act and setting forth or referring to
the restrictions on transferability and sales of such securities; (iv)
the Shares, Warrants and Warrant Shares will be subject to significant
contractual transfer restrictions pursuant to Section 7 herein and
that certain shareholders' agreement by and among the Company, Max Re
and shareholders of the Company to be made at the consummation of the
Offering (as amended from time to time, the "Shareholders'
Agreement"), including a prohibition on certain transfers of such
securities; and (v) the Company has no obligation or intention to
register the Shares, Warrant or Warrant Shares for sale under the
Securities Act or any other United States of America federal or state
securities laws or applicable securities laws of other jurisdictions
or assist the Subscriber in obtaining an exemption from the various
registration requirements except as set forth herein or contemplated
by the Shareholders' Agreement. The Subscriber agrees not to transfer,
dispose of or resell the Shares, Warrants or Warrant Shares without
compliance with the terms of this Agreement, the Shareholders'
Agreement, the Company's Bye-laws, the Securities Act and any and all
applicable securities laws and relevant permissions or approvals of
the Bermuda Monetary Authority.
(d) The Subscriber (i) is acquiring the Shares, Warrants and Warrant
Shares solely for the Subscriber's own account for investment purposes
only and not with a view to making a distribution, either in whole or
in part; (ii) has no contract, undertaking, agreement or other
arrangement, in existence or contemplated, to sell, charge, pledge,
assign or otherwise transfer or dispose of such securities (including
without limitation any interest therein) to any other person, and
(iii) agrees not to sell or otherwise transfer such securities unless
and until (A) they are subsequently registered under the Securities
Act and any applicable securities laws or unless an exemption from any
such registration is available and (B) such transfer complies with the
terms and conditions of the Shareholders' Agreement, Section 7 herein,
the Company's Bye-laws and relevant permissions or approvals of the
Bermuda Monetary Authority.
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(e) The Subscriber acknowledges that such Subscriber has been informed
that the Company's business is highly speculative in nature; the
Subscriber therefore understands that an investment in the Shares,
Warrant or Warrant Shares involves substantial risks and the
Subscriber recognizes and understands the risks relating to the
purchase of such securities, including without limitation those risks
outlined in the Memorandum under "Risk Factors -- We and/or U.S.
persons who own our Common Shares may be subject to U.S. income
taxation."
(f) The Subscriber's investment in the Company is reasonable in relation
to its net worth and financial needs and the Subscriber is able to
bear the economic risk of losing the Subscriber's entire investment in
the Securities.
(g) The Subscriber represents that such Subscriber satisfies the
definition of "accredited investor" as set forth in Rule 501(a) of
Regulation D under the Securities Act ("Regulation D"), and can afford
a total loss of his investment without substantially affecting his
present manner or mode of living. A copy of this definition has been
attached hereto as Exhibit B.
(h) The Subscriber understands that (i) the Offering and the documents
used in connection with the Offering have not been reviewed or
approved by any regulatory agency or government department, nor has
any such agency or government department made any finding or
determination as to the suitability of the Shares for investment; and
(ii) if required by the laws or regulations of any applicable
jurisdiction, the Offering will be submitted to the appropriate
authorities of such jurisdiction for registration or exemption
therefrom.
(i) The Subscriber acknowledges and agrees that the Company has the
unconditional right to accept or reject this subscription, in whole or
in part. The Company shall notify the Subscriber whether this
subscription is accepted or rejected. If such subscription is
rejected, payment will be returned, at the cost of the Subscriber,
without interest to the Subscriber.
(j) The Subscriber has been formed and validly exists and is in good
standing under the laws of the jurisdiction in which the Subscriber
has been formed and has not been organized for the specific purpose of
purchasing the Shares, Warrants or Warrant Shares (unless all
beneficial owners of the Subscriber are "accredited investors") and is
not prohibited from so purchasing the Shares or receiving the Warrants
hereunder.
(k) The Subscriber is authorized, empowered and qualified to execute this
Agreement and to make an investment in the Company as contemplated
hereby. Each of this Agreement and the Shareholders' Agreement has
been duly executed by, for or on behalf of and constitutes the legal,
valid and binding obligations of the Subscriber and enforceable
against the undersigned in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding of law or
in equity). The Subscriber is not aware of any laws or regulations
that might be the basis for releasing the Subscriber from the
obligations created by this Agreement or the Shareholders' Agreement.
