CGA GROUP, LTD.
COMMON STOCK
WARRANT ACQUISITION AGREEMENT
Dated as of June 9, 1997
TABLE OF CONTENTS
Page
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ARTICLE I ISSUANCE OF THE WARRANTS............................. 2
ARTICLE II REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE COMPANY............................ 2
Section 2.1 Due Organization, Valid
Existence and Authority of
the Company and the Company's
Subsidiaries............................... 2
Section 2.2 Authorization and Validity of
Agreements................................. 3
Section 2.3 Capitalization............................. 3
Section 2.4 Shares Issued Pursuant to
Warrants .................................. 4
Section 2.5 No Conflict with Other
Instruments; No Approvals
Required Except as Have
Been Obtained.............................. 4
Section 2.6 Regulatory Filings; Compliance
with Law................................... 5
Section 2.7 Stamp Duties or Taxes...................... 6
Section 2.8 Private Offering........................... 6
Section 2.9 The Private Placement
Memorandum................................. 7
Section 2.10 Not an "Investment Company"................ 7
Section 2.11 Business Newly Formed...................... 8
Section 2.12 Operating Company.......................... 8
Section 2.13 No U.S. Trade or Business and
Not a Controlled Foreign Corporation....... 8
Section 2.14 Related Person Insurance
Income..................................... 9
Section 2.15 Operating Guidelines........................ 9
Section 2.16 Passive Foreign Investment
Company.................................... 10
Section 2.17 Use of Proceeds of the
Offering................................... 10
Section 2.18 Shareholders............................... 10
Section 2.19 St. Xxxxxx Representations................. 11
Section 2.20 Bermuda Withholding Tax.................... 11
Section 2.21 No Events of Non-Compliance................ 11
Section 2.22 Registration Rights........................ 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE INVESTORS....................................... 11
Section 3.1 Due Organization, Good Standing
and Authority of the Investor.............. 11
Section 3.2 Authorization and Validity of
Agreements................................. 11
Page
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Section 3.3 Investment Intent.......................... 12
Section 3.4 No Conflict with Other
Instruments; No Approvals
Required Except as Have Been
Obtained................................... 12
Section 3.5 Investor Awareness and
Suitability................................ 13
Section 3.6 Accredited Investor Status................. 15
Section 3.7 Warrant Stock Ownership
Limitations................................ 15
ARTICLE IV RESTRICTIONS ON TRANSFER............................. 16
Section 4.1 Restrictive Legends on
Certificates Representing
Warrants................................... 16
Section 4.2 Restrictive Legends on Certificates
Representing Shares Issuable Upon
Exercise of Warrants....................... 16
Section 4.3 Notice of Proposed Transfers............... 17
ARTICLE V MISCELLANEOUS........................................ 19
Section 5.1 Survival of Representations,
Warranties and Covenants................... 19
Section 5.2 Entire Agreement........................... 19
Section 5.3 Severability............................... 19
Section 5.4 Assignability.............................. 19
Section 5.5 Amendment; Waiver.......................... 20
Section 5.6 Headings................................... 20
Section 5.7 Counterparts............................... 20
Section 5.8 Applicable Law............................. 20
Section 5.9 Notices and Payments....................... 20
Section 5.10 Indemnification............................ 21
Section 5.11 Submission to Jurisdiction................. 22
Section 5.12 Transfer Agent and Registrar............... 23
CGA GROUP, LTD.
COMMON STOCK
WARRANT ACQUISITION AGREEMENT
THIS WARRANT ACQUISITION AGREEMENT, dated as of June 9, 1997 (this
"Agreement"), among CGA Group, Ltd., a company with limited liability organized
under the laws of Bermuda (together with its successors and permitted assigns,
the "Company"), and each of the Investors identified in Schedule 1 hereto
(collectively, together with their successors and permitted assigns, the
"Investors"). The date of this Agreement may sometimes be referred to herein as
the "Closing Date." Capitalized terms used, but not defined, herein shall have
the meanings set forth in the Series A Subscription Agreement.
