Exhibit 10.16
OPTION AGREEMENT
NONE OF THE ST. XXXX OPTION (AS DEFINED BELOW) AND THE COMMON SHARES DELIVERABLE
UPON EXERCISE OF THE ST. XXXX OPTION HAVE BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933. NEITHER THE ST. XXXX OPTION, NOR ANY INTEREST THEREIN,
NOR ANY COMMON SHARES DELIVERABLE UPON EXERCISE THEREOF MAY BE ASSIGNED OR
OTHERWISE TRANSFERRED, DISPOSED OF OR ENCUMBERED EXCEPT FOLLOWING RECEIPT BY
PLATINUM UNDERWRITERS HOLDINGS, LTD. (THE "COMPANY") OF EVIDENCE SATISFACTORY TO
IT, WHICH MAY INCLUDE AN OPINION OF UNITED STATES COUNSEL, THAT SUCH TRANSFER
DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS
AND UPON OBTAINMENT OF ANY REQUIRED GOVERNMENT APPROVALS. TRANSFER OF THE ST.
XXXX OPTION OR ANY INTEREST THEREIN, OR ANY COMMON SHARES DELIVERABLE UPON
EXERCISE THEREOF, MAY BE DISAPPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY
IF, IN ITS REASONABLE JUDGMENT, IT HAS REASON TO BELIEVE THAT SUCH TRANSFER MAY
EXPOSE THE COMPANY, ANY SUBSIDIARY THEREOF, ANY SHAREHOLDER OR ANY PERSON CEDING
INSURANCE TO THE COMPANY OR ANY SUCH SUBSIDIARY TO ADVERSE TAX OR REGULATORY
TREATMENT IN ANY JURISDICTION. COMMON SHARES OBTAINED UPON EXERCISE OF THE ST.
XXXX OPTION ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER AS SET FORTH IN
SECTION 5(C) OF THIS OPTION AGREEMENT.
This OPTION AGREEMENT is made this [27th] day of [September] 2002 between
PLATINUM UNDERWRITERS HOLDINGS, LTD., a company organized under the laws of the
Islands of Bermuda (the "Company"), and THE ST. XXXX COMPANIES, INC., a company
incorporated under the laws of the State of Minnesota in the United States of
America ("St. Xxxx").
R E C I T A L S :
WHEREAS, the Company is contemplating an initial public offering (the
"Public Offering") of its common shares of par value U.S. $0.01 per share (the
"Common Shares");
WHEREAS, St. Xxxx and the Company have entered into a Formation and
Separation Agreement, dated as of [September 23,] 2002 (the "Formation and
Separation Agreement") in which St. Xxxx and the Company have set forth certain
terms of their continuing relationship following the Public Offering; and
WHEREAS, as contemplated by the Formation and Separation Agreement,
contingent upon the consummation of the Public Offering, St. Xxxx will
contribute cash and certain assets to
the Company, in consideration for which the Company intends to issue to St. Xxxx
or its nominees, a number of Common Shares determined as set forth in the
Formation and Separation Agreement and The St. Xxxx Option, as defined below,
exercisable under the circumstances specified in this Agreement.
NOW, THEREFORE, in furtherance of the transactions contemplated by the
Formation and Separation Agreement, and in consideration of the mutual promises,
covenants and agreements set forth therein and herein, the receipt and
sufficiency of which are acknowledged, the parties hereby agree as follows:
1. (a) The Company grants St. Xxxx an option (the "St. Xxxx Option") to
purchase for cash up to __________________ Common Shares (the "St. Xxxx Option
Shares") following the completion of the Public Offering.
(b) The St. Xxxx Option is exercisable, at an exercise price per Common
Share equal to ___ percent of the initial public offering price per Common
Share (the "St. Xxxx Option Price"), in whole or in part at any time prior to
the tenth anniversary of the completion of the Public Offering (the "Exercise
Period").
(c) An "Exercise Date" is any day during an Exercise Period, other than
a Saturday, Sunday or other day on which banking institutions in New York City
or Bermuda are authorized or obligated by law or executive order to close (a
"Business Day"). An Option may be exercised as provided herein until 12:01 A.M.,
New York City time, on the first day after the expiration of the Exercise
Period.
(d) Notwithstanding anything to the contrary in this Agreement, St.
