EXHIBIT 1.1
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
16,750,000 Ordinary Shares/1/
UNDERWRITING AGREEMENT
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November __, 1998
Prudential Securities Incorporated
CIBC Xxxxxxxxxxx Corp.
ING Baring Xxxxxx Xxxx LLC
Warburg Dillon Read LLC
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
Scottish Annuity & Life Holdings, Ltd., a Cayman Islands, British West
Indies corporation (the "Company"), hereby confirms its agreement with the
several underwriters named in Schedule 1 hereto (the "Underwriters"), for whom
you have been duly authorized to act as representatives (in such capacities, the
"Representatives"), as set forth below. If you are the only Underwriters, all
references herein to the Representatives shall be deemed to be to the
Underwriters. The Company's Ordinary Shares, par value $0.01 per share, are
referred to herein as the "Ordinary Shares."
1. Securities. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the several Underwriters an aggregate
of 16,750,000 Ordinary Shares (the "Firm Securities"). The Company also proposes
to issue and sell to the several Underwriters not more than an aggregate of
2,512,500 additional Ordinary Shares if requested by the Representatives as
provided in Section 3 of this Agreement. Any and all Ordinary Shares to be
purchased by the Underwriters pursuant to such option are referred to herein as
the "Option Securities", and the Firm Securities and any Option Securities are
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/1/ Plus an option to purchase from Scottish Annuity & Life Holdings, Ltd. up
to 2,512,500 additional Ordinary Shares to cover over-allotments.
collectively referred to herein as the "Securities". It is understood that the
Company has agreed, concurrently with the issuance, offering and sale of the
Securities to the Underwriters by the Company pursuant to this Agreement, to
issue and sell directly to Audubon Asset, Limited, Soulieana Limited, Maverick
Fund USA, Ltd., Maverick Fund, L.D.C. and Maverick Fund II, Ltd. (collectively,
the "Direct Investors") an aggregate of 1,418,440 Ordinary Shares (the "Direct
Shares") and Class A Warrants to purchase an aggregate of 400,000 Ordinary
Shares (the "Direct Warrants", and collectively with the Direct Shares, the
"Direct Securities") as set forth in the Prospectus or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus under the caption "Direct
Sales".
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) A registration statement on Form S-1 (File No. 333-57227) with
respect to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and one
or more amendments to such registration statement may have been so filed. After
the execution of this Agreement, the Company will file with the Commission
either (i) if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (A) if the
Company relies on Rule 434 under the Act, a Term Sheet (as hereinafter defined)
relating to the Securities, that shall identify the Preliminary Prospectus (as
hereinafter defined) that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) under the Act or (B) if the
Company does not rely on Rule 434 under the Act, a prospectus in the form most
recently included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A under the Act or permitted by
Rule 424(b) under the Act, and in the case of either clause (i)(A) or (i)(B) of
this sentence as have been provided to and approved by the Representatives prior
to the execution of this Agreement, or (ii) if such registration statement, as
it may have been amended, has not been declared by the Commission to be
effective under the Act, an amendment to such registration statement, including
a form of prospectus, a copy of which amendment has been furnished to and
approved by the Representatives prior to the execution of this Agreement. The
Company may also file a related registration statement with the Commission
pursuant to Rule 462(b) under the Act for the purpose of registering certain
additional Securities, which registration shall be effective upon filing with
the Commission. As used in this Agreement, the term "Original Registration
Statement" means the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and included
in the Prospectus (as hereinafter defined); the term "Rule 462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) under the Act (including the Registration Statement and any
Preliminary Prospectus or Prospectus incorporated therein at the time such
Registration Statement becomes effective); the term "Registration Statement"
includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each prospectus
subject to completion filed
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with such registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration Statement
or any amendment thereto at the time it was or is declared effective); the term
"Prospectus" means:
(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the
Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. When any Preliminary Prospectus was filed
with the Commission it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was or is
declared effective, it (i) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the Prospectus or
any Term Sheet that is a part thereof or any amendment or supplement to the
Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or any Term Sheet that is a part thereof or such amendment or
supplement is not required to be so filed, when the Registration Statement or
the amendment thereto containing such amendment or supplement to the Prospectus
was or is declared effective) and on the Firm Closing Date and any Option
Closing Date (both as hereinafter defined), the Prospectus, as amended or
supplemented at any such time, (i) contained or will contain all statements
required to be stated therein in accordance with, and complied or will comply in
all material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (b) do not apply to statements or omissions made in
any Preliminary Prospectus, the Registration Statement or any amendment thereto
or the Prospectus or any amendment or supplement thereto in reliance upon and in
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conformity with written information furnished to the Company by or on behalf of
any Underwriter through the Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that is
effective upon filing pursuant to Rule 462(b) and has received confirmation of
its receipt and (ii) the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of the
Rule 462(b) Registration Statement, in compliance with Rule 111 promulgated
under the Act or the Commission has received payment of such filing fee.
(d) No registration was, is or will be required under the Act or any
applicable securities, blue sky or insurance laws of any applicable jurisdiction
for the issuance, offering and sale of the Direct Securities to the Direct
Investors, of the 1,500,000 Ordinary Shares (the "SHL Securities") to Scottish
Holdings, Ltd. ("SHL") and of the Company's outstanding Class A Warrants (the
"Class A Warrants"), Class B Warrants (the "Class B Warrants") and Class C
Warrants, if any are issued (the "Class C Warrants") to the holders thereof (the
"Class A Warrant Holders," the "Class B Warrant Holders" and the "Class C
Warrant Holders", respectively). Neither the Company nor any "affiliate" of the
Company within the meaning of Rule 501(b) under the Act or any person acting on
behalf of the Company or any such affiliate, directly or indirectly, (i) has
made or will make offers or sales of, or solicitations of offers to buy, the
Direct Securities, the SHL Securities, the Class A Warrants, the Class B
Warrants or the Class C Warrants (or any securities of the same or similar
respective classes) to any prospective purchaser under circumstances that would
require registration of the Direct Securities, the SHL Securities, the Class A
Warrants, the Class B Warrants or the Class C Warrants or (ii) has engaged in
any form of "general solicitation" or "general advertising" within the meaning
of Rule 502(c) under the Act with respect to the Direct Securities, the SHL
Securities, the Class A Warrants, the Class B Warrants and the Class C Warrants.
(e) Each of the Company and Scottish Annuity & Life Insurance Company
(Cayman) Ltd., a Cayman Islands, British West Indies corporation (the
"Subsidiary"), has been duly organized and is validly existing as a company in
good standing under the laws of the Cayman Islands, British West Indies and is
duly qualified to transact business as a foreign corporation and is in good
standing under the laws of all other jurisdictions where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified does not amount to a
material liability or disability to the Company and its Subsidiary, taken as a
whole.
(f) The Company has no subsidiary other than the Subsidiary.
(g) Each of the Company and its Subsidiary has full power (corporate
and other) to own or lease its properties and to conduct its business as
described in the Registration Statement and the Prospectus or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus; and the Company has
full power (corporate and other) to enter into (i) this Agreement, (ii) the
separate securities purchase agreements entered into by the Company with
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each of the Direct Investors (such securities purchase agreements, the "Direct
Agreements"), (iii) the subscription agreement entered into by the Company with
SHL (such subscription agreement, the "SHL Agreement"), (iv) the separate
warrant purchase agreements entered into by the Company with each of the Class A
Warrant Holders (such warrant purchase agreements, the "Class A Warrant Purchase
Agreements"), the Class B Warrant Holders (such warrant purchase agreements, the
"Class B Warrant Purchase Agreements") and the Class C Warrant Holders (such
warrant purchase agreements, the "Class C Warrant Purchase Agreements", and
collectively with the Class A Warrant Purchase Agreements and the Class B
Warrant Purchase Agreements, the "Warrant Purchase Agreements"), (v) the omnibus
registration rights agreement entered into by the Company with each of the
Direct Investors, the Class A Warrant Holders and the Class B Warrant Holders
(such omnibus registration rights agreement, the "Registration Rights
Agreement"), and (vi) the Direct Warrants, the Class A Warrants, the Class B
Warrants and the Class C Warrants and to carry out all the terms and provisions
hereof and thereof to be carried out by it.
(h) The issued shares in the capital of the Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable and are owned
beneficially by the Company free and clear of any security interests, liens,
encumbrances, equities or claims.