RECITALS
WHEREAS, the Company has offered (the "Offering") the opportunity to
purchase Series A Cumulative Voting Preference Shares of the Company ("Series A
Preferred Stock") to the Investors pursuant to a Confidential Private Placement
Memorandum, dated January 24, 1997 (together with any amendments, modifications
or supplements thereto as may be made from time to time prior to the Closing
Date (as defined below), the "Private Placement Memorandum");
WHEREAS, the Investors have, pursuant to the terms of the Series A
Preferred Stock Subscription Agreement, dated as of June 9, 1997 (the "Series A
Subscription Agreement"), among the Investors and the Company, agreed to
purchase, severally and jointly, such Series A Preferred Stock on the Closing
Date upon completion of the transactions contemplated by such Series A
Subscription Agreement (the "Closing");
WHEREAS, in consideration of the purchase of Class Series A
Preferred Stock, the Company has agreed to issue warrants to purchase shares of
Common Shares of the Company ("Common Stock" or "Warrant Shares") to the
Investors;
NOW THEREFORE, in consideration of the premises and mutual
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
ISSUANCE OF THE WARRANTS
(i) On the basis of the representations, warranties and
covenants herein set forth, the Company hereby issues and delivers, to
each of the Investors, and each of the Investors hereby accepts delivery
from the Company, the number of Warrants, in the form of Annex I hereto
(the "Warrants"), set forth opposite each such Investor's name on Schedule
1 hereto. Each Investor Warrant shall evidence the right to purchase from
the Company a total of .1038462 shares of Common Stock.
(ii) Delivery of the Warrants is hereby acknowledged to be
made on the Closing Date by the Company delivering to each of the
Investors, or representatives thereof, a warrant certificate evidencing
the number of Warrants acquired by each of the Investors, with such
delivery taking place at the offices of Xxxxxxx Xxxx & Xxxxxxx in
Xxxxxxxx, Bermuda at 10:00 a.m., Bermuda time, on the Closing Date.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants and covenants to each of the
Investors as of the Closing Date as follows:
Section 2.1 Due Organization, Valid Existence and Authority of the
Company and the Company's Subsidiaries. (a) The Company has been duly
incorporated and is validly existing under the laws of Bermuda. Upon completion
of the Closing, the Company will have full right, power and authority to carry
on its business as conducted and as proposed to be conducted as described in the
Private Placement Memorandum. The Company has full right, power and authority to
enter into this Agreement and the Other Closing Documents (as defined in the
Series A Subscription Agreement) to which the Company is a party, and perform
its obligations hereunder and thereunder. The Memorandum of Association, in the
form attached as Annex I to the Series A Subscription Agreement is a true and
complete copy of the Memorandum of Association of the Company as in effect at
the date of this Agreement, and no amendment to such Memorandum of Association
has been proposed or adopted. At the Closing, the Bye-laws of the Company will
be in the form attached as Annex II to the Series A Subscription Agreement. Upon
completion of the Closing, the Company will not own any interest in or control,
directly or indirectly, any other corporations, partnerships or other entities,
other than the
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Initial Subsidiaries (as defined in the Series A Subscription Agreement).
(b) Each of the Initial Subsidiaries has been duly incorporated and
is validly existing under the laws of its jurisdiction of incorporation. Upon
completion of the Closing and the closings under the Investment Units
Subscription Agreement (as defined in the Series A Subscription Agreement), the
Founders' Common Stock Subscription Agreement, (as defined in the Series A
Subscription Agreement) and the use of proceeds therefrom as described in the
Private Placement Memorandum, each Initial Subsidiary (as defined in the Series
A Subscription Agreement) will have the full right, power and authority to carry
on its business as then conducted and as proposed to be conducted as described
in the Private Placement Memorandum.
Section 2.2 Authorization and Validity of Agreements. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) (together, the "Creditor and Enforceability
Exceptions"). Each of the Other Closing Documents to which the Company is a
party has been duly authorized by the Company, and, when executed and delivered
by the Company at the Closing, will constitute a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
subject to the Creditor and Enforceability Exceptions.
Section 2.3 Capitalization. The issuance of the Warrants has been,
and upon exercise the Warrant Shares shall be, duly authorized by the Company
and the Warrants are, and upon exercise the Warrant Shares shall be, validly
issued, fully paid and non-assessable (meaning that no further sums will be
payable in respect of the holding of the Warrants). Except as contemplated by
its Memorandum of Association, Bye-laws, the Shareholders Agreement to be dated
on or prior to the Closing Date among the Company and the other parties named
therein (the "Shareholders Agreement"), the Sponsoring Investors and Founders
Stock Warrant Plan and the Employee Stock Warrant Plan each in substantially the
form as attached to Annex X to the Series A Subscription Agreement, and this
Agreement, each of the Company and its Initial Subsidiaries does not, and on the
3
Closing Date will not, have any outstanding or authorized options, warrants,
calls, rights, commitments or any other agreements of any character obligating
it to issue any of its shares or any securities convertible into or exchangeable
for, or evidencing the right to purchase or obtain, any of its shares or any
agreements or understandings with respect to the voting, sale or transfer of any
of its shares or any securities convertible into or exchangeable for or
evidencing the right to purchase or obtain any of its shares. Prior to the
Closing, the Company shall reserve the Warrant Shares and the Warrant Shares
shall conform in all material respects to the description of such shares
provided in the Private Placement Memorandum.