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(l) If the Subscriber is purchasing the Shares or Warrants in a fiduciary
capacity for another person or entity, including without limitation a
company, corporation, limited liability company, partnership, trust or
any other entity, the Subscriber has been duly authorized, empowered
and qualified to execute this Agreement and all other subscription
documents, and such other person fulfills all the requirements for
purchase of the Shares or Warrants as such requirements are set forth
herein, concurs in the purchase of the Shares or Warrants and agrees
to be bound by the obligations, representations, warranties and
covenants contained herein. Upon request of the Company, the
Subscriber will provide true, complete and current copies of all
relevant documents creating the Subscriber, authorizing such
investment in the Company and/or evidencing the satisfaction of the
foregoing.
(m) No consent, approval or authorization of, or declaration or filing
with, any governmental or quasi-government authority or agency that
has not been obtained or made is required to be obtained or made by
the Subscriber for the valid execution and delivery of this Agreement
by the Subscriber or the valid purchase of Shares pursuant to this
Agreement.
(n) The Subscriber hereby covenants that for so long as it holds any
portion of the Shares subscribed for hereunder or the Warrants or
Warrant Shares it shall immediately notify the Company upon any change
in the Subscriber's status as an "accredited investor" or the
Subscriber's status as not resident in Bermuda for exchange control
purposes.
(o) The representations and warranties set forth by the Subscriber in this
Section 5 are true and correct as of the date hereof and will be true
and correct as of the date of the acceptance of this Agreement by the
Company in accordance with the terms of Section 3 hereof. If such
representations and warranties shall not be true and correct in any
respect prior thereto, the Subscriber shall immediately give written
notice of such fact to the Company, specifying which representations
and warranties are not true and correct and the reasons therefor.
6. Representations and Warranties of the Company. By accepting the
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Subscriber's Subscription hereunder, the Company makes the following
representations, declarations and warranties to the Subscriber, with the
intent and understanding that the Subscriber will rely thereon.
(a) The Company is duly organized, validly existing and in good standing
(meaning that it has not failed to make any filing with any Bermuda
governmental authority to pay any Bermuda government fee or tax which
would make it liable to be struck off the Bermuda Register of
Companies and thereby cease to exist) under the laws of Bermuda, and
has all corporate powers required to carry on its business as now
being, and as proposed to be, conducted. The Company is authorized or
duly qualified to do business as a foreign corporation and in good
standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such
qualification necessary.
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(b) The authorized share capital of each of the Company and Max Re as of
the date of this Subscription is accepted by the Company will be as
set forth on Schedule 6(b) attached hereto. The issued and outstanding
shares of the Company and Max Re immediately prior to the commencement
of the initial closing of the Offering or any direct sales described
in the Memorandum will be as set forth on Schedule 6(b) attached
hereto. Upon the consummation of the final closing of the Offering and
the direct sales and assuming issuances thereby of US$600 million of
shares as described in the Memorandum, the pro forma issued and
outstanding shares of the Company and Max Re and warrants to purchase
shares of the Company and Max Re will be as set forth on Schedule 6(b)
attached hereto. There are no outstanding options, warrants, rights to
subscribe to, or securities or rights convertible or exercisable into
or exchangeable for any shares of the Company or Max Re, or
arrangements by which either the Company or Max Re is or may become
bound to issue additional shares.
(c) The execution, delivery and performance by the Company of its
obligations under this Agreement, the Warrants and the Shareholders'
Agreement and the consummation by the Company of the transactions
contemplated hereby or thereby, are within the Company's corporate
power and have been duly authorized by all necessary corporate action
on the part of the Company. Each of this Agreement, the Warrants and
the Shareholders' Agreement has been duly and validly executed by the
Company and constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding of
law or in equity).
(d) The execution, delivery and performance by the Company of this
Agreement, the Warrants and the Shareholders' Agreement do not require
consent, approval or authorization of, or filing, registration or
qualification with, any governmental body, agency, official, court or
other authority that has not been obtained or made.
(e) The execution, delivery and performance by the Company of its
obligations under this Agreement, the Warrants and the Shareholders'
Agreement do not and will not (A) contravene or conflict with the
Company's organizational documents or (B) (i) contravene or conflict
with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or
applicable to the Company, (ii) require any consent, approval or other
action by any person or constitute a default under or give rise to any
right of termination, cancellation or acceleration of any right or
obligation of the Company to a loss of any benefit to which the
Company is entitled under any provision of any agreement, contract,
indenture, lease or other instrument binding upon the Company or any
license, franchise, permit or other similar authorization held by the
Company or (iii) result in the creation or imposition of any
encumbrances.