Paul's ownership interest in the Common Shares may not at any time and under any
circumstances be equal to or exceed that percentage of the Common Shares
outstanding that would cause St. Xxxx to be a "United States 25% Shareholder" as
defined in the Company's bye-laws as in effect as of the completion of the
Public Offering. It is agreed and understood that, prior to any exercise of the
St. Xxxx Option, St. Xxxx shall, if necessary, dispose of such number of Common
Shares so that, immediately after any exercise of St. Xxxx Option, St. Xxxx will
not be a "United States 25% Shareholder".
(e) St. Xxxx Option Shares upon issue will rank equally in all respects
with the other Common Shares of the Company, but in no case will any St. Xxxx
Option Shares carry any option or other right to subscribe for further
additional shares.
(f) St. Xxxx is not, solely by virtue hereof, entitled to any rights of
a shareholder in the Company either at law or in equity.
(g) Upon any merger, amalgamation, consolidation, scheme of arrangement
or similar transaction involving the Company and any third party that is not a
subsidiary of the Company, or any sale of all or substantially all the assets of
the Company to any third party that
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is not a subsidiary of the Company (each, a "Transaction") in which all holders
of Common Shares become entitled to receive, in respect of such shares, any
capital stock, rights to acquire capital stock or other securities of the
Company or of any other person, any cash or any other property, or any
combination of the foregoing (collectively, "Transaction Consideration"), the
St. Xxxx Option shall entitle St. Xxxx to receive all Transaction Consideration
that St. Xxxx would have been entitled to if it had exercised the St. Xxxx
Option in full immediately prior to the Transaction (to the extent it remains
unexercised and without regard to the limitations in Section 1(d) hereof), in
each case upon payment by St. Xxxx of the St. Xxxx Option Price as in effect
immediately prior to such time. In determining the kind and amount of
Transaction Consideration that St. Xxxx would be entitled to receive in respect
of any Transaction pursuant to this Section 1(g), St. Xxxx shall be entitled to
exercise any rights of election as to the kinds and amounts of consideration
receivable in such Transaction that are provided to holders of Common Shares in
such Transactions. Any adjustment in respect of a Transaction pursuant to this
Section 1(g) shall become effective immediately after the effective time of such
Transaction, retroactive to any record date therefor. The Company shall take
such action as is necessary to ensure that St. Xxxx shall be entitled to receive
Transaction Consideration upon the terms and conditions provided in this Section
1(g). Notwithstanding the foregoing, if an adjustment is made pursuant to this
Section 1(g) in respect of a Transaction that involves a Change of Control (as
defined below), St. Xxxx shall be entitled to exercise the St. Xxxx Option
pursuant to this Section 1(g) without regard to Section 1(d) hereof. A
Transaction is deemed to involved a "Change of Control" if the beneficial owners
of the outstanding Common Shares immediately prior to the effective time of such
Transaction are not the beneficial owners of a majority of the total voting
power of the surviving or acquiring entity in the Transaction, as the case may
be, immediately after such effective time.
2. (a) To exercise the St. Xxxx Option in accordance with Section 1(b)
hereof, St. Xxxx shall provide written notice to the Company of its intention to
exercise all or a portion of the St. Xxxx Option at least ten (10) Business Days
prior to the intended Exercise Date (such notice must indicate the number of the
St. Xxxx Option Shares St. Xxxx intends to purchase upon exercise of the St.
Xxxx Option and must be in writing signed by or on behalf of St. Xxxx and
delivered or sent to the Company in accordance with Section (g) hereof).
(b) The Company shall issue and allot St. Xxxx Option Shares upon
exercise of the St. Xxxx Option and payment of the total price payable therefor.
(c) Concurrently with the issuance of the St. Xxxx Option Shares
pursuant to Section 2(b) above, St. Xxxx shall pay the St. Xxxx Option Price for
any exercise hereunder by wire transfer of immediately available funds to an
account specified at least five (5) Business Days in advance by the Company;
such St. Xxxx Option Price being an amount in U.S. dollars equal to the product
of (i) the number of St. Xxxx Option Shares that St. Xxxx intends to purchase
pursuant to any exercise of the St. Xxxx Option and (ii) the St. Xxxx Option
Price.
(d) Notwithstanding anything to the contrary in this Agreement, the St.
Xxxx Option
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may not be exercised under this Agreement unless the required regulatory
approvals set forth in Section 5 shall have been obtained.