Section 2.4 Shares Issued Pursuant to Warrants. The Warrant Shares
will, when issued by the Company and paid for pursuant to this Agreement, be
duly authorized by the Company and will be validly issued, fully paid and
non-assessable (meaning that no further sums will be payable in respect of the
holding the Warrant Shares).
Section 2.5 No Conflict with Other Instruments; No Approvals
Required Except as Have Been Obtained. (i) The execution and delivery of this
Agreement and the Other Closing Documents to which the Company is a party by the
Company and compliance by the Company with the terms and conditions hereof and
thereof, will not violate, with or without the giving of notice or the lapse of
time, or both, or require any registration, qualification, approval or filing
under, any provision of law, statute, ordinance or regulation applicable to the
Company or any affiliate thereof, and will not conflict with, or require any
consent or approval under, or result in the breach or termination of any
provision of, or constitute a default under, or result in the acceleration of
the performance of the obligations of the Company or any affiliate thereof
under, or result in the creation of any claim, lien, charge or encumbrance upon
any of the properties, assets or businesses of the Company or any affiliate
thereof pursuant to the Memorandum of Association or Bye-laws of the Company or
the organizational documents of such affiliate, as the case may be, or any
order, judgment, decree, law, ordinance or regulation applicable to the Company
or such affiliate, as the case may be, or any contract, instrument, agreement or
restriction to which the Company or such affiliate, as the case may be, is a
party or by which the Company or such affiliate, as the case may be, or any of
its assets or properties is bound. Except where the Company is obliged to obtain
Bermuda governmental approvals that have been obtained, neither the Company or
any affiliate thereof nor any of the Company's or any of its affiliates',
respectively, assets or properties is subject to any charter, bye-law, contract
or other instrument or agreement, order, judgment, decree, law,
4
statute, ordinance or regulation or any other restriction of any kind or
character that would prevent the Company from entering into this Agreement or
the Other Closing Documents to which the Company is a party or from consummating
the transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof.
(ii) The execution and delivery of the Other Closing Documents to
which each of the Initial Subsidiaries is a party by such Initial Subsidiary and
compliance by such Initial Subsidiary with the terms and conditions thereof,
will not violate, with or without the giving of notice or the lapse of time, or
both, or require any registration, qualification, approval or filing under, any
provision of law, statute, ordinance or regulation applicable to such Initial
Subsidiary or any affiliate thereof, and will not conflict with, or require any
consent or approval under, or result in the breach or termination of any
provision of, or constitute a default under, or result in the acceleration of
the performance of the obligations of such Initial Subsidiary or any affiliate
thereof under, or result in the creation of any claim, lien, charge or
encumbrance upon any of the properties, assets or businesses of such Initial
Subsidiary or any affiliate thereof pursuant to the Memorandum of Association,
Articles of Incorporation or Bye-laws, as the case may be, of such Initial
Subsidiary or the organizational documents of such affiliate, as the case may
be, or any order, judgment, decree, law, ordinance or regulation applicable to
the Company or any contract, instrument, agreement or restriction to which such
Initial Subsidiary or such affiliate, as the case may be, is a party or by which
such Initial Subsidiary or any of its assets or properties is bound. Except
where such Initial Subsidiary is obliged to obtain Bermuda governmental
approvals that have been obtained, neither such Initial Subsidiary or any
affiliate thereof nor any of its assets or properties is subject to any charter,
bye-law, contract or other instrument or agreement, order, judgement, decree,
law, statute, ordinance, or regulation or any other restriction of any kind or
character that would prevent such Initial Subsidiary from entering into the
Other Closing Documents to which the Initial Subsidiary is a party or from
consummating the transactions contemplated thereby in accordance with the terms
thereof.