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(f) When issued, sold, and delivered in accordance with this Agreement,
the Shares will be validly issued and outstanding, fully paid and
non-assessable (meaning that no further sums are required to be paid
by the holders thereof in connection with the issue thereof) with no
personal liability attaching to the ownership thereof and not subject
to preemptive or similar rights of the Shareholders of the Company or
others, except as provided in the Shareholders' Agreement. Upon proper
exercise of the Warrants and the obtaining of any required approvals
of the Bermuda Monetary Authority, the Warrant Shares received by the
Subscriber will be validly issued and outstanding, fully paid, and
non-assessable (meaning that no further sums are required to be paid
by the holders thereof in connection with the issue thereof) with no
personal liability attaching and not subject to preemptive or similar
rights of the Shareholders of the Company or others, except as
provided in the Shareholders' Agreement.
(g) The terms and conditions of the Warrants to be issued to the
Subscriber hereunder are the same in all material respects as the
warrants to be issued to ▇▇▇▇▇ Capital Holdings, LLC and Capital Z
Investments, L.P. on the date this Subscription is accepted by the
Company (the "Founder Warrants") except that the Founder Warrants are
exercisable for Non-Voting Common Shares of Max Re, such Founder
Warrants have a fixed exercise price of US$15.00 per share and such
Founder Warrants are not exercisable in the manner set forth in
Section 3(a)(ii) of the Warrants. The Warrant Shares will represent
10% of the total number of Common Shares and Non-Voting Common Shares
of Max Re issuable upon the exercise of Common Share purchase warrants
issued to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the President and Chief Executive Officer
of the Company, on the date hereof and the Founder Warrants. Attached
hereto as Exhibit E is a true and complete copy of the form of Founder
Warrant.
(h) There is no action, suit, investigation or proceeding pending against,
or to the best knowledge of the Company threatened against or
affecting, the Company or any of its properties before any court or
arbitrator or any governmental body, agency, official or authority
that (i) could reasonably be expected to have a material adverse
effect or (ii) in any manner would enjoin, alter, call into question,
affect or delay the transactions contemplated by this Agreement.
(i) No representation, warranty or statement made by the Company in this
Agreement or any agreement, certificate, statement or document
furnished by or on behalf of the Company in connection herewith or
therewith, including the Memorandum, contains any untrue statement of
a material fact or omits to state a material fact necessary in order
to make the statements contained herein or therein, in light of the
circumstances under which they were made, misleading.
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(j) Except for obligations incurred in connection with its incorporation
or organization or the negotiation and consummation of this Agreement,
the Offering and the transactions contemplated hereby and thereby or
as disclosed in the Memorandum, the Company has neither incurred any
obligation or liability nor engaged in any business or activity of any
type or kind whatsoever or entered into any agreement or arrangement
with any person or entity.
(k) The representations and warranties set forth by the Company in this
Section 6 are true and correct as of the date hereof and will be true
and correct as of the date of the acceptance of this Agreement by the
Company in accordance with the terms of Section 3 hereof. If such
representations and warranties shall not be true and correct in any
respect prior thereto, the Company shall immediately give written
notice of such fact to the Subscriber, specifying which
representations and warranties are not true and correct and the
reasons therefor.