(i) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus. All of the issued shares in
the capital of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. The Class A Warrants and the Class B Warrants have
been duly authorized and validly issued and are fully paid and nonassessable.
The Firm Securities and the Option Securities have been duly authorized and at
the Firm Closing Date or the related Option Closing Date (as the case may be),
after payment therefor in accordance herewith, will be validly issued, fully
paid and nonassessable. The Direct Securities have been duly authorized and,
after payment therefor in accordance with the Direct Agreements, will be validly
issued, fully paid and nonassessable. The Class C Warrants have been duly
authorized and, after payment therefor in accordance with the Class C Warrant
Purchase Agreements, will be validly issued, fully paid and nonassessable. The
Ordinary Shares initially issuable upon exercise of the Class A Warrants, the
Class B Warrants, the Class C Warrants and the Direct Warrants (as the case may
be), have been duly authorized and reserved for issuance upon such exercise, and
after payment therefor upon exercise in accordance with the Class A Warrants,
the Class B Warrants, the Class C Warrants and the Direct Warrants (as the case
may be), will be validly issued, fully paid and nonassessable. No holders of
outstanding shares of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Securities, the Direct Securities or
the Ordinary Shares initially issuable upon exercise of the Class A Warrants,
the Class B Warrants, the Class C Warrants or the Direct Warrants, and no holder
of securities of the Company has any right which has not been fully exercised or
waived to require the Company to register the offer or sale of any securities
owned by such holder under the Act in the public offering contemplated by this
Agreement.
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(j) The share capital of the Company conforms to the description
thereof contained in the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus.
(k) Except as disclosed in the Prospectus or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus, there are no
outstanding (A) securities or obligations of the Company or its Subsidiary
convertible into or exchangeable or exercisable for any shares in the capital of
the Company or its Subsidiary, (B) warrants, rights or options to subscribe for
or purchase from the Company or its Subsidiary any such shares or any such
convertible, exchangeable or exercisable securities or obligations, or (C)
obligations of the Company or its Subsidiary to issue any shares, any such
convertible, exchangeable or exercisable securities or obligations, or any such
warrants, rights or options.
(l) The consolidated financial statements of the Company and its
Subsidiary included in the Registration Statement and the Prospectus or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus, fairly
present the financial position of the Company and its Subsidiary and the results
of operations and changes in financial condition as of the dates and periods
therein specified. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise noted therein).
(m) Ernst & Young LLP, who have certified the consolidated financial
statements of the Company and its Subsidiary and delivered their report with
respect to the audited consolidated balance sheet included in the Registration
Statement and the Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus, are independent public accountants as required by
the Act and the applicable rules and regulations thereunder.
(n) The execution and delivery of this Agreement, the Direct
Agreements, the SHL Agreement, the Warrant Purchase Agreements, the Registration
Rights Agreement, the Class A Warrants, the Class B Warrants, the Class C
Warrants and the Direct Warrants have been duly authorized by all necessary
corporate action of the Company, and no other corporate proceeding therefor on
the part of the Company or its shareholders is required; this Agreement, the
Direct Agreements, the SHL Agreement, the Warrant Purchase Agreements, the
Registration Rights Agreement, the Class A Warrants, the Class B Warrants and
the Direct Warrants have been duly executed and delivered by the Company, and
are the valid and binding agreements of the Company, enforceable against the
Company in accordance with their respective terms.
(o) No legal or governmental proceedings are pending to which the
Company or its Subsidiary is a party or to which the property of the Company or
its Subsidiary is subject that are required to be described in the Registration
Statement or the Prospectus and are not described therein or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus, and to the
knowledge of the Company, no such proceedings have been threatened against the
Company or its Subsidiary or with respect to any of their respective properties;
and no contract or other document is required to be described in the
Registration Statement or the Prospectus or to be
6
filed as an exhibit to the Registration Statement that is not described therein
or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus, or filed as required.
(p) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, of the Direct Securities
to the Direct Investors by the Company pursuant to the Direct Agreements, of the
SHL Securities to SHL by the Company pursuant to the SHL Agreement, and of the
Class A Warrants, the Class B Warrants and the Class C Warrants to the Class A
Warrant Holders, the Class B Warrant Holders and the Class C Warrant Holders,
respectively, by the Company pursuant to the Warrant Purchase Agreements, the
compliance by the Company with the other provisions of this Agreement, the
Direct Agreements, the SHL Agreement, the Warrant Purchase Agreements, the
Registration Rights Agreement, the Class A Warrants, the Class B Warrants, the
Class C Warrants and the Direct Warrants and the consummation of the other
transactions herein and therein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act, or (ii) conflict
with or result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Company or its Subsidiary is a party
or by which the Company or its Subsidiary or any of their respective properties
are bound, or the Memorandum of Association or Articles of Association or other
organizational documents of the Company or its Subsidiary, or any statute or any
judgment, decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or its Subsidiary, except
for such breaches or defaults as will not have a material adverse effect on the
condition (financial or otherwise), management, business prospects, net worth or
results of operations of the Company and the Subsidiary, taken as a whole.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus, (i) the Company and
its Subsidiary have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business, (ii) the Company has not purchased any of its outstanding shares,
nor declared, paid or otherwise made any dividend or distribution of any kind on
its share capital, (iii) there has not been any material change in the share
capital, short-term debt or long-term debt of the Company and its Subsidiary,
(iv) neither the Company nor its Subsidiary has sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and (v) there
has not been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or otherwise),
management, business prospects, net worth, or results of operations of the
Company or its Subsidiary, except in each case as described in or contemplated
by the Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus.
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(r) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company, except as
contemplated by this Agreement.
(s) The Company and its Subsidiary have good and marketable title in
fee simple to all items of real property and marketable title to all personal
property owned by each of them, in each case free and clear of any security
interests, liens, encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company or its Subsidiary, and any real property and buildings held under lease
by the Company or its Subsidiary are held under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or its Subsidiary, in each case except as described in
or contemplated by the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus.
(t) The Company's Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on its capital stock, from repaying to the Company any loans or
advances to it from the Company or from transferring any of its property or
assets to the Company, except as described in or contemplated by the Prospectus
or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus.
(u) Neither the Company nor its Subsidiary is required to be
registered as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), an investment adviser under the Investment Advisers
Act of 1940, as amended (the "Advisers Act"), or a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
transactions contemplated by this Agreement, the Direct Agreements, the SHL
Agreement, the Warrant Purchase Agreements, the Class A Warrants, the Class B
Warrants, the Class C Warrants and the Direct Warrants and the offering,
issuance and sale by the Subsidiary of its annuity and life insurance and
reinsurance products and the conduct of its other respective businesses as
contemplated in the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus will not cause the Company or its Subsidiary
to become an investment company or an entity controlled by an investment company
subject to registration under the 1940 Act, an investment adviser subject to
registration under the Advisers Act or a broker-dealer subject to registration
under the Exchange Act. The Subsidiary is a "foreign insurance company" within
the meaning of Rule 3a-6 under the 1940 Act, and the Company and the Subsidiary
will conduct their respective businesses in a manner such that at all times the
Subsidiary will be a "foreign insurance company" within the meaning of such
Rule. The Company has filed Form F-N with the Commission, and such Form
accurately sets forth all information required to be included therein and
complies in all material respects with the
8
applicable requirements of the Act and the 1940 Act and the respective rules and
regulations of the Commission thereunder.
(v) The variable life insurance products offered, issued and sold by
the Subsidiary qualify as life insurance under the Internal Revenue Code of
1986, as amended (the "Code"), and such variable life insurance products will be
issued only to persons or trusts the Company and its Subsidiary reasonably
believe to be "qualified purchasers" within the meaning of Section 2(a)(51) of
the 1940 Act and the rules and regulations of the Commission thereunder and
"accredited investors" within the meaning of Rule 501(a) under the Act. No
registration is required under the Act or any applicable securities, blue sky or
insurance laws of any applicable jurisdiction for the offering, issuance and
sale by the Subsidiary of its variable life insurance products as contemplated
in the Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus.
(w) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(x) The Company and its Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or specific
authorizations; (2) transactions are recorded as necessary to permit preparation
of financial statements in conformity with United States generally accepted
accounting principles and to maintain asset accountability; (3) access to assets
is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) The Company has not distributed and, prior to the later of (i)
the Firm Closing Date or the Option Closing Date and (ii) the completion of the
distribution of the Securities, will not distribute any offering material in
connection with the offering and sale of the Securities other than the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or other materials, if
any, permitted by the Act.