Section 2.6 Regulatory filings; Compliance with Law. Upon completion
of the Closing and the closings under the Series A Subscription Agreement, the
Investment Units Subscription Agreement, the Founders' Common Stock Subscription
Agreement, and the use of the proceeds therefrom as described in the Private
Placement Memorandum, CGA will be authorized on the Closing Date under Bermuda
law to conduct the business of selling insurance and reinsurance
5
as contemplated by the Private Placement Memorandum and no further approvals of
the insurance regulatory or other authorities of Bermuda are required for the
conduct of such business. Upon completion of the Closing, and the closings under
the Series A Subscription Agreement, the Investment Units Subscription
Agreement, the Founders' Common Stock Subscription Agreement, and the use of
proceeds therefrom as described in the Private Placement Memorandum, CGAIM (as
defined in the Series A Subscription Agreement) will be authorized on the
Closing Date or immediately thereafter under the applicable United States
federal and state laws to conduct its respective business as contemplated by the
Private Placement Memorandum and no further approvals of regulatory or other
authorities are required for the conduct of such business. Upon completion of
the Closing and the closings under the Series A Subscription Agreement, the
Investment Units Subscription Agreement, the Founders' Common Stock Subscription
Agreement, and the use of proceeds therefrom as described in the Private
Placement Memorandum, the Company and the Initial Subsidiaries will be in
compliance with all applicable laws and regulations.
Section 2.7 Stamp Duties or Taxes. No Bermuda stamp, transfer or
similar duties or taxes are payable in respect of the issuance and delivery of
the Warrants, to the Investors pursuant to this Agreement provided that any such
Investor is not resident in Bermuda for exchange control purposes, and if any
such taxes arise in connection with the execution of this Agreement, the Other
Closing Documents or the consummation of any of the transactions contemplated
hereby or thereby, then the Company will pay such taxes.
Section 2.8 Private Offering
(a) The offer and sale and the issuance and delivery of the
Shares are intended to be exempt from the provisions of Section 5 of the United
States Securities Act of 1933, as amended (the "Securities Act"), and from the
registration provisions of the applicable state securities laws. Neither the
Company nor anyone acting on its behalf has taken, or omitted to take, any
action, with respect to the Shares or any securities similar to the Shares, or
otherwise, that would bring the sale and issuance of the Shares within the
provisions of Section 5 of the Securities Act or that would violate any blue sky
laws of a state of the United States or securities law of any foreign
jurisdiction (including Bermuda).
(b) In the case of each offer or sale of the Shares, no form
of general solicitation or general advertising was used by the Company or any
person authorized to act on behalf of the Company, including, without
limitation, any advertisement, article, notice or other
6
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(c) Neither the Company nor anyone acting on its behalf has
taken, or omitted to take, any action, with respect to any other shares of the
Company issued and sold by the Company that would bring the issuance and sale of
such shares within the provisions of Section 5 of the Securities Act or that
would violate any blue sky laws of a state of the United States or securities
law of a foreign jurisdiction (including Bermuda).
(d) Except for the issuance of shares (as defined in the
Series A Subscription Agreement) by the Initial Subsidiaries (other than CGA (as
defined in the Series A Subscription Agreement)) to the Company or another
Initial Subsidiary, as the case may be, neither the Company nor any Initial
Subsidiary has issued or sold, or agreed to issue or sell, any shares in the
Company or any Initial Subsidiary to any persons other than to the Investors
pursuant hereto and to the other investors pursuant to the subscription
agreements contained in the Other Closing Documents.
Section 2.9 The Private Placement Memorandum. The Private Placement
Memorandum does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. There
is no fact which the Company has not disclosed herein or in the Private
Placement Memorandum or any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date that, so far
as the Company can foresee, is reasonably likely to have a material adverse
effect on the performance of obligations hereunder and under the Other Closing
Documents by the Company and its Initial Subsidiaries, considered as a whole, or
on the business, operations, financial condition, assets, liabilities or
prospects of the Company and its Subsidiaries taken as a whole.
Section 2.10 Not an "Investment Company". Each of the Company and
the Initial Subsidiaries is not, and when conducting business as contemplated by
the Private Placement Memorandum will not be, an "investment company" or an
entity "controlled" by an "investment company" as such terms are defined in the
United States Investment Company Act of 1940, as amended.
7
Section 2.11 Business Newly Formed. Each of the Company and its
Initial Subsidiaries is newly formed, has neither conducted any business nor
incurred any liabilities (other than organizational expenses with respect to the
Company and the Initial Subsidiaries, expenses associated with establishing the
businesses of the Initial Subsidiaries and expenses in connection with the
offering and issuance of the securities of the Company and the Subsidiaries),
has entered into no material agreements and incurred no liens or encumbrances on
present or future assets or revenues and has no proceedings pending against, or
to the Company's knowledge, threatened against or affecting it before any court,
governmental authority, arbitration board or tribunal, in each of the foregoing
cases other than as disclosed in the Private Placement Memorandum or referred to
herein or in the Series A Subscription Agreement or in an attachment to the
Series A Subscription Agreement.