3. (a) In case the Company at any time after the date that the number of
Common Shares issuable pursuant to the Public Offering and the St. Xxxx
Investment has been determined:
(A) declares or pays a dividend or makes any other distribution
with respect to its capital stock in Common Shares such that the number of
Common Shares outstanding is increased,
(B) subdivides or splits-up its outstanding Common Shares, such
that the number of Common Shares outstanding is increased,
(C) combines its outstanding Common Shares into a smaller number
of Common Shares or
(D) effects any reclassification of the Common Shares other than
a change in par value (including any such reclassification in connection
with an amalgamation or merger in which the Company is the surviving entity
or a reincorporation of the Company),
the number of Common Shares purchasable upon exercise of the St. Xxxx Option
shall be proportionately adjusted so that St. Xxxx will be entitled to receive
the kind and number of Common Shares or other securities of the Company which it
would have been entitled to receive after the happening of any of the events
described above if the St. Xxxx Option had been exercised immediately prior to
the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph 3(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) In case the Company issues rights, options or warrants to all
holders of its outstanding Common Shares entitling them to subscribe for or
purchase Common Shares at a price per share which is lower at the record date
mentioned below than the then Current Market Value (as defined in Section 3(d)),
the number of St. Xxxx Option Shares that St. Xxxx xxx purchase thereafter upon
the exercise of the St. Xxxx Option will be determined by multiplying the number
of St. Xxxx Option Shares theretofore purchasable upon exercise of the St. Xxxx
Option by a fraction, of which the numerator is the sum of (A) the number of
Common Shares outstanding on the record date for determining shareholders
entitled to receive such rights, options or warrants plus (B) the number of
additional Common Shares offered for subscription or purchase, and of which the
denominator shall be the sum of (A) the number of Common Shares outstanding on
the record date for determining shareholders entitled to receive such rights,
options or warrants plus (B) the number of shares which the aggregate offering
price of the total number of Common Shares so offered would purchase at the
Current Market Value (as defined below in Section 3(d)) per share of Common
Shares at such record date. Such adjustment shall
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be made whenever such rights, options or warrants are issued, and shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such rights, options or warrants.
(c) In the event the Company distributes to all holders of its Common
Shares any of the capital stock of any of its subsidiaries (each, a
"Subsidiary"), the St. Xxxx Option will upon such distribution be deemed to be
an option to purchase the kind and number of shares of the capital stock of the
Subsidiary which St. Xxxx would have been entitled to receive after such
distribution had the St. Xxxx Option been exercised immediately prior to such
distribution or any record date with respect thereto. The roll-over of the St.
Xxxx Option into an option to purchase shares of capital stock of the applicable
Subsidiary pursuant to this Section 3(c) will become effective immediately after
the effective date of the distribution of shares of the capital stock of the
applicable Subsidiary to shareholders of the Company described above.
(d) For the purpose of any computation under Section 3(b), the "Current
Market Value" of such Common Shares on a specified date is deemed to be the
average of the daily closing prices per share for the ten consecutive Trading
Days (as defined below) ending on the day before the applicable record date.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which the Common Shares are not traded on the applicable
securities exchange or on the applicable securities market. The closing price
for each day is the reported last sale price regular way or, in case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock Exchange or,
if the Common Shares are not listed or admitted to trading on such Exchange, on
the principal national securities exchange on which the Common Shares are listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the NASDAQ National Market or, if the Common Shares are
not listed or admitted to trading on any national securities exchange or quoted
on the NASDAQ National Market, the average of the closing bid and asked prices
in the over-the-counter market as furnished by any New York Stock Exchange
member firm reasonably selected from time to time by the Board of Directors of
the Company for that purpose.
(e) Whenever the number of Common Shares purchasable by St. Xxxx upon
the exercise of the St. Xxxx Option is adjusted, as herein provided, the St.
Xxxx Option Price shall be adjusted by multiplying the St. Xxxx Option Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of St. Xxxx Option Shares purchasable upon the exercise of the St.
Xxxx Option immediately prior to such adjustment, and of which the denominator
shall be the number of St. Xxxx Option Shares purchasable immediately
thereafter.
(f) No adjustment in the number of St. Xxxx Option Shares purchasable
upon the exercise of the St. Xxxx Option need be made under Section 3(b) and (c)
if the Company issues or distributes, pursuant to this Agreement, to St. Xxxx
the shares, rights, options, warrants, securities or assets referred to in those
paragraphs which St. Xxxx would have been entitled to receive had the St. Xxxx
Option been exercised prior to the happening of such event or the record date
with
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respect thereto. No adjustment need be made for a change in the par value of the
St. Xxxx Option Shares.