7. Subscriber Bound By Terms of Shareholders' Agreement. The terms and
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provisions of the Shareholders' Agreement are hereby incorporated herein by
reference and shall be deemed to be a part hereof. By executing this
Agreement, the Subscriber shall be bound by the terms and provisions of the
Shareholders' Agreement, a copy of which has been made available to the
Subscriber, and the Subscriber shall be deemed to be a "Shareholder" and
holder of "Registrable Securities" thereunder. The Subscriber acknowledges
that Max Re, each of the Founding Investors (as defined in the
Shareholders' Agreement) and the other parties to the Shareholders'
Agreement are third-party beneficiaries to this Section 7 and shall be
entitled to enforce their respective rights against the Subscriber under
the Shareholders' Agreement. The Subscriber hereby irrevocably constitutes
and appoints each of the officers of the Company, with full power of
substitution, as the Subscriber's true and lawful representative and
attorney, granting unto such attorney full power and authority in the
Subscriber's name, place and stead to make, execute, acknowledge, deliver,
swear to, file and record in all necessary or appropriate places the
Shareholders' Agreement substantially in the form attached to the
Memorandum but with such material amendments thereto as the Subscriber
agrees. The power of attorney granted hereby is coupled with an interest,
is irrevocable, and shall survive the death, dissolution, winding-up,
amalgamation, merger, incompetency or incapacity of the Subscriber. The
Subscriber shall not transfer the Shares, Warrants or Warrant Shares to any
person except in accordance with the Shareholders' Agreement and the
transferee of such securities agrees to be bound by the terms of this
Section 7 and the Shareholders' Agreement. Any transfer of the Shares in
violation of this Section 7 or the Shareholders' Agreement shall be void ab
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initio and shall not be recorded in the Company's Register of Members. The
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provisions of this Section 7 shall survive the subscription made hereby and
shall remain in full force and effort for so long as the Shareholders'
Agreement is in effect.
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8. Assignability. The Subscriber acknowledges that the Subscriber may not
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assign any of the Subscriber's rights to or interest in or under this
Agreement without the prior express written consent of the Company (and
such consent may be refused without giving any reason therefor) and any
attempted assignment without such consent shall be void and without effect.
9. Survival of Representations and Warranties. All representations and
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warranties contained in this Agreement made in writing by the Subscriber
and the Company pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the offer and sale of the Shares and the
issuance of the Warrants.
10. Notices. All notices and other communications provided for or permitted
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hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier, or air courier guaranteeing overnight delivery. All such
notices and communications shall be deemed to have been duly given when
delivered by hand, if personally delivered; five (5) Business Days after
being deposited in the United States mails, if being mailed by first class
mail, three (3) Business Days after being delivered to a next-day air
courier; and when receipt is acknowledged by the recipient's telecopier
machine, if telecopied..
11. Miscellaneous.
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(a) This Agreement shall be construed in accordance with and governed by
the laws of Bermuda without giving effect to the principles of
conflict-of-laws; provided, however, that the provision of Section 7
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hereof and the provisions of the Shareholders' Agreement incorporated
herein by reference shall be construed in accordance with and governed
by the law governing the Shareholders' Agreement.
(b) This Agreement may be executed in one or more counterparts each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
(c) This Agreement shall, except as otherwise provided herein, inure to
the benefit of and be binding on the Company and its successors and
assigns and on the Subscriber and his respective heirs, executors,
administrators, successors and assigns.
(d) This Agreement, when accepted by the Company, shall constitute the
entire agreement among the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements
and understandings, inducements or conditions, express or implied,
oral or written, except as herein contained. This Agreement may not be
modified, changed, waived or terminated other than by a writing
executed by all the parties hereto. No course of conduct or dealing
shall be construed to modify, amend or otherwise affect any of the
provisions hereof.
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(e) When the context in which words are used in this Agreement indicates
that such is the intent, singular words shall include the plural, and
vice versa, and masculine words shall include the feminine and neuter
genders, and vice versa.
(f) Captions are inserted for convenience only, are not a part of this
Agreement, and shall not be used in the interpretation of this
Agreement.
(g) In case any provision of this Agreement shall be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall
not in anyway effect or impair any other provision of this Agreement
assuming such invalidity, illegality or unenforceability does not
materially affect the purpose of this Agreement or the rights and
obligations hereunder.
12. CERTIFICATION. THE SUBSCRIBER CERTIFIES THAT THE SUBSCRIBER HAS READ THIS
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ENTIRE SUBSCRIPTION AGREEMENT AND THAT EVERY STATEMENT MADE BY THE
SUBSCRIBER HEREIN IS TRUE AND COMPLETE at the date hereof and will be true
on the date on which the Subscription contemplated hereby is consummated.
................................................................................
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SUBSCRIBER SIGNATURE PAGE
THE UNDERSIGNED, desiring to subscribe for Common Shares of Maximus
Capital Holdings, Ltd., a Company organized and existing under the laws of
Bermuda, as is set forth below, acknowledges that such Subscriber has received
and understands the terms and conditions of this Agreement and that the
Subscriber does hereby agree to all the terms and conditions contained therein.
IN WITNESS WHEREOF, the undersigned has hereby executed this Agreement
as of the date set forth below.