Section 2.12 Operating Company. At the time the Company issues any
Shares, the Company shall be an "operating company" as defined in United States
Department of Labor Regulation section 2510.3-101(c) issued under the United
States Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Company shall at all times thereafter conduct its activities so that it
will continue to qualify as such an "operating company." As a result, pursuant
to United States Department of Labor Regulation section 2510.3-101(a)(2)(i), at
no time shall the assets of the Company constitute the assets of any Investor or
Member of the Company for purposes of Title I of ERISA or section 4975 of the
United States Internal Revenue Code of 1986 (the "Code").
Section 2.13 No U.S. Trade or Business and Not a Controlled Foreign
Corporation. The Company shall use its best efforts not to take, and to cause
CGA not to take, any action which the Company has reason to believe could cause
it or CGA to be considered engaged in the conduct of a trade or business in the
United States (within the meaning of Code Section 864) or to become a controlled
foreign corporation (within the meaning of Code Section 957) ("CFC"); provided,
however, that this Section 2.13 shall not apply to any action which affects the
election of directors pursuant to Section 12 of the Bye-laws; provided, further,
that it is hereby understood that the Company shall not be considered to violate
this Section 2.13; in the event that (x) the board of directors of the Company
(the "Board") shall, in its sole discretion, request the advice of counsel with
respect to a proposed action and counsel determines that such action will more
likely than not cause the Company or CGA to be engaged in the conduct of a trade
or business in the United States or become a CFC and (y) such proposed action to
be taken by the Company receives the prior
8
approval of 75% of the members of the Board then in office (for the sake of
clarity, the foregoing imposes no obligation on the Company or the Board to seek
the advice of counsel prior to taking any action unless the Company wishes to
take advantage of this second proviso to this Section 2.13); provided, further,
that it is hereby understood that this Section 2.13 does not alter any provision
in the Company's Bye-laws and all actions taken in connection herewith must
comply with such Bye-laws.
Section 2.14 Related Person Insurance Income. The Company shall use
its best efforts to cause CGA not to sell insurance or reinsurance to a U.S.
person which is a shareholder of the Company ("U.S. Shareholder") or a related
person (within the meaning of Section 953(c)(6) of the Code) to a U.S.
Shareholder ("Related Person") and which would therefore generate related person
insurance income (within the meaning of Section 953(c)(2) of the Code) ("RPII")
if the Company knows that (i) 20% or more of CGA's gross insurance income in any
taxable year will be RPII and (ii) persons which are directly or indirectly
insured or reinsured by CGA ("Insureds") or Related Persons to Insureds own 20
percent or more of the stock of CGA ("Excess RPII"); provided, however, that it
is hereby understood that the Company shall not be considered to violate this
Section 2.14(a) by virtue of such sale which the Company has reason to believe
will generate Excess RPII if the Company receives the prior approval of 100% of
the members of the Board then in office, provided, further, that it is hereby
understood that this Section 2.14(a) does not alter any provision in the
Company's Bye-laws and all actions taken in connection herewith must comply with
such Bye-laws.
(b) In the event that the Board shall have given prior authorization
(as provided in subsection (a) of this Section 2.14 for CGA to sell insurance or
reinsurance which the Company has reason to believe will generate Excess RPII
for any tax year, unless a U.S. statute, a final regulation of the U.S. Treasury
or a published ruling of the U.S. Internal Revenue Service issued after the
Closing Date provides or establishes that subpart F insurance income (as defined
in Code Section 953) does not constitute unrelated business taxable income (as
defined in Code Section 512), the Company shall so notify any U.S. Shareholder
which is subject pursuant to Code Section 511, to tax on its unrelated business
taxable income not later than June 30 of the tax year in which the Company
proposes that CGA generate Excess RPII.
Section 2.15 Operating Guidelines. Attached as Annex VII to the
Series A Subscription Agreement is a true, correct and complete copy of the
operating guidelines of the Company and the Initial Subsidiaries (the "Operating
9
guidelines"), which were adopted by all necessary corporate action of the Board
of Directors of the Company (the "Board") at a duly called and convened meeting
of the Board, and the resolution(s) pursuant to which the Operating Guidelines
were adopted provides that the Operating Guidelines may only be amended or
revoked pursuant to a resolution adopted by a two-thirds vote of the Board at a
duly called and convened meeting of the Board. To the extent the Operating
Guidelines are followed by the Company and the Subsidiaries, (i) neither the
Company nor CGA will be considered to be engaged in the conduct of a trade or
business in the United States through a U.S. "permanent establishment" as
defined in Article 3 of the Convention between the Government of the United
States of America and the Government of the United Kingdom of Great Britain and
Northern Ireland (on behalf of the Government of Bermuda) relating to the
Taxation of Insurance Enterprises and Mutual Assistance in Tax Matters and (ii)
neither the Company nor any Initial Subsidiaries will be considered to be
transacting the business of insurance in any state of the United States without
appropriate licenses or approvals. The Company knows of no reason why it and the
Initial Subsidiaries cannot now and will not in the future be able to
continuously comply with the Operating Guidelines. The Company knows of no
reason why compliance with the Operating Guidelines would result in the
company's inability to meet the projections set forth in the Private Placement
Memorandum.