(z) Neither the Company nor the Subsidiary is (i) in violation of its
Memorandum of Association or Articles of Association or other organizational
documents, (ii) in violation of any law, ordinance, administrative or
governmental rule or regulation applicable to it or any of its properties,
except where any such violation or violations in the aggregate could not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), management, business prospects, net worth or results
of operations of the Company and its Subsidiary, taken as a whole, (iii) in
violation of any judgment, injunction, order or decree of any court,
governmental agency or body (including, without limitation, any insurance
regulatory agency or body) or arbitrator having jurisdiction over it, except
where any such violation or violations in the aggregate could not reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), management, business prospects, net
9
worth or results of operations of the Company and its Subsidiary, taken as a
whole, and (iv) no default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which the Company or its
Subsidiary is a party or by which the Company or its Subsidiary or any of their
respective properties is bound or may be affected, except where any such default
or event or defaults or events in the aggregate could not reasonably be expected
to have a material adverse effect on the condition (financial or otherwise),
management, business prospects, net worth or results of operations of the
Company and its Subsidiary, taken as a whole.
(aa) The forms of certificate for the Securities, the Direct
Securities, the SHL Securities, the Class A Warrants, the Class B Warrants and
the Class C Warrants conform to the requirements of the Companies Law (1998
Revision) (the "Companies Law") of the Cayman Islands, British West Indies, and
the Securities have been approved for quotation in the Nasdaq Stock Market's
National Market (the "Nasdaq National Market"), subject to official notice of
issuance.
(bb) No currency exchange control laws or withholding taxes of the
Cayman Islands, British West Indies or elsewhere apply to the payment of
dividends (i) on the Securities by the Company or (ii) by the Subsidiary to the
Company, except in each case as described in or contemplated by the Prospectus
or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus.
(cc) The Subsidiary is subject to regulation as an insurance company
by the government of the Cayman Islands and has been duly licensed by the
Governor-in-Council as an unrestricted Class "B" insurer under the Insurance Law
(1998 Revision) of the Cayman Islands, British West Indies (the "Insurance
Law"), and such license authorizes the Subsidiary to conduct its business as
described in or contemplated by the Registration Statement and the Prospectus
or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus. The Subsidiary is in compliance with the requirements of the
Insurance Law and any applicable rules and regulations thereunder and has filed
all statutory financial returns, reports, business plans, documents or other
information required to be filed thereunder, except where the failure to comply
or to file would not have a material adverse effect on the condition (financial
or otherwise), management, business prospects, net worth, or results of
operations of the Company and its Subsidiary, taken as a whole. The Company is a
holding company and is not subject to Cayman Islands insurance regulations. The
Company and its Subsidiary are in compliance with all other insurance laws and
regulations of the jurisdictions that apply to them, including laws that relate
to companies that control insurance companies, except where the failure to
comply would not have a material adverse effect on the condition (financial or
otherwise), management, business prospects, net worth, or results of operations
of the Company and its Subsidiary, taken as a whole. Neither the Company nor its
Subsidiary has received any notification from any insurance authority,
commission or other insurance regulatory body in the Cayman Islands or elsewhere
to the effect that the Subsidiary is not in compliance with any insurance law or
regulation.
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(dd) Each of the Company and the Subsidiary possess all certificates,
authorizations and permits issued by, and have made all filings with and
provided all notices to, the appropriate Cayman Islands or foreign regulatory
authorities necessary to own, lease, license and operate its properties and to
conduct its business as described in the Prospectus or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus, and neither the Company
nor the Subsidiary has received any notice of proceedings relating to, or knows
of any event that could reasonably be expected to result in, the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a material adverse change in the condition (financial or
otherwise), management, business prospects, net worth or results of operations
of the Company and the Subsidiary, taken as a whole, except as described in or
contemplated by the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus; no certificate, authorization or permit of,
and no filing with or notice to, any United States governmental or regulatory
authority or self-regulatory organization or any court or other tribunal is
required by either the Company or its Subsidiary to own, lease, license and
operate their respective properties or to conduct their respective businesses as
described in the Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus.
(ee) Neither the Company nor its Subsidiary is required to be licensed
or admitted as an insurer or an insurance holding company, as applicable, or to
otherwise comply with the insurance laws and regulations of any jurisdictions
within the United States in order to conduct their respective businesses as
described in the Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus.
(ff) The Company and its Subsidiary are not, and will conduct their
respective businesses in a manner such that they will not be, engaged in a trade
or business in the United States within the meaning of the Code.
(gg) Each of the Company and its Subsidiary has received from the
Cayman Islands Governor-in-Council an undertaking pursuant to the provisions of
the Tax Concessions Law, as amended (1995 Revision), to the effect set forth in
the Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus, under the caption "Material Tax Consequences--Taxation
of Holdings and Scottish Insurance--Cayman Islands."
(hh) Neither the Underwriters nor any subsequent purchasers of the
Securities, will be subject to any stamp duty, excise or similar tax imposed in
the Cayman Islands, British West Indies in connection with the offering, sale or
purchase of the Securities.
(ii) To the knowledge of the Company and its Subsidiary, no change in
any insurance law or regulation is pending that would reasonably be expected to
have, singly or in the aggregate, a material adverse effect on the condition
(financial or otherwise), management, business prospects, net worth or results
of operations of the Company and its Subsidiary, except as described in or
contemplated by the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus.
11
(jj) The Company has duly and irrevocably appointed CT Corporation
System as its agent to receive service of process with respect to actions
arising out of or in connection with violations of United States federal
securities laws relating to offers and sales of the Securities.
3. Purchase, Sale and Delivery of the Securities. (a) On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company, at a purchase
price of $___ per share, the number of Firm Securities set forth opposite the
name of such Underwriter in Schedule 1 hereto. One or more certificates in
definitive form for the Firm Securities that the several Underwriters have
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Representatives request upon notice to
the Company at least 48 hours prior to the Firm Closing Date, shall be delivered
by or on behalf of the Company to the Representatives for the respective
accounts of the Underwriters, against payment by or on behalf of the
Underwriters of the purchase price therefor by wire transfer in same-day funds
(the "Wired Funds") to the account of the Company. Such delivery of and payment
for the Firm Securities shall be made at the offices of Cleary, Gottlieb, Xxxxx
& Xxxxxxxx, One Liberty Plaza, New York, New York, at 9:30 A.M., New York time,
on November __, 1998, or at such other place, time or date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 9 hereof, such time and date of delivery against
payment being herein referred to as the "Firm Closing Date". The Company will
make such certificate or certificates for the Firm Securities available for
checking and packaging by the Representatives at the offices in New York, New
York of the Company's transfer agent or registrar or of Prudential Securities
Incorporated at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The purchase price
to be paid for any Option Securities shall be the same price per share as the
price per share for the Firm Securities set forth above in paragraph (a) of this
Section 3. The option granted hereby may be exercised as to all or any part of
the Option Securities from time to time within thirty (30) days after the date
of the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock Exchange is
open for trading). The Underwriters shall not be under any obligation to
purchase any of the Option Securities prior to the exercise of such option. The
Representatives may from time to time exercise the option granted hereby by
giving notice in writing or by telephone (confirmed in writing) to the Company
setting forth the aggregate number of Option Securities as to which the several
Underwriters are then exercising the option and the date and time for delivery
of and payment for such Option Securities. Any such date of delivery shall be
determined by the Representatives but shall not be earlier than two business
days or later than five business days after such exercise of the option and, in
any event, shall not be earlier than the Firm Closing Date. The time and date
set forth in such notice, or such other time on such other date as the
Representatives and Company may agree upon or as the
12
Representatives may determine pursuant to Section 9 hereof, is herein called the
"Option Closing Date" with respect to such Option Securities. Upon exercise of
the option as provided herein, the Company shall become obligated to sell to
each of the several Underwriters, and, subject to the terms and conditions
herein set forth, each of the Underwriters, severally and not jointly, shall
become obligated to purchase from the Company, the same percentage of the total
number of the Option Securities as to which the several Underwriters are then
exercising the option as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representatives in such
manner as they deem advisable to avoid fractional shares. If the option is
exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section 3,
except that reference therein to the Firm Securities and the Firm Closing Date
shall be deemed, for purposes of this paragraph (b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) The Company hereby acknowledges that the wire transfer by or on
behalf of the Underwriters of the purchase price for any of the Securities does
not constitute closing of a purchase and sale of the Securities. Only execution
and delivery of a receipt for the Securities by the Underwriters indicates
completion of the closing of a purchase of the Securities from the Company.