(g) For the purpose of this Section 3, the term "Common Shares" shall
mean (i) the class of stock consisting of the Common Shares of the Company, or
(ii) any other class of stock resulting from successive changes or
reclassification of such shares other than consisting solely of changes in par
value. In the event that at any time, as a result of an adjustment made pursuant
to Section 3 (a) above, St. Xxxx will become entitled to receive any securities
of the Company other than Common Shares, thereafter the number of such other
securities so receivable upon exercise of the St. Xxxx Option and the St. Xxxx
Option Price of such securities will be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the St. Xxxx Option Shares contained in paragraphs (a) through
(f), inclusive, above; PROVIDED, HOWEVER, that the St. Xxxx Option Price will at
no time be less than the aggregate par value of the Common Shares or other
securities of the Company obtainable upon exercise of the St. Xxxx Option.
(h) In the case of Section 3(b), upon the expiration of any rights,
options or warrants or if any thereof shall not have been exercised, the St.
Xxxx Option Price and the number of Common Shares purchasable upon the exercise
of the St. Xxxx Option shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted (or
had the original adjustment not been required, as the case may be) as if (A) the
only Common Shares so issued were the Common Shares, if any, actually issued or
sold upon the exercise of such rights, options or warrants and (B) such Common
Shares, if any, were issued or sold for the consideration actually received by
the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options or warrants whether or not exercised; PROVIDED, FURTHER, that no
such readjustment may have the effect of increasing St. Xxxx Option Price or
decreasing the number of Common Shares purchasable upon the exercise of the St.
Xxxx Option by an amount in excess of the amount of the adjustment initially
made in respect to the issuance, sale or grant or such rights, options or
warrants.
(i) In the case of Section 3(b), on any change in the number of Common
Shares deliverable upon exercise of any such rights, options or warrants, other
than a change resulting from the antidilution provisions hereof, the number of
St. Xxxx Option Shares thereafter purchasable upon the exercise of the St. Xxxx
Option shall forthwith be readjusted to such number as would have been obtained
had the adjustment made upon the issuance of such rights, options or warrants
not converted prior to such change (or rights, options or warrants related to
such securities not converted prior to such change) been made upon the basis of
such change.
(j) The Company may at its option, at any time during the term of the
St. Xxxx Option, reduce the then current St. Xxxx Option Price to any amount and
for any period of time deemed appropriate by the Board of Directors of the
Company, including such reductions in the exercise price as the Company
considers to be advisable in order that any event treated for
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Federal income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients.
4. The Company undertakes to use commercially reasonable efforts to increase
its authorized share capital prior to the dates upon which the St. Xxxx Option
shall become exercisable to a level sufficient to satisfy any exercise of the
St. Xxxx Option.
5. (a) For so long as the St. Xxxx Option is exercisable hereunder, each
party hereto shall (i) use its commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all governmental authorities
and officials that may be or become necessary for the performance of its
obligations pursuant to this Agreement and (ii) cooperate reasonably with the
other party in promptly seeking to obtain all such authorizations, consents,
orders and approvals. The parties hereto agree to cooperate reasonably, complete
and file any joint applications for any authorizations from any governmental
authorities reasonably necessary or desirable to effectuate the transactions
contemplated by this Agreement. The parties hereto agree that they will keep
each other apprised of the status of matters relating to the exercise of the St.
Xxxx Option, including reasonably promptly furnishing the other with copies of
notices or other communications received by the Company or St. Xxxx, from all
third parties and governmental authorities with respect to the St. Xxxx Option.
(b) For so long as the St. Xxxx Option is exercisable, the Company and
St. Xxxx agree to reasonably promptly prepare and file, if necessary, any filing
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR ACT") with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "DOJ") in order to enable St. Xxxx to
exercise such St. Xxxx Option pursuant to this Agreement. Each party hereby
covenants to cooperate reasonably with the other such party to the extent
reasonably necessary to assist in making reasonable supplemental presentations
to the FTC or the DOJ, and, if requested by the FTC or the DOJ, to reasonably
promptly amend or furnish additional information thereunder.