Section 2.16 Passive Foreign Investment Company. The Company shall
use its best efforts to operate its business in such manner that neither the
Company nor CGA will be considered a passive foreign investment company under
Section 1296 of the Code.
Section 2.17 Use of proceeds of the Offering. The Company shall use
the net proceeds of the subscription under the Series A Subscription Agreement
(after payment of placement agent fees and other fees and expenses incurred by
the Company in connection with the Offering, the offering of the Investment
Units and the Common Stock to other investors and the organization and
establishment of the Company and the Initial Subsidiaries, which fees and
expenses shall be substantially as described in Private Placement Memorandum) as
capital to engage in the financial guarantee insurance business as described in
the Private Placement Memorandum. On the Closing Date, CGA will be capitalized
with $125 million.
Section 2.18 Shareholders. Schedule 2 to this Agreement represents a
true and complete list of the shareholders of the Company upon completion of the
Closing and their respective shareholdings on the Closing Date.
10
Section 2.19 St Xxxxxx Representations. The Company has no reason to
believe that the representations and warranties given by St. Xxxxxx Holdings,
Ltd. ("St. Xxxxxx") to the investors in St. Xxxxxx (the "St. Xxxxxx Investors")
pursuant to the St. Xxxxxx Subscription Agreement, dated as of or prior to the
Closing Date, among St. Xxxxxx and the St. Xxxxxx Investors, are not true and
complete as of the date made thereunder and as of the Closing Date.
Section 2.20 Bermuda Withholding Tax. The payment of dividends on or
the making of distributions or redemption payments to any holder of the Warrant
Shares will not be subject to any tax withholding requirement under current
Bermuda tax law.
Section 2.21 No Events of Non-Compliance. No event has occurred and
no condition exists which, upon the consummation of transactions under this
Agreement or any Other Closing Document would constitute an Event of
Non-Compliance (as defined in the Series A Preferred Subscription Agreement as
in effect on the date hereof) with or without notice or lapse of time or both.
Section 2.22 Registration Rights. Other than as provided in the
Series A Preferred Subscription Agreement and the Shareholders Agreement, the
Company has not agreed to register any of its shares under the Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE INVESTORS
Each of the Investors, severally and not jointly, hereby represents
and warrants to the Company as of the Closing Date as follows:
Section 3.1 Due Organization, Good Standing and Authority of the
Investor. Such Investor is a corporation, partnership, limited liability
company, trust or other legal entity and is duly organized, validly existing and
in good standing under the laws of such Investor's jurisdiction of organization
and not resident in Bermuda for Bermuda foreign exchange control purposes.
Section 3.2 Authorization and Validity of Agreements. This agreement
has been duly authorized, executed and delivered by such Investor and, assuming
the due authorization, execution and delivery by the other parties hereto,
constitutes a valid and binding obligation of such Investor enforceable against
such Investor in
11
accordance with its terms subject to the Creditor and Enforceability Exceptions.
Section 3.3 Investment Intent. Such Investor is acquiring the
Warrants for its own account as principal or for one or more separate accounts
maintained by it or for the account of one or more pension or trust funds of
which it is trustee, in each case, for investment purposes only, and not with a
view to, or for, the resale or other distribution thereof, in whole or in part,
other than pursuant to the Exchange Offer Registration Statement or the Shelf
Registration Statement (as defined in the Series A Subscription Agreement)
pursuant to the Series A Subscription Agreement; provided that, subject to the
terms hereof, the disposition of its or their property shall at all times be
within its or their control.