Furthermore, in the event that the Underwriters wire funds (such funds, the
"Wired Funds") to the Company prior to the completion of the closing of a
purchase of the Securities, the Company hereby acknowledges that until the
Underwriters execute and deliver a receipt for the Securities, by facsimile or
otherwise, the Company will not be entitled to the Wired Funds and shall return
the Wired Funds to the Underwriters as soon as practicable (by wire transfer of
same-day funds) upon demand. In the event that the closing of a purchase of the
Securities is not completed and the Wired Funds are not returned by the Company
to the Underwriters on the same day the Wired Funds were received by the
Company, the Company agrees to pay to the Underwriters in respect of each day
the Wired Funds are not returned by it, in same-day funds, interest on the
amount of such Wired Funds in an amount representing the Underwriters' cost of
financing as reasonably determined by Prudential Securities Incorporated.
(d) It is understood that any of you, individually and not as one of
the Representatives, may (but shall not be obligated to) make payment on behalf
of any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such Underwriter
or Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
5. Covenants of the Company. The Company covenants and agrees with
each of the Underwriters that:
13
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and any
amendments thereto to become effective as promptly as possible. If required, the
Company will file the Prospectus or any Term Sheet that constitutes a part
thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and 424(b) under the
Act. During any time when a prospectus relating to the Securities is required to
be delivered under the Act, the Company (i) will comply with all requirements
imposed upon it by the Act and the rules and regulations of the Commission
thereunder to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (ii) will not file with the
Commission the Prospectus, Term Sheet or the amendment referred to in the second
sentence of Section 2(a) hereof, any amendment or supplement to such Prospectus,
Term Sheet or any amendment to the Registration Statement or any Rule 462(b)
Registration Statement of which the Representatives previously have been advised
and furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Representatives shall not have given their
consent (which consent will not be unreasonably withheld or delayed). The
Company will prepare and file with the Commission, in accordance with the rules
and regulations of the Commission, promptly upon request by the Representatives
or counsel for the Underwriters, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be necessary or advisable
in connection with the distribution of the Securities by the several
Underwriters, and will use its best efforts to cause any such amendment to the
Registration Statement to be declared effective by the Commission as promptly as
possible. The Company will advise the Representatives, promptly after receiving
notice thereof, of the time when the Registration Statement or any amendment
thereto has been filed or declared effective or the Prospectus or any amendment
or supplement thereto has been filed and will provide evidence satisfactory to
the Representatives of each such filing or effectiveness.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
(ii) the suspension of the qualification of the Securities for offering or sale
in any jurisdiction, (iii) the institution, threatening or contemplation of any
proceeding for any such purpose or (iv) any request made by the Commission for
amending the Original Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing the Prospectus or for additional
information. The Company will use its best efforts to prevent the issuance of
any such stop order and, if any such stop order is issued, to obtain the
withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the insurance and securities or blue sky laws of
such United States jurisdictions as the Representatives may designate and will
continue such qualifications in effect for as long as may be necessary to
complete the distribution of the Securities; provided, however, that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
14
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or supplement the Prospectus to comply with the Act or the rules or
regulations of the Commission thereunder, the Company will promptly notify the
Representatives thereof and, subject to Section 5(a) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a signed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto) (ii) to each other
Underwriter, a conformed copy of such registration statement or any Rule 462(b)
Registration Statement and each amendment thereto (in each case without exhibits
thereto) and (iii) so long as a prospectus relating to the Securities is
required to be delivered under the Act, as many copies of each Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request; without limiting the application of
clause (iii) of this sentence, the Company, not later than (A) 6:00 P.M., New
York City time, on the date of determination of the public offering price, if
such determination occurred at or prior to 10:00 A.M., New York City time, on
such date or (B) 2:00 P.M., New York City time, on the business day following
the date of determination of the public offering price, if such determination
occurred after 10:00 A.M., New York City time, on such date, will deliver to the
Underwriters, without charge, as many copies of the Prospectus and any amendment
or supplement thereto as the Representatives may reasonably request for purposes
of confirming orders that are expected to settle on the Firm Closing Date.
(f) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representatives a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities and the Direct Securities as set forth under the caption "Use of
Proceeds" in the Prospectus.
(h) The Company and its Subsidiary will comply with their respective
operating, investment and underwriting guidelines, as each is in effect from
time to time.
(i) The Company will not, directly or indirectly, without the prior
written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, pledge, transfer,
assign, hypothecate, grant any option to purchase, or otherwise sell or dispose
(or announce any offer, sale, offer of sale, contract of sale, pledge, transfer,
assignment, hypothecation, grant of any option to purchase or other sale or
disposition) of any Ordinary Shares or other capital stock of the Company or any
securities convertible into,
15
or exercisable or exchangeable for, any Ordinary Shares or other capital stock
of the Company for a period of one year after the date of the Prospectus, except
(i) pursuant to this Agreement , (ii) pursuant to the Direct Agreements and
(iii) the issuance of options pursuant to the Company's Second Amended and
Restated 1998 Stock Option Plan, provided that such options will not be
exercisable until one year after the date of the Prospectus. The Company will
not file any registration statement on Form S-8 with respect to, or otherwise
register for resale with the Commission, the Ordinary Shares underlying any
stock options issued by the Company for a period of one year after the date of
the Prospectus. The Company will not file any registration statement with
respect to the Direct Securities, the SHL Securities, the Class A Warrants, the
Class B Warrants, the Class C Warrants or the Ordinary Shares underlying the
Class A Warrants, the Class B Warrants, the Class C Warrants or the Direct
Warrants for a period of one year after the date of the Prospectus.
(j) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or which would reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities or (ii) (A) sell,
bid for, purchase, or pay anyone any compensation for soliciting purchases of,
the Securities or (B) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company, except as
contemplated by this Agreement.
(k) The Company will obtain the agreements described in Section 7(h)
hereof prior to the Firm Closing Date.
(l) If at any time during the 25-day period after the Registration
Statement becomes effective or during the period prior to the Option Closing
Date, any rumor, publication or event relating to or affecting the Company or
its Subsidiary shall occur as a result of which in your reasonable opinion the
market price of the Ordinary Shares has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after notice
from you advising the Company to the effect set forth above, forthwith prepare,
consult with you concerning the substance of, and disseminate a press release or
other public statement, reasonably satisfactory to you, responding to or
commenting on such rumor, publication or event.
(m) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111
promulgated under the Act by the earlier of (i) 10:00 P.M. Eastern time on the
date of this Agreement and (ii) the time confirmations are sent or given, as
specified by Rule 462(b)(2).
(n) The Company will cause the Securities to be duly included for
quotation on the Nasdaq National Market prior to the Firm Closing Date. The
Company will use its best efforts to ensure that the Securities remain included
for quotation on the Nasdaq National Market following the Firm Closing Date.