(PLEASE PRINT OR TYPE)
Number of Shares:
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Aggregate Purchase Price:
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(Number of Shares multiplied by price per Share)
Exact name(s) of Subscriber(s):
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(If a trust, name of trustee, or
if a partnership, name of
general partner. Such person --------------------------------------
will be the registered holder)
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Social Security Number:
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or
Taxpayer ID Number:
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Signature of Subscriber(s): Name:
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By:
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Name:
Title:
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COMPANY SUBSCRIPTION ACKNOWLEDGEMENT
The foregoing subscription is accepted by Maximus Capital Holdings, Ltd. to the
extent of 4,000,000 Common Shares for a total purchase price of US$60,000,000.00
this 22nd day of December 1999.
MAXIMUS CAPITAL HOLDINGS, LTD.
By:
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Name:
Title:
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Schedule 6(b)
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A. Actual Capitalization.
At the date hereof, the Company and Max Re have the following authorized
capital, issued and outstanding shares and shares reserved for issuance:
1. Maximus Capital Holdings, Ltd.
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The authorized share capital of the Company is US$220,000,000 divided into
200,000,000 Common Shares and 20,000,000 Preferred Shares each having a par
value of US$1.00. Of the 200,000,000 Common Shares authorized, 12,000
Common Shares are issued and outstanding and held by Codan Trust Company
Limited. No shares are reserved for issuance and no Preferred Shares are
issued and outstanding.
2. Max Re Ltd.
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The authorized share capital of Max Re is US$30,000,000 divided into
1,250,000 Voting Common Shares, 27,000,000 Non-Voting Common Shares and
1,750,000 Preferred Shares each having a par value of US$1.00. Of the
30,000,000 authorized shares, 1,250,000 Voting Common Shares are held by
the Company. No shares are reserved for issuance.
B. Pro Forma Capitalization.
Assuming that US$600 million is raised in the Offering and the direct sales
as more fully described in Section 6(b) herein, the Company and Max Re will have
the following authorized capital, issued and outstanding shares and shares
reserved for issuance:
1. Maximus Capital Holdings, Ltd.
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The authorized share capital of the Company will be US$220,000,000 divided
into 200,000,000 Common Shares and 20,000,000 Preferred Shares each having
a par value of US$1.00. Of the 200,000,000 Common Shares authorized,
36,995,930 Common Shares will be issued and outstanding and 7,800,000
Common Shares will be reserved for issuance upon the exercise of warrants
and the exchange of 5,400,000 Non-Voting Common Shares of Max Re into
Common Shares, including 680,000 Common Shares reserved for issuance upon
the exercise of the warrants issued to Western General Insurance, Ltd.,
720,000 Common Shares reserved for issuance upon the exercise of Common
Share purchase warrants to be issued to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and 1,000,000
Common Shares reserved for issuance upon the exercise of Common Share
purchase warrants issued to managers of the Company. No Preferred Shares
will be issued and outstanding or reserved for issuance and 3,004,070 Comon
Shares will be reserved for issuance upon conversion of Max Re Non-Voting
Common Shares.
2. Max Re Ltd.
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The authorized share capital of Max Re will be US$50,000,000 divided into
shares each having a par value of US$1.00. Of the 50,000,000 authorized
shares, 36,995,930 Voting Common Shares will be issued and outstanding and
held by the Company, 3,004,070 Non-Voting Common Shares will be issued and
outstanding and held by ▇▇▇▇▇ Holdings, LLC and 5,400,000 Non-Voting Common
Shares will be reserved for issuance upon the exercise of warrants issued
to the founding investors.
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EXHIBIT A
SUBSCRIBER QUESTIONNAIRE
ALL SUBSCRIBERS MUST COMPLETE THE FOLLOWING
Date:
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Residence or
Mailing Address for entry in the Share Register:
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Telephone Number: ( )
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Facsimile Number: ( )
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E-mail Address:
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Citizenship/Domicile of Subscriber:
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Type of Entity
(if applicable):
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If a trust, name and address
of trustee (this person will be
the registered holder of
Common Shares):
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If a partnership,
name and address of general
partner (this person will be
the registered holder of
Common Shares):
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Date of Formation
(if applicable):
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Social Security or Taxpayer
Identification Number(s)
(as applicable):
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Mailing Address for
Correspondence
from the Company
(if different):
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Please complete, execute and date this Subscriber Questionnaire and deliver it
to the address set forth above. Your answers will, at all times, be kept
confidential except as necessary to establish that the offering and sale of the
Shares will not result in a violation of the registration provisions of the
Securities Act or securities laws or to establish compliance with any provision
of United States of America federal income tax law and relevant permission or
approval of the Bermuda Monetary Authority. Capitalized terms used herein and
not otherwise defined shall have the meaning ascribed to them in the
Subscription Agreement attached hereto.