Section 3.4 No Conflict with Other Instruments; No Approvals
Required Except as Have Been Obtained. The execution and delivery of this
Agreement, by such Investor and the compliance by such Investor with the terms
and conditions hereof will not violate, with or without the giving of notice or
the lapse of time, or both, or require any registration, qualification, approval
or filing under, any provision of law, statute, ordinance or regulation
applicable to such Investor, and will not conflict with, or require any consent
or approval under, or result in the breach or termination of any provision of,
or constitute a default under, or result in the acceleration of the performance
of the obligations of such Investor under, or result in the creation of any
claim, lien, charge or encumbrance upon any of the properties, assets or
businesses of such Investor pursuant to the articles of incorporation or by-laws
of such Investor (if such Investor is a corporation) or equivalent
organizational documents (if such Investor is not a corporation) or any order,
judgment, decree, law, statute, ordinance or regulation applicable to such
Investor or any contract, instrument, agreement or restriction to which such
Investor is a party or by which such Investor or any of its assets or properties
is bound, other than any such (i) violation, (ii) failure to register, qualify,
obtain approval or file, (iii) conflict, (iv) breach, termination or default,
(v) acceleration, or (vi) creation of claim, lien, charge or encumbrance that
would not, individually or in the aggregate, have a material adverse effect on
such Investor's ability to consummate the transactions contemplated hereby.
Neither such Investor nor any of its assets or properties is subject to any
charter, by-law, contract or other instrument or agreement, order, judgment,
decree, law, statute, ordinance or regulation or any other restriction of any
kind or character that would prevent such Investor from entering into this
Agreement or from consummating the transactions contemplated hereby in
12
accordance with the terms hereof other than that which would not, individually
or in the aggregate, have a material adverse effect on such Investor's ability
to consummate the transactions contemplated hereby in accordance with the terms
hereof. Notwithstanding anything in this Agreement to the contrary, no
representation or warranty is made by any Investor regarding compliance with
ERISA or section 4975 of the Code, or the effect under ERISA or section 4975 of
the Code of the execution and delivery of this Agreement, and the compliance by
such Investor with the terms and conditions hereof.
Section 3.Investor Awareness and Suitability. Such Investor
acknowledges, agrees and is aware that:
(i) An investment in the Warrants involves a high degree of
risk, including, without limitation, the risks identified under the
caption "Risk Factors" in the Private Placement Memorandum, and such
Investor may lose the entire amount of its investment and such Investor
has the knowledge and experience in financial affairs that it is capable
of evaluating the merits and risks of purchasing the Warrants;
(ii) The Company has only recently been organized and has no
financial or operating history;
(iii) The Private Placement Memorandum contains a summary of
certain United States and Bermuda tax consequences under current laws
relating to (i) the United States federal income taxation of the Company
and of U.S. Persons (as defined below) and non-U.S. Persons that own
Warrants of the Company and (ii) the Bermuda taxation of persons or
entities not resident in Bermuda for exchange control purposes that own
Warrants of the Company. Positions of, and developments in rulings of, the
United States Internal Revenue Service, court decisions or legislative or
administrative actions may have an adverse effect on one or more of the
tax benefits sought by the Company. Moreover, the Company retains the
right to alter the conduct of its affairs in such a manner as to subject
its business to United States federal and/or state taxation. The Private
Placement Memorandum does not address the Bermuda taxation of Investors
that are resident in Bermuda for exchange control purposes or the taxation
of Investors by any jurisdiction other than the United States or Bermuda,
which tax consequences may be significantly different from the tax
consequences discussed in the Private Placement Memorandum. (For purposes
of this Section 3.5, "U.S. Person" means an individual who is a citizen or
resident of the United States, a corporation or partnership created or
13
organized under the laws of the United States or any state thereof, an
estate, the income of which, from non-U.S. sources and not effectively
connected with the conduct of a trade or business in the United States, is
includable in gross income for United States federal income tax purposes,
or a trust, if (i) a court within the United States may exercise primary
supervision of the trust, and (ii) one or more United States fiduciaries
have the authority to control all substantial decisions of the trust);
(iv) No Bermuda or United States federal or state regulatory
authority or any foreign agency has passed upon the accuracy, adequacy,
validity or completeness of the Private Placement Memorandum or this
Agreement or made any finding or determination as to the fairness of an
investment in the Warrants;
(v) The Warrants are illiquid, and such Investor must bear
the financial risk of investment in the Warrants for an indefinite period
of time and such Investor represents and warrants that such Investor has
the financial ability to bear the financial risk of its investment and,
except in the case of such Investor's listed on Schedule 4 attached
hereto, such Investor's investment does not exceed ten percent (10%) of
such Investor's net worth;
(vi) The Bye-laws and this Agreement contain substantial
restrictions on the transferability of the Warrants;
(vii) There is no existing public or other market for the
Warrants, and it is not expected that any such market will develop. There
can be no assurance that such Investor will be able to sell or dispose of
such Investor's Warrants. Without limiting the generality of the
foregoing, in order not to jeopardize the Offering's exempt status under
the Securities Act or under the securities laws of any other jurisdiction,
the transferee of such Warrants may, among other things, be required to
fulfill the investor suitability requirements thereunder;
(viii) The Warrants have not been registered under the
Securities Act or under the securities laws of any other jurisdiction,
including the states of the United States and, except as otherwise
provided with respect to the Exchange Offer Registration Statement or the
Shelf Registration Statement as set forth herein, the Company is under no
obligation to, and currently does not intend to, register or qualify the
Warrants for resale by such Investor or assist such Investor in
14
complying with any exemption under such securities laws or the securities
laws of any such jurisdiction or any other jurisdiction. An offer or sale
of Warrants by such Investor in the absence of registration under such
securities laws will require the availability of an exemption thereunder.