(c) Any reasonable out-of-pocket costs and expenses arising in
connection with actions taken pursuant to this Section 5 shall be borne by St.
Xxxx.
6. (a) The St. Xxxx Option and the St. Xxxx Option Shares may not be
assigned or otherwise transferred, disposed of or encumbered by St. Xxxx (or any
subsequent transferee) in whole or in part except as provided in this Section 6.
(b) In the event of a merger of St. Xxxx into another person, or a sale,
transfer or lease to another person of all or substantially all the assets of
St. Xxxx, the St. Xxxx Option or the St. Xxxx Option Shares may be transferred
as part of such transaction to the other party to such transaction.
(c) On and after the date which is the second anniversary of the closing
date of the
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Public Offering, St. Xxxx xxx transfer the St. Xxxx Option or the St. Xxxx
Option Shares, in whole or in part, in one or more private transaction(s) to up
to three institutional investors; PROVIDED, HOWEVER, that any proposed transfer
is conditioned upon
(i) receipt by the Company of evidence satisfactory to it, which
may include an opinion of United States counsel that such transfer would
not require registration under the Securities Act or state securities laws
and upon the obtainment of any required government approvals (which
approvals the Company agrees to use commercially reasonable efforts to
assist in obtaining); and
(ii) the proposed transferee executing and delivering instruments
reasonably acceptable to the Company acknowledging
(A) that the St. Xxxx Option and the St. Xxxx Option
Shares have not been registered under the Securities Act and,
accordingly, the transferee may not offer, sell, assign, pledge or
otherwise transfer the St. Xxxx Option or any St. Xxxx Option Shares
except pursuant to an effective registration statement under the
Securities Act covering such St. Xxxx Option Shares or pursuant to
an available exemption from the registration requirements of the
Securities Act and in compliance with all applicable state
securities laws;
(B) that the Company is entitled to decline to register
any transfer of St. Xxxx Option Shares, and any transfer of St. Xxxx
Option and St. Xxxx Option Shares shall be void, unless (i) such
transfer is made pursuant to and in accordance with Rule 144
(PROVIDED that the Company (or its designated agent for such
purpose) may request a certificate satisfactory to it of compliance
by the transferor with the requirements of Rule 144), (ii) such
transfer is made pursuant to another available exemption from the
registration requirements of the Securities Act (PROVIDED that, if
not already a party hereto, the intended transferee agrees to abide
by the provisions of this Section 6(c)(ii), and PROVIDED, FURTHER,
that, if the Company requests, the transferor first provides the
Company (or such agent) with evidence satisfactory to it, which may
include an opinion of U.S. counsel satisfactory to the Company, to
the effect that such transfer is made pursuant to another available
exemption from the registration requirements of the Securities Act),
(iii) such transfer is made pursuant to an effective registration
statement under the Securities Act covering the St. Xxxx Option
Shares being transferred, including a registration statement filed
pursuant to the Registration Rights Agreement and in all cases
pursuant to this clause (B) such transfer is in compliance with all
applicable state securities laws (the Company being entitled to
waive or modify the foregoing transfer requirements, generally or in
any particular case, to the extent that it determines, on advice of
U.S. counsel, that compliance with such requirements is not
necessary to ensure compliance with the Securities Act or any
applicable state securities laws, or
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such modification is necessary to ensure compliance with the
Securities Act or any applicable state securities laws, as the case
may be) and (iv) such transferee agrees to be bound by the
provisions of this Agreement;
(C) that, except as provided below, no St. Xxxx Option
Share shall be held in book-entry form, and each certificate
representing a St. Xxxx Option Share shall be evidenced by a
certificate bearing a restrictive legend (the "Legend")
substantially in the form set forth below:
THE COMMON SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT
BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS. SUCH SHARES MAY NOT BE HELD IN BOOK-ENTRY FORM. SUCH SHARES
ARE ALSO SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN THE OPTION
AGREEMENT, DATED AS OF [SEPTEMBER 27,] 2002, BETWEEN THE ST. XXXX
COMPANIES, INC. AND PLATINUM UNDERWRITERS HOLDINGS, LTD. (THE
"COMPANY"), WHICH MAY REQUIRE, AMONG OTHER THINGS, THE PRIOR RECEIPT
BY THE COMPANY FROM THE TRANSFEROR OR THE TRANSFEREE OF EVIDENCE
SATISFACTORY TO IT, WHICH MAY INCLUDE AN OPINION OF U.S. COUNSEL OR
UNDERTAKINGS TO BE BOUND BY SUCH AGREEMENT. SUCH SHARES ARE ALSO
SUBJECT TO RESTRICTIONS IN THE BYE-LAWS OF THE COMPANY, INCLUDING
RESTRICTIONS ON TRANSFER AND VOTING INTENDED TO ENSURE THAT NO
PERSON BECOMES OR IS DEEMED TO BECOME A 10% SHAREHOLDER OF THE
COMPANY (AS EXPLAINED IN SUCH BYE-LAWS).