16
6. Expenses. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to (i)
the printing or other production of documents with respect to the transactions,
including any costs of printing the registration statement originally filed with
respect to the Securities and any amendment thereto, any Rule 462(b)
Registration Statement, any Preliminary Prospectus and the Prospectus and any
amendment or supplement thereto, any offering document and any amendment or
supplement thereto required under the securities or insurance laws of any other
applicable jurisdictions, this Agreement and any blue sky memoranda, (ii) all
arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including transfer agent's and registrar's fees, (v)
the qualification of the Securities under state or foreign insurance or
securities and blue sky laws, including filing fees and reasonable fees and
disbursements of counsel for the Underwriters relating thereto, (vi) the filing
fees of the Commission and the National Association of Securities Dealers, Inc.
relating to the Securities, (vii) any quotation of the Securities on the Nasdaq
National Market, (viii) any meetings with prospective investors in the
Securities (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters) and (ix) advertising
relating to the offering of the Securities (other than as shall have been
specifically approved by the Representatives to be paid for by the
Underwriters). If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied, because this Agreement is terminated
pursuant to Section 11(a)(i) or (a)(ii) hereof or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder other
than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all reasonable out-of-
pocket expenses (including reasonable counsel fees and disbursements) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities. The Company shall not in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions covered
by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing
Date, to the accuracy of the statements of the Company's officers made pursuant
to the provisions hereof, to the performance by the Company of its covenants and
agreements hereunder and to the following additional conditions:
(a) If the Original Registration Statement or any amendment thereto
filed prior to the Firm Closing Date has not been declared effective as of the
time of execution hereof, the Registration Statement or such amendment and, if
the Company has elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement shall have been declared effective not later than
17
the earlier of (i) 11:00 A.M., New York time, on the date on which the amendment
to the registration statement originally filed with respect to the Securities or
the amendment to the Registration Statement, as the case may be, containing
information regarding the initial public offering price of the Securities has
been filed with the Commission and (ii) the time confirmations are sent or given
as specified by Rule 462(b)(2), or with respect to the Original Registration
Statement, or such later time and date as shall have been consented to by the
Representatives; if required, the Prospectus and any amendment or supplement
thereto shall have been filed with the Commission, or shall have been filed at
such later time and date as shall have been consented to by the Representatives;
if required, the Prospectus or any Term Sheet that constitutes a part thereof
and any amendment or supplement thereto shall have been filed with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Xxxxx, Day, Xxxxxx & Xxxxx, United States counsel for the
Company, to the effect that:
(i) this Agreement, the Direct Agreements, the Warrant Purchase
Agreements, the Registration Rights Agreement, the Class A Warrants, the
Class B Warrants and the Direct Warrants have been duly executed and
delivered by the Company under New York law; and assuming the Company and
each other party to such agreements has satisfied those legal requirements
under Cayman Islands law that are applicable to it to the extent necessary
to make such agreements enforceable against it, the Direct Agreements, the
Warrant Purchase Agreements, and the Registration Rights Agreement are the
valid and binding obligations of the Company under New York law, enforceable
against it in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to the
enforcement of creditors' rights and remedies or other equitable principles
of general application;
(ii) the Securities have been duly included for quotation in the
Nasdaq National Market subject to official notice of issuance;
(iii) to the knowledge of such counsel, no holders of securities of
the Company are entitled to have such securities registered under the
Registration Statement, or such rights have been waived;
(iv) the statements set forth under the headings, "Material Tax
Consequences--Taxation of Holdings and Scottish Insurance--United States"
and "Material Tax Consequences--Taxation of Shareholders--United States
Taxation" in the Prospectus,
18
insofar as such statements constitute a summary of provisions of federal tax
law, provide a fair summary of such provisions;
(v) such counsel does not know of any litigation or any governmental
proceedings or investigations, pending or threatened, required to be
described in the Prospectus that are not described as required, or of any
contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
(vi) the execution and delivery by the Company of this Agreement, the
Direct Agreements, the SHL Agreement, the Class A Warrants, the Class B
Warrants and the Direct Warrants and the performance of its obligations
hereunder and thereunder will not (A) result in a violation of any federal
securities statute or regulation or of any other federal or New York statute
or regulation or any judgment, decree, order, rule or regulation known to
such counsel of any court or other governmental authority or any arbitrator
having jurisdiction over the Company or its Subsidiary or any of their
respective properties, or (B) result in a breach or constitute a default
under any agreement filed as an exhibit to the Registration Statement or
otherwise identified in a list appended to such opinion; no consent,
approval, authorization, registration, qualification or order of or with any
federal or New York governmental agency or body is required for the issuance
or sale by the Company of the Securities, the Direct Securities, the SHL
Securities, the Class A Warrants or the Class B Warrants except such as have
been obtained under the Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution
of the Securities by the Underwriters.
(vii) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, or any Term Sheet that constitutes a
part thereof, pursuant to Rules 434 and 424(b) has been made in the manner
and within the time period required by Rules 434 and 424(b); and to the
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
are pending or threatened or are contemplated by the Commission;
(viii) such counsel shall state that in the course of the preparation
by the Company of the Registration Statement and the Prospectus, such
counsel participated in discussions with officers, directors and employees
of the Company, representatives of Ernst & Young LLP, the independent
accountants who examined the consolidated financial statements of the
Company and its subsidiaries included in the Registration Statement and the
Prospectus, counsel for the Underwriters and the representatives of the
Underwriters concerning the information contained in the Registration
Statement and the Prospectus and the proposed responses to various items in
Form S-1 under the Act, and that based upon such counsel's examination of
the Registration Statement and the Prospectus, such counsel's investigations
made in connection with the preparation of the Registration Statement and
the Prospectus and such counsel's participation in the
19
discussions referred to above, such counsel is of the opinion that the
Registration Statement and the Prospectus (in each case, except for (i) the
financial statements, financial schedules and other financial and
statistical information included therein and (ii) the information referred
to under the caption "Experts" as having been included therein on the
authority of Ernst & Young LLP, as experts, as to which such counsel need
express no opinion) at the time the Registration Statement became effective
under the Act, and at the time the Prospectus was filed pursuant to Rule
424(b) under the Act, respectively, complied as to form in all material
respects with the Act and the rules and regulations thereunder;
(ix) if the Company elects to rely on Rule 434, the Prospectus is not
"materially different", as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time of its
effectiveness or an effective post-effective amendment thereto (including
such information that is permitted to be omitted pursuant to Rule 430A);
(x) no registration of the Direct Securities, the SHL Securities,
the Class A Warrants or the Class B Warrants under the Act was, is or will
be required for the issuance, offering and sale by the Company of the Direct
Securities to the Direct Investors, of the SHL Securities to SHL, of the
Class A Warrants to the Class A Warrant Holders and of the Class B Warrants
to the Class B Warrant Holders, in each case in the manner described in the
Registration Statement and the Prospectus;
(xi) under the laws of the State of New York relating to submission
to jurisdiction, the Company has, pursuant to Section 16 of this Agreement,
validly and irrevocably submitted to the jurisdiction of any federal or
state court of competent jurisdiction in the State of New York in any action
arising out of or relating to this Agreement, has, to the fullest extent
permitted by New York or federal law, validly and irrevocably waived any
objection to the venue of a proceeding in any such court, and has validly
appointed CT Corporation System as its authorized agent for the purpose
described in Section 16 hereof; service of process effected on such agent in
the manner set forth in Section 16 hereof will be effective service of
process in any such action upon the Company; and the choice of the law of
New York as the governing law of this Agreement is a valid and effective
choice of law under the laws of the State of New York;
(xii) neither the Company nor its Subsidiary is nor will the
transactions contemplated by this Agreement or the conduct of the respective
businesses of the Company and the Subsidiary as described in or contemplated
by the Prospectus cause either the Company or its Subsidiary to be subject
to registration as an investment company under the 1940 Act or controlled by
an investment company subject to such registration, an investment adviser
under the Advisers Act, or a broker-dealer under the Exchange Act; the
Subsidiary is a "foreign insurance company" within the meaning of Rule 3a-6
under the 1940 Act, and the conduct of the respective businesses of the
Company and its Subsidiary as described in or contemplated by the Prospectus
will qualify the Subsidiary as a "foreign insurance company" within the
meaning of such
20
Rule; Form F-N has been filed with the Commission, and such Form accurately
sets forth all information required to be included therein and complies as
to form in all material respects with the applicable requirements of the
Act and the 1940 Act and the respective rules and regulations of the
Commission thereunder; and
(xiii) a variable life insurance policy issued by the Subsidiary in
the form attached to such opinion should qualify as a life insurance
contract for federal income tax purposes, assuming it is administered in
accordance with its terms and with the requirements of section 7702(a)(1)
or 7702(a)(2), as applicable, of the Code.