1. To establish the basis of the Subscriber's status as an accredited investor
under Regulation D, please answer the questions set forth below.
(a) Is the Subscriber an individual with a net worth (or net worth with
his or her spouse) in excess of US$1 million:
Yes____ No_____
(b) Is the Subscriber an individual with income (without including any
income of the Subscriber's spouse) in excess of US$200,000, or joint
income with the Subscriber's spouse, in excess of US$300,000, in each
of the two most recent years, and does the Subscriber reasonably
expect to reach the same income level in the current year?
Yes____ No_____
(c) Is the Subscriber a director, executive officer, or general partner of
the issuer of the Shares being offered or sold, or a director,
executive officer, or general partner of a general partner of that
issuer?
Yes____ No_____
(d) Is the Subscriber an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 (hereinafter "ERISA")
whose decision to invest in the Company is being made by a plan
fiduciary which is either a bank, savings and loan association,
insurance company or registered investment adviser or, alternatively,
does the employee benefit plan have total assets in excess of
US$5,000,000 or is the employee benefit plan "self-directed" with
investment decisions made solely by person(s) who answered "Yes" to
item 1(a) or 1(b) above?
Yes____ No_____
2
(e) Is the Subscriber a retirement plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of
a state or its political subdivisions for the benefit of its employees
with total assets in excess of US$5,000,000?
Yes____ No_____
(f) Is the Subscriber a trust (including an individual retirement
arrangement formed as a trust or a tax-qualified pension and profit
sharing plan (e.g., a ▇▇▇▇▇ Plan) formed as a trust but not subject to
ERISA) with total assets in excess of US$5,000,000 that was not formed
for the specific purpose of acquiring the Shares and whose purchase is
directed by a person with such knowledge and experience in financial
and business matters that such person is capable of evaluating the
merits and risks of the prospective investment?
Yes____ No_____
(g) Is the Subscriber a Company, partnership, Massachusetts or similar
business trust or an organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended (the "Code") that was
not formed for the specific purpose of acquiring the Shares and whose
total assets exceed US$5,000,000?
Yes____ No_____
(h) Is the Subscriber one of the following entities:
(i) A "bank" as defined in Section 3(a)(2) of the Securities Act or
any "savings and loan association" or other institution as
defined in Section 3(a)(5)(A) of the Securities Act, whether
acting in an individual or fiduciary capacity;
(ii) A "broker/dealer" registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended;
(iii)An "insurance company," as defined in Section 2(13) of the
Securities Act;
(iv) An "investment company" registered under the Investment Company
Act of 1940 or a "business development company" as defined in
Section 2(a)(48) of the Investment Company Act of 1940;
3
(v) A "Small Business Investment Company" licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958; or
(vi) A "Private Business Development Company" as defined in Section
202(a)(22) of the Investment Advisers Act of 1940?
Yes____ No_____
If yes, then which entity (i.e., (g)(i) through (vi) above)?
(vii)Is the Subscriber an entity (other than a trust, but including a
grantor trust) in which all of the equity owners can answer "Yes"
to any one question set forth in Sections 1(a) through 1(g)
immediately above?
Yes____ No_____
2. Is the Subscriber acquiring the Shares as a principal for the purposes of
investment and not with a view to resale or distribution?
Yes____ No_____
3. By signing this Subscriber Questionnaire, the Subscriber hereby confirms
the following statements:
(a) The Subscriber is purchasing the Shares for its own account where
the purchaser is the sole beneficial owner, and
(b) either (i) the Subscriber is not, for federal income tax
purposes, a partnership, trust, estate or "S Company" (as defined
in the Code) (each, a "Pass-through Entity"), or (ii) the
Subscriber is, for federal income tax purposes, a Pass-through
Entity, but after giving effect to the purchase of the Shares,
less than 50% of the aggregate value of the Subscriber's assets
consist of Shares, and
(c) the purchase of the Shares will not be through an "established
securities market" within the meaning of Section 7704(b) of the
Code, and
(d) if the Subscriber is a Pass-through Entity, the portion of its
assets consisting of Shares remain below 50% at all times, and
(e) either (i) no portion of the assets used to purchase the Shares
constitute the assets of any "benefit plan investor" as defined
in 29 C.F.R. 2510.101(f), or (ii) if the purchaser is an
insurance company using the assets of its general account to
purchase the Shares, less than 25% of such general account
constitutes the assets of any "benefit plan investor."