(D) that the transferee shall become a party to the
Registration Rights Agreement, with the attendant rights and
obligations thereunder; PROVIDED, FURTHER, that any proposed
transfer may be disapproved by the Board of Directors of the Company
if, in their reasonable judgment, they have reason to believe that
such transfer may expose the Company, any subsidiary thereof, any
shareholder or any person ceding insurance to the Company or any
such subsidiary to adverse tax or regulatory treatment in any
jurisdiction. In connection with or following any transfer of St.
Xxxx Option Shares in accordance with clause (i) or (iii) of Section
6(c)(ii)(B), and upon the surrender of any certificate or
certificates representing such St. Xxxx Option Shares to the Company
(or such agent), the Company shall cause to be issued in exchange
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therefor a new certificate or certificates that represent the same
Common Shares and do not bear the Legend (or shall permit such
shares to be held in book-entry form). The Company shall use
commercially reasonable efforts to cause each St. Xxxx Option Share
transferred as contemplated by clause (i) or (iii) of Section
6(c)(ii)(B) to be duly listed on each securities exchange, and to be
accepted for quotation in each interdealer quotation system, on or
in which any Common Shares are listed or quoted at the time of such
transfer (PROVIDED that the approval for such listing or quotation
has been obtained by the Company), in each case so that the St. Xxxx
Option Share so transferred will be freely transferable on each such
exchange and in each such system to the same extent as the Common
Shares then listed thereon or quoted therein; and
(E) such transferee shall not become a "10% Shareholder"
(as defined in Section 6(d) below) immediately after such transfer
(assuming for purposes of this determination that the St. Xxxx
Option Shares were actually owned by the transferee); and
(iii) such transfer not resulting, directly or indirectly, in a
transfer to any Specified Person (as defined below) of more than 9.9% of
the Common Shares outstanding at the time of such transfer, or the right to
acquire pursuant to the St. Xxxx Option more than 9.9% of the Common Shares
outstanding at the time of such transfer, except in the following
circumstances: (A) in connection with any tender offer or exchange offer
made to all holders of outstanding Common Shares; (B) to any Post-Closing
Subsidiary of St. Xxxx (as defined in the Formation and Separation
Agreement) provided that such subsidiary agrees in writing with the Company
to the same transfer restrictions as are contained in this Section 6(c); or
(C) a transfer by operation of law upon consummation of a merger or
consolidation of St. Xxxx into another Person (as defined in the Formation
and Separation Agreement). For purposes of this Section 6(c)(iii),
"Specified Person" means any Person that generates 50% or more of its gross
revenue in its most recent fiscal year for which financial statements are
available by writing property or casualty insurance or reinsurance.
(d) In connection with any transfer of all or a portion of the St. Xxxx
Option pursuant to Section 6(c), the Company shall prepare an option agreement
substantially identical to this Agreement (or, in the case of a partial
transfer, option agreements) issuable to the transferee (and transferor, in the
case of partial transfer) upon surrender to the Company of the existing option
agreement upon consummation of the transfer. Upon said consummation, the
transferee shall have such rights and obligations with respect to the number of
St. Xxxx Option Shares covered by the portion of the St. Xxxx Option transferred
to such transferee as the rights and obligations of St. Xxxx hereunder. As used
herein, "10% Shareholder" means a person who owns, in aggregate, (i) directly,
(ii) with respect to persons who are United States persons, by application of
the attribution and constructive ownership rules of Sections 958(a) and 958(b)
of the Code or (iii) beneficially, directly or indirectly, within the meaning of
Section 13(d)(3) of the United States
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Securities Exchange Act of 1934, issued shares of the Company carrying 10% or
more of the total combined voting rights attaching to all issued shares.