Such counsel shall also state that although such counsel has not
independently verified and is not passing upon, and does not assume any
responsibility for the accuracy, completeness or fairness of the information
contained in the Registration Statement and Prospectus, based upon such
counsel's examinations, investigations and participation in the discussions
described above, no facts have come to such counsel's attention that cause such
counsel to believe that the Registration Statement (except for (i) the financial
statements, financial schedules and other financial and statistical information
included therein and (ii) the information referred to under the caption
"Experts" as having been included therein on the authority of Ernst & Young LLP,
as experts, as to which such counsel need express no view), at the time it
became effective contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or that the Prospectus (with the
foregoing exceptions) as of its date or as of the date of such opinion contained
or contains any untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
In rendering such opinion, such counsel may (i) limit its opinion to the
federal laws of the United States of America and the laws of the State of New
York and (ii) rely, as to matters of fact, to the extent such counsel deem
proper, on certificates of officers of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Xxxxxx & Xxxxxx, Cayman Islands counsel for the Company,
to the effect that:
(i) the Company and its Subsidiary have been duly organized and are
validly existing as exempted corporations in good standing under the laws
of the Cayman Islands;
(ii) the Company and its Subsidiary have corporate power to own or
lease their respective properties and conduct their respective businesses
as described in the Registration Statement and the Prospectus, and the
Company has corporate power to enter into this Agreement, the Direct
Agreements, the SHL Agreement, the Warrant
21
Purchase Agreements, the Registration Rights Agreement, the Class A Warrants,
the Class B Warrants, the Class C Warrants and the Direct Warrants and to carry
out all the terms and provisions hereof and thereof to be carried out by it;
(iii) the issued shares of the Subsidiary have been duly authorized and
validly issued, are fully paid and nonassessable and, based on an examination of
the Register of Mortgages and Charges of the Subsidiary, are owned beneficially
by the Company free and clear of any perfected security interests or, to the
best knowledge of such counsel, any other security interests, liens,
encumbrances, equities or claims;
(iv) the Company has an authorized, issued and outstanding capitalization
as set forth in the Prospectus; all of the issued shares of the Company have
been duly authorized and validly issued and are fully paid and nonassessable,
have been issued in compliance with all applicable Cayman Islands laws and were
not issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities; the Class A Warrants and the Class B
Warrants have been duly authorized and validly issued, are fully paid and no
further amounts are payable with respect to the Class A Warrants and the Class B
Warrants except as specified in the Class A Warrants and the Class B Warrants
with respect to payment of the exercise price upon exercise thereof, and have
been issued in compliance with all applicable Cayman Islands laws; the
Securities and the Direct Securities have been duly authorized by all necessary
corporate action of the Company and, when issued and delivered to and paid for
by the Underwriters and by the Direct Investors pursuant to this Agreement and
the Direct Agreements, as the case may be, will be validly issued in compliance
with all applicable Cayman Islands laws, fully paid and nonassessable; the Class
C Warrants have been duly authorized by all necessary corporate action of the
Company and, when issued and delivered to and paid for by the Class C Warrant
Holders pursuant to the Class C Warrant Purchase Agreements will be validly
issued, fully paid and no further amounts will be payable with respect to the
Class C Warrants except as specified in the Class C Warrants with respect to
payment of the exercise price upon exercise thereof; the Ordinary Shares
initially issuable upon exercise of the Class A Warrants, the Class B Warrants,
the Class C Warrants and the Direct Warrants have been duly authorized and
reserved for issuance upon such exercise, and after payment therefor upon
exercise in accordance with the Class A Warrants, the Class B Warrants, the
Class C Warrants and the Direct Warrants, will be validly issued, fully paid and
nonassessable; no holders of outstanding shares of capital stock of the Company
are entitled as such to any preemptive or other rights to subscribe for any of
the Securities, the Direct Securities, the Class A Warrants, the Class B
Warrants, the Class C Warrants or the Ordinary Shares initially issuable upon
exercise of the Class A Warrants, the Class B Warrants, the Class C Warrants and
the Direct Warrants;
(v) the statements set forth under the heading "Description of Shares" in
the Prospectus, insofar as such statements purport to summarize certain
provisions of the share capital of the Company, provide a fair summary of such
provisions, and the statements set forth under the headings "Enforceability of
Civil Liabilities under United
22
States Federal Securities Laws", "Risk Factors--Importance of Management and Key
Employees; Cayman Islands Work Permits", "Risk Factors--Income Tax Risks--Cayman
Islands Taxes", "Risk Factors--Holding Company Structure and Dividends", "Risk
Factors--Limitations on Ownership, Transfers and Voting Rights", "Risk Factors--
Anti-Takeover Effects of Articles of Association and Cayman Islands
Confidentiality Laws", "Risk Factors--Service of Process and Enforcement of
Judgments", "Dividend Policy", "Management's Discussion and Analysis of
Financial Condition and Plan of Operations--Taxation", "Business--Employees",
"Business--Legal Proceedings", "Business--Regulation--Cayman Islands",
"Description of Shares", "Material Tax Consequences--Taxation of Holdings and
Scottish Insurance--Cayman Islands" and "Material Tax Consequences--Taxation of
Shareholders--Cayman Islands Taxation" in the Prospectus, insofar as such
statements constitute a summary of provisions of Cayman Islands law and of
documents governed by Cayman Islands law or proceedings in the Cayman Islands
referred to therein, provide a fair summary of such legal matters, documents and
proceedings;
(vi) the execution and delivery of this Agreement, the Direct Agreements,
the SHL Agreement, the Warrant Purchase Agreements, the Registration Rights
Agreement, the Class A Warrants, the Class B Warrants, the Class C Warrants and
the Direct Warrants have been duly authorized by all necessary corporate action
of the Company, and no other corporate proceeding therefor on the part of the
Company or its shareholders is required; this Agreement, the Direct Agreements,
the SHL Agreement, the Warrant Purchase Agreements, the Registration Rights
Agreement, the Class A Warrants, the Class B Warrants and the Direct Warrants
have been duly executed and delivered by the Company; the SHL Agreement, the
Class A Warrants, the Class B Warrants and the Direct Warrants are the valid and
binding obligations of the Company, enforceable against it in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to the enforcement of creditors' rights and remedies or
other equitable principles of general application; and no registration, filing,
stamping or other formalities are necessary (except for a nominal stamp duty if
this Agreement, the Direct Agreements, the SHL Agreement, the Warrant Purchase
Agreements, the Registration Rights Agreement, the Class A Warrants, the Class B
Warrants, the Direct Warrants or any original counterparts are brought within
the jurisdiction of the Cayman Islands in original form) for the validity and
enforceability of this Agreement, the Direct Agreements, the SHL Agreement, the
Warrant Purchase Agreements, the Registration Rights Agreement, the Class A
Warrants, the Class B Warrants or the Direct Warrants in the Cayman Islands or
for their admissibility in evidence in proceedings in the courts of the Cayman
Islands;
(vii) the issuance, offering and sale of the Securities to the Underwriters
by the Company pursuant to this Agreement, of the Direct Securities to the
Direct Investors by the Company pursuant to the Direct Agreements, of the SHL
Securities to SHL by the Company pursuant to the SHL Agreement, and of the Class
A Warrants and the Class B Warrants to the Class A Warrant Holders and the Class
B Warrant Holders, respectively,
23
by the Company pursuant to the Warrant Purchase Agreements and the issuance of
Ordinary Shares initially issuable upon the exercise of the Class A Warrants,
the Class B Warrants and the Direct Warrants, the compliance by the Company with
the other provisions of this Agreement, the Direct Agreements, the SHL
Agreement, the Warrant Purchase Agreements, the Registration Rights Agreement,
the Class A Warrants, the Class B Warrants and the Direct Warrants and the
consummation of the other transactions herein and therein contemplated do not
(A) require the consent, approval, authorization, registration or qualification
of or with any Cayman Islands governmental authority, except such as have been
obtained, or (B) conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, lease or other agreement or instrument filed as an exhibit to the
Registration Statement that is governed by Cayman Islands law or otherwise
identified in a list appended to such opinion to which the Company or its
Subsidiary is a party or by which the Company or its Subsidiary or any of their
respective properties are bound, or the Memorandum of Association or Articles of
Association or other organizational documents of the Company or its Subsidiary,
or any Cayman Islands statute or any reported or publicly available judgment,
decree, order, rule or regulation of any Cayman Islands court or other Cayman
Islands governmental authority known to such counsel and applicable to the
Company or its Subsidiary;
(viii) the Subsidiary is not currently prohibited by any Cayman Islands
law or governmental authority, directly or indirectly, from paying any dividends
to the Company, from making any other distribution on its share capital, from
repaying to the Company any loans or advances to it from the Company or from
transferring any of its property or assets to the Company, except as described
in or contemplated by the Prospectus;
(ix) except as otherwise set forth in such opinion, no authorizations,
consents, registrations, qualifications or approvals are required from any
governmental authorities or agencies or other official bodies in the Cayman
Islands in order for the Company and the Subsidiary to conduct their respective
businesses as described in or contemplated by the Prospectus;
(x) the forms of share certificate for the Securities, the Direct
Securities, the SHL Securities, the Class A Warrants and the Class B Warrants
conform to the requirements of the Companies Law of the Cayman Islands;
(xi) the Subsidiary is subject to regulation as an insurance company by
the government of the Cayman Islands and has been duly licensed by the Governor-
in-Council as an unrestricted Class "B" insurer under the Insurance Law, and
such license authorizes the Subsidiary to conduct its business as described in