4
4. By signing this Subscriber Questionnaire, the Subscriber hereby confirms
the following statements:
(a) The Subscriber is aware that the Offering will involve securities
for which no market exists, thereby-possibly requiring an
investment to be held for an indefinite period of time.
(b) The Subscriber shall immediately provide the Company with
corrected information in the event any information given herein
was untrue.
(c) The Subscriber acknowledges that any delivery of any information
relating to the Company prior to the determination by the Company
of the suitability of the Subscriber as a shareholder shall not
constitute an offer of Shares until such determination of
suitability shall be made.
(d) The Subscriber acknowledges that the Company will rely on the
Subscriber's representations contained herein and in the
Agreement as a basis for exemption from registration and for
purposes of complying with U.S. federal income tax laws.
(e) The Subscriber, either alone or with his or her purchase
representative, has such knowledge and experience in financial
and business matters as to be capable of evaluating the risks and
merits of the prospective investment in the Shares.
(f) The answers of the Subscriber to the foregoing questions are true
and complete to the best of the information and belief of the
undersigned, and the Company shall be notified promptly (and, in
particular, upon the acquisition of additional Shares by the
Subscriber) of any changes in the foregoing answers.
5. Are you aware of any affiliates or related parties (your direct or indirect
shareholders if you are a corporation; your direct or indirect partners if
you are a partnership; corporations, partnerships, trusts or estates in
which you are directly or indirectly invested or of which you are a
beneficiary) and relatives (lineal and spouse) also subscribing to this
offering?
Yes____ No_____
5
If your answer to question 5 is yes, please list any such affiliate or
related party in the space provided below:
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By:
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Name:
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Title:
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Principal Residence (if Subscriber is an individual) or Business Address of
Subscriber:
Date:
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6
EXHIBIT B
INVESTOR SUITABILITY STANDARDS
Capitalized terms used herein and not otherwise defined shall have the
meaning ascribed to them in the Subscription Agreement attached hereto.
A purchase of the Shares pursuant to the Agreement involves a high degree
of risk and is suitable only for persons of substantial financial means who have
no need for liquidity in their investments. The offer, offer for sale, and sale
of the Shares are intended to be exempt from the registration requirements of
the Securities Act pursuant to Regulation D promulgated thereunder ("Regulation
D") or another exemption thereunder and are intended to be exempt from the
registration requirements of applicable state securities laws.
Rule 501(a) of Regulation D defines an "accredited investor" as follows:
(1) Any bank as defined in Section 3(a)(2) of the Securities Act or any
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934; any
insurance company as defined in Section 2(13) of the Securities Act;
any investment company registered under the Investment Company Act of
1940 or a business development company as defined in Section 2(a)(48)
of that Act; any Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of
US$5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of US$5,000,000, or,
if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;
(2) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in Section 501(c)(3) of the Internal
Revenue Code, Company, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with total assets in excess of US$5,000,000;
(4) Any director, executive officer or general partner of the issuer of
the securities being offered or sold, or any director, executive
officer or general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds
US$1,000,000;
(6) Any natural person who had an individual income in excess of
US$200,000 in each of the two most recent years or joint income with
that person's spouse in excess of US$300,000 in each of those years
and has a reasonable expectation of reaching the same income level in
the current year;
(7) Any trust with total assets in excess of US$5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited investors.
2
EXHIBIT C
WIRING INSTRUCTION
Transfer Funds to:
The Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fed ABA ▇▇▇▇▇▇▇▇▇
Or
CHIPS ABA 0002
SWIFT ▇▇▇▇▇▇▇▇
Beneficiary Account:
Maximus Capital Holdings, Ltd.
Account No. 323892973
EXHIBIT D
FORM OF INITIAL WARRANT
EXHIBIT E
FORM OF FOUNDER WARRANT