(e) Any transferee of all or part of the St. Xxxx Option pursuant to
Section 6(c) hereof (or any subsequent transferee who holds any portion of the
St. Xxxx Option as a result of a transfer pursuant to this Section 6(e)) may
transfer, in whole but not in part, its portion of the St. Xxxx Option to a
subsequent transferee; PROVIDED that any such transfer shall be subject to the
terms and conditions set forth in Section 6(c) and 6(d) hereof.
7. The issuance of share certificates upon the exercise of the St. Xxxx Option
shall be without charge to St. Xxxx. The Company shall pay, and indemnify St.
Xxxx from and against, any issuance, stamp, documentary or other taxes (other
than transfer taxes and income taxes), or charges imposed by any governmental
body, agency or official by reason of the exercise of the St. Xxxx Option or the
resulting issuance of Common Shares.
8. This Agreement may not be amended except in a written instrument signed by
the Company and St. Xxxx.
9. All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered by
hand (with receipt confirmed), or by certified mail, postage prepaid and return
receipt requested, or by facsimile addressed as follows (or to such other
address as a party may designate by written notice to the others) and shall be
deemed given on the date on which such notice is received:
If to St. Xxxx:
The St. Xxxx Companies, Inc.
000 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxxx
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
-11-
If to the Company:
Platinum Underwriters Holdings, Ltd.
Clarendon Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx XX00
Xxxxxxx
Xxxxxxxxx: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
10. This Agreement and the Formation and Separation Agreement constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof.
11. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
12. This Agreement may not be assigned by any party hereto, except to a party
to whom St. Xxxx transfers the St. Xxxx Option or St. Xxxx Option Shares in
accordance with Section 6(c), and then only in accordance with that section.
13. The headings contained in this Agreement are for convenience
only and do not affect the meaning or interpretation of this
Agreement.
14. (a) This Agreement shall be governed by, and construed in accordance
with, the law of the State of New York (without regard to principles of conflict
of laws).
(b) The parties hereto shall promptly submit any dispute, claim, or
controversy arising out of or relating to this Agreement, including effect,
validity, breach, interpretation, performance, or enforcement (collectively, a
"DISPUTE") to binding arbitration in New York, New York at the offices of
Judicial Arbitration and Mediation Services, Inc. ("JAMS") before an arbitrator
(the "ARBITRATOR") in accordance with JAMS' Comprehensive Arbitration Rules and
Procedures and the Federal Arbitration Act, 9 U.S.C. Sections 1 ET SEQ. The
Arbitrator shall be a former judge selected from JAMS' pool of neutrals. The
parties agree that, except as otherwise provided herein respecting temporary or
preliminary injunctive relief, binding arbitration shall be
-12-
the sole means of resolving any Dispute. Judgment on any award of the
Arbitrators may be entered by any court of competent jurisdiction.
(c) The costs of the arbitration proceeding and any proceeding in court
to confirm or to vacate any arbitration award or to obtain temporary or
preliminary injunctive relief as provided in paragraph (d) below, as applicable
(including, without limitation, actual attorneys' fees and costs), shall be
borne by the unsuccessful party and shall be awarded as part of the Arbitrator's
decision, unless the Arbitrator shall otherwise allocate such costs in such
decision.
(d) This Section 14 shall not prevent the parties hereto from seeking or
obtaining temporary or preliminary injunctive relieve in a court for any breach
or threatened breach of any provision hereof pending the hearing before and
determination of the Arbitrator. The parties hereby agree that they shall
continue to perform their obligations under this Agreement pending the hearing
before and determination of the Arbitrator, it being agreed and understood that
the failure to so provide will cause irreparable harm to the other party hereto
and that the putative breaching party has assumed all of the commercial risks
associated with such breach or threatened breach of any provision hereof by such
party.
(e) The parties agree that the State and Federal courts in The City of
New York shall have jurisdiction for purposes of enforcement of their agreement
to submit Disputes to arbitration and of any award of the Arbitrator.
15. Capitalized terms used but not defined in this Agreement have the meanings
specified in the Formation and Separation Agreement.
16. This Agreement becomes effective contingent upon the consummation of the
Public Offering automatically and with no action on the part of any person.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed and
attested by its duly authorized officers and to be dated as of [September 27],
2002.
PLATINUM UNDERWRITERS HOLDINGS,
LTD.
By:
------------------------------
Name:
Title:
-00-
XXX XX. XXXX COMPANIES, INC.
By:
------------------------------
Name:
Title:
-14-