or contemplated by the Registration Statement and the Prospectus; all statutory
financial returns, reports, business plans, documents or other information
required to be filed under the Insurance Law and any applicable rules and
regulations thereunder in order for the Company and its Subsidiary to conduct
their respective businesses as described in or contemplated by the
24
Registration Statement and the Prospectus have been filed; the Company is a
holding company and is not subject to Cayman Islands insurance regulations;
(xii) no currency exchange control laws or withholding taxes of the
Cayman Islands apply to the payment of dividends (A) on the Securities by the
Company or (B) by the Subsidiary to the Company, except in each case as
described in or contemplated by the Prospectus;
(xiii) no legal or governmental proceedings are pending in the courts of
the Cayman Islands to which the Company or its Subsidiary is a party or to which
the property of the Company or its Subsidiary is subject, and to the best
knowledge of such counsel, no such proceedings have been threatened against the
Company or its Subsidiary or with respect to any of their respective properties;
(xiv) none of the Underwriters, the Direct Investors, SHL, the Class A
Warrant Holders, the Class B Warrant Holders or any subsequent purchasers of the
Securities, the Direct Securities, the SHL Securities, the Class A Warrants or
the Class B Warrants will be subject to any excise or similar tax imposed in the
Cayman Islands (other than a nominal stamp duty if the Securities, the Direct
Securities, the SHL Securities, the Class A Warrants of the Class B Warrants are
executed in or subsequently brought into the Cayman Islands) in connection with
the offering, sale or purchase of the Securities, the Direct Securities, the SHL
Securities, the Class A Warrants, the Class B Warrants or the Ordinary Shares
initially issuable upon exercise of the Class A Warrants, the Class B Warrants
and the Direct Warrants;
(xv) each of the Company and its Subsidiary has received from the Cayman
Islands Governor-in-Council an undertaking pursuant to the provisions of the Tax
Concessions Law, as amended (1995 Revision), to the effect set forth in the
Prospectus under the caption "Material Tax Consequences--Taxation of Holdings
and Scottish Insurance--Cayman Islands";
(xvi) to the extent Cayman Islands law is applicable, each of the Company
and its Subsidiary has validly and irrevocably submitted to the jurisdiction of
any federal or state court sitting in the City of New York, has validly and
irrevocably waived, to the fullest extent permitted by law, any objections that
it may now or hereafter have to the laying of venue of any such suit, action or
proceeding brought in any such court based on or arising under this Agreement or
any claims that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum, and has validly appointed CT
Corporation System as its authorized agent to receive service of process in any
such suit, action or proceeding; service of process effected in the manner set
forth in Section 16 of this Agreement will be effective under the laws of the
Cayman Islands to confer personal jurisdiction over the Company; and the choice
of the law of New York as the governing law of this Agreement is a valid and
effective choice of law; and
25
(xvii) the courts of the Cayman Islands will recognize and enforce a
judgment obtained in a federal or state court sitting in the City of New
York against the Company based on or arising under this Agreement, provided
that service of process is effected in accordance with Section 16 of this
Agreement and provided that such judgment imposes upon the Company an
obligation to pay the sum for which the judgment is given, such judgment is
final, for a liquidated sum, not in respect of taxes or a fine or penalty,
and not obtained in a manner and not of a kind the enforcement of which is
contrary to the public policy of the Cayman Islands (and such counsel shall
state they do not believe that any judgment obtained against the Company
based on or arising under this Agreement would be of such a kind).
In rendering any such opinion, such counsel may (i) limit its opinion
to the laws of the Cayman Islands and (ii) rely, as to matters of fact, to the
extent such counsel deem proper, on certificates of responsible officers of the
Company and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (c) shall include any amendment or supplement thereto at the date of
such opinion.
(d) The Representatives shall have received an opinion, dated the
Firm Closing Date, of the Xxxxxxxxx Law Firm, special insurance regulatory
counsel for the Company and the Subsidiary, to the effect that:
(i) neither the Company nor its Subsidiary is required to be
licensed or admitted as an insurer or an insurance holding company, as
applicable, in, or to otherwise comply with the insurance laws and
regulations of, any jurisdiction within the United States in order to
conduct their respective businesses as described in the Prospectus;
(ii) no certificate, authorization or permit of, and no filing
with or notice to, any insurance regulatory authority of any state in the
United States is required by either the Company or the Subsidiary to own,
lease, license and operate its properties or to conduct its business as
described in the Prospectus;
(iii) the statements set forth under the headings, "Risk Factors--
Regulation" and "Business--Regulation--United States and Other", insofar as
such statements constitute a summary of provisions of insurance laws and
regulations of jurisdictions within the United States, provide a fair
summary of such provisions; and
(iv) to the best knowledge of such counsel, no change in any
insurance law or regulation of the United States or any state thereof is
pending that could have, singly or in the aggregate, a material adverse
effect on the condition (financial or otherwise), management, business
prospects, net worth or results of operations of the Company and its
Subsidiary, except as described in or contemplated by the Prospectus.
Such counsel shall also state that, based on their role as special
insurance regulatory counsel to the Company and the Subsidiary, they have no
reason to believe that the Registration Statement, as of its effective date,
contained any untrue statement of a material fact
26
or omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus, as of its
date or the date of such opinion, included or includes any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials.
References to the Prospectus in this paragraph (d) shall include any
amendment or supplement thereto at the date of such opinion.
(e) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, counsel for the
Underwriters, with respect to the Registration Statement and the Prospectus, and
such other related matters as the Representatives may reasonably require, and
the Company shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(f) The Representatives shall have received from Ernst & Young LLP a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
(i) they are independent accountants with respect to the Company
and its Subsidiary within the meaning of the Act and the applicable rules
and regulations thereunder and that they have performed a review of the
interim unaudited financial information of the Company and its Subsidiary
for the period ended June 30, 1998, and as at June 30, 1998, in accordance
with Statement on Auditing Standards No. 71;
(ii) in their opinion, the audited consolidated balance sheet
examined by them and included in the Registration Statement and the
Prospectus complies in form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iii) on the basis of a reading of the latest unaudited
consolidated financial statements made available by the Company and its
Subsidiary and their review, in accordance with standards established under
Statement on Auditing Standards No. 71, of the interim unaudited financial
information for the period ended June 30, 1998, and as at June 30, 1998,
carrying out certain specified procedures (which do not constitute an
examination made in accordance with generally accepted auditing standards)
that would not necessarily reveal matters of significance with respect to
the comments set forth in this paragraph (iii), a reading of the minute
books of the shareholders, the board of directors and any committees
thereof of the Company and the Subsidiary, and inquiries of certain
officials of the Company and the Subsidiary who have responsibility for
financial and accounting matters, nothing came to their attention that
caused them to believe that:
27
(A) the unaudited consolidated financial statements of the Company
and its Subsidiary included in the Registration Statement and the
Prospectus do not comply in form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations thereunder or are not in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with that of the audited consolidated balance sheet included in the
Registration Statement and the Prospectus; and
(B) at a specific date not more than five business days prior to the
date of such letter, there were any changes in the capital stock or long-
term debt of the Company and its Subsidiary or any decreases in net current
assets or stockholders' equity of the Company and its Subsidiary, in each
case compared with the amounts shown on the June 30, 1998 unaudited
consolidated balance sheet included in the Registration Statement and the
Prospectus, except in all instances for changes, decreases or increases set
forth in such letter; and
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting records
of the Company and its Subsidiary and are included in the Registration
Statement and the Prospectus under the captions "Prospectus Summary", "Risk
Factors", "Capitalization", "Dilution", "Management's Discussion and
Analysis of Financial Condition and Plan of Operations", "Business--
Products Offered by Scottish Insurance", "Business--Administration and
Consulting Services", "Business--Property", "Management--Stock Option
Plan", "Certain Relationships and Related Party Transactions", "Description
of Shares", "Shares Eligible for Future Sale", "Material Tax Consequences"
and "Underwriting" and have compared such amounts, percentages and
financial information with such records of the Company and its Subsidiary
and with information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Securities as contemplated by the Registration Statement, as amended as of the
date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (f) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
28
(g) The Representatives shall have received a certificate, dated
the Firm Closing Date, of the Chief Executive Officer and the Chief Financial
Officer of the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration Statement, as amended as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company has performed
all covenants and agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto has been issued, and no proceedings for
that purpose have been instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, neither the Company
nor its Subsidiary has sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding, and there has
not been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
otherwise), management, business prospects, net worth or results of
operations of the Company or its Subsidiary, except in each case as
described in or contemplated by the Prospectus (exclusive of any amendment
or supplement thereto).
(h) The Representatives shall have received from each of the Direct
Investors, each of the Class A Warrant Holders and the Class B Warrant Holders
and each person who is a director or officer of the Company or who owns any
outstanding Ordinary Shares or any securities convertible into, or exchangeable
or exercisable for, any Ordinary Shares, an agreement to the effect that such
person will not, directly or indirectly, without the prior written consent of
Prudential Securities Incorporated (which in the case of the Class B Warrant
Holders, may be granted only with respect to transactions with certain officers
of Prudential Securities Incorporated who hold a beneficial interest in any of
the partnerships holding the Class B Warrants), on behalf of the Underwriters,
and (other than with respect to the Class B Warrant Holders), the Company,
offer, sell, offer to sell, contract to sell, pledge, transfer, assign,
hypothecate, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge, transfer,
assignment, hypothecation, grant of an option to purchase or other sale or
disposition) of any Ordinary Shares or other capital stock of the Company or any
securities convertible into, or exercisable or exchangeable for, any Ordinary
29
Shares or other capital stock of the Company for a period of one year (or six
months with respect to the Direct Securities to be purchased by Maverick Fund
USA, Ltd., Maverick Fund, L.D.C. and Maverick Fund II, Ltd.) after the date of
the Prospectus.
(i) On or before the Firm Closing Date, the Representatives and counsel
for the Underwriters shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company.
(j) Prior to the commencement of the offering of the Securities, the
Securities shall have been included for quotation in the Nasdaq National Market.
(k) The Direct Investors shall have purchased Ordinary Shares and Direct
Warrants pursuant to the Direct Agreements with an aggregate purchase price of
at least $20.0 million.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and pay
for any Option Securities shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon:
(i) any untrue statement or alleged untrue statement made by the Company
in Section 2 of this Agreement;
(ii) any untrue statement or alleged untrue statement of any material
fact contained in (A) the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the insurance or securities or blue sky laws
thereof or filed with the Commission or any securities association or
securities exchange (each an "Application");
30
(iii) the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or any Application a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in connection
with the marketing of the Securities, including without limitation, slides,
videos, films and tape recordings;
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Underwriter through the Representatives specifically for use therein and
provided, further, that the Company will not be liable to any Underwriter or any
person controlling such Underwriter with respect to any such untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus that is corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Section 5(d) and (e) of this
Agreement. This indemnity agreement will be in addition to any liability which
the Company may otherwise have. The Company will not, without the prior written
consent of the Underwriter or Underwriters purchasing, in the aggregate, more
than fifty percent (50%) of the Securities, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any such Underwriter or any person who controls any such Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act is
a party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of all of the
Underwriters and such controlling persons from all liability arising out of such
claim, action, suit or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect
31
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement or
any amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or any Application or (ii) the omission or the
alleged omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any Application or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Underwriter through the Representatives specifically for use therein; and,
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating, defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability which
such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 8, representing the indemnified parties under such
paragraph (a)
32
who are parties to such action or actions) or (ii) the indemnifying party does
not promptly retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 8 is unavailable or insufficient, for any
reason, to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions in respect thereof), each indemnifying party,
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take into account
the equitable considerations referred to above in this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Underwriter shall
be obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Prudential Securities Incorporated Master Agreement Among Underwriters.
For purposes of this paragraph (d), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall
33
have the same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
9. Default of Underwriters. If one or more Underwriters default in their
obligations to purchase Firm Securities or Option Securities hereunder and the
aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters as
described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination. (a) This Agreement may be terminated with respect to the
Firm Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date,
34
respectively, in the event that the Company shall have failed, refused or been
unable to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto or, if at or prior to the
Firm Closing Date or such Option Closing Date, respectively,
(i) the Company or its Subsidiary shall have, in the sole judgment of
the Representatives, sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding or there shall have been any material
adverse change, or any development involving a prospective material adverse
change (including without limitation a change in management or control of the
Company), in the condition (financial or otherwise), business prospects, net
worth or results of operations of the Company and its Subsidiary, except in
each case as described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto);
(ii) trading in the Ordinary Shares shall have been suspended by the
Commission or the Nasdaq National Market;
(iii) trading in securities generally on the New York Stock Exchange or
Nasdaq National Market shall have been suspended or minimum or maximum prices
shall have been established on such exchange or market system;
(iv) a banking moratorium shall have been declared by New York, United
States or Cayman Islands governmental authorities; or
(v) there shall have been (A) an outbreak or escalation of hostilities
between the United States and any foreign power, (B) an outbreak or escalation
of any other insurrection or armed conflict involving the United States or the
Cayman Islands or (C) any other calamity or crisis or material adverse change
in general economic, political or financial conditions having an effect on the
United States or Cayman Islands financial markets that, in the sole judgment
of the Representatives, makes it impractical or inadvisable to proceed with
the public offering or the delivery of the Securities as contemplated by the
Registration Statement, as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall be
without liability of any party to any other party except as provided in Section
10 hereof.
12. Information Supplied by Underwriters. The statements set forth in
the last paragraph on the front cover page and under the heading "Underwriting"
in any Preliminary Prospectus or the Prospectus (to the extent such statements
relate to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(b) and 8 hereof. The Underwriters confirm that such statements (to
such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and
35
confirmed in writing to Prudential Securities Incorporated, Xxx Xxx Xxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Transactions Group; and if sent to
the Company, shall be delivered or sent by mail, telex or facsimile transmission
and confirmed in writing to the Company at Xxxxxx House (P.O. Box 10657APO),
Xxxxxx Town, Grand Cayman, Cayman Islands, British West Indies.
14. Successors. This Agreement shall inure to the benefit of and shall be
binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 8 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
15. Applicable Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York, and
by execution and delivery of this Agreement, the Company accepts for itself and
in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts and waives any defense of
forum non conveniens and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. The Company designates and appoints
CT Corporation System, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, and such other persons
as may hereafter be selected by the Company irrevocably agreeing in writing to
so serve, as its agent to receive on its behalf service of all process in any
such proceedings in any such court, such service being hereby acknowledged by
the Company to be effective and binding service in every respect. A copy of any
such process so served shall be mailed by registered mail to the Company at its
address provided in Section 13 hereof; provided, however, that, unless otherwise
provided by applicable law, any failure to mail such copy shall not affect the
validity of service of such process. If any agent appointed by the Company
refuses to accept service, the Company hereby agrees that service of process
sufficient for personal jurisdiction in any action against the Company in the
State of New York may be made by registered or certified mail, return receipt
requested, to the Company at its address provided in Section 13 hereof, and the
Company hereby acknowledges
36
that such service shall be effective and binding in every respect. Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of any Underwriter to bring proceedings against the
Company in the courts of any other jurisdiction.
37
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and each of the
several Underwriters.
Very truly yours,
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
By
----------------------------------------------
Xxxxxxx X. Xxxxxx
Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
CIBC XXXXXXXXXXX CORP.
ING BARING XXXXXX XXXX LLC
XXXXXXX XXXXXX READ LLC
By PRUDENTIAL SECURITIES INCORPORATED
By
-----------------------------------------
Name: Xxxx-Xxxxxx Canfin
Title: Managing Director
For itself and on behalf of the Representatives.
38
SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- --------------
Prudential Securities Incorporated..........................
CIBC Xxxxxxxxxxx Corp.......................................
ING Baring Xxxxxx Xxxx LLC..................................
Warburg Dillon Read LLC.....................................
--------------
Total............................................. 16,750,000
==============