A restrictive legend in substantially the form set forth either Section
4.1 or Section 4.2 respectively, shall be placed on the certificates
representing the Warrants and a notation shall be made in the appropriate
records of the Company indicating that the securities underlying the
Warrants are subject to restrictions on transfer;
(ix) Such Investor shall hold the Warrants subject to this
Agreement and the Bye-laws of the Company from time to time in effect and
shall have voting rights with respect to the Warrants as specified in the
Bye-laws of the Company from time to time in effect; and
(x) It is intended that no person or entity may acquire or
own, directly, indirectly or by attribution (within the meaning of Section
958 of the Code) 10% or more of the total combined voting power of the
Common Stock, the Series A Preferred Stock and the Series B Preferred
Stock (as defined below) as such voting power is described in the
Bye-laws.
Section 3.6 Accredited Investor Status. Such Investor hereby
represents and warrants to the Company that it qualifies as an "accredited
investor" within the meaning of Rule 501(a)(1),(2),(3),(7) or (8) of Regulation
D under the Securities Act.
Section 3.7 Warrant Stock Ownership Limitations. To such Investor's
knowledge, such Investor's acquisition on the Closing Date of Warrants pursuant
to this Agreement will not cause any person or entity to own on the Closing Date
directly, indirectly or by attribution (within the meaning of Section 958 of the
Code) 10% or more of the total combined voting power of the Common Stock of the
Company , the Series A Preferred Stock and the Series B Cumulative Voting
Preference Shares of the Company ("Series B Preferred Stock") as such voting
power is described in the Bye-laws or to be treated by virtue of its ownership
of stock in the Company as indirectly or constructively owning on the Closing
Date 10% or more of the voting power of all classes of capital stock of CGA
entitled to vote. Such Investor may rely on the list of anticipated shareholders
of the Company and their respective anticipated shareholdings set forth in
Schedule 2 hereto for purposes of making this representation and warranty.
15
ARTICLE IV
RESTRICTIONS ON TRANSFER
The Warrant, and the shares issuable upon exercise of the Warrants,
shall not be transferable except upon the conditions specified in this Article
IV, which are intended to insure compliance with the provisions of the
Securities Act, applicable securities laws of other jurisdictions and Bermuda
law and the Company's Bye-laws.
Section 4.1 Restrictive Legends on Certificates . In addition to any
other legend required by the Company's Bye-laws, or applicable law, each
certificate representing the Warrants, shall (unless otherwise permitted by the
provisions of this Article IV) be stamped or otherwise imprinted with a legend
in substantially the following form:
"ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE
RIGHTS REPRESENTED HEREBY IS RESTRICTED BY, AND THE RIGHTS OF THE HOLDER
HEREOF ARE SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED IN THE CGA
GROUP, LTD. (THE "COMPANY") COMMON STOCK WARRANT ACQUISITION AGREEMENT,
WHICH IS AVAILABLE FOR EXAMINATION BY HOLDERS OF THESE SHARES AT THE
REGISTERED OFFICE OF THE COMPANY. IN ADDITION TO THE FOREGOING
RESTRICTIONS, THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT") OR UNDER THE SECURITIES LAWS OF ANY JURISDICTION AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT
IS IN EFFECT UNDER THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS
WITH RESPECT HERETO OR THERETO OR A WRITTEN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY IS PROVIDED TO THE COMPANY TO THE EFFECT THAT NO
REGISTRATIONS ARE REQUIRED UNDER SUCH SECURITIES LAWS. THE PRIOR APPROVAL
OF THE BERMUDA MONETARY AUTHORITY IS NOT REQUIRED FOR ANY SALE,
ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THIS WARRANT AND THE
SHARES ISSUABLE HEREUNDER PROVIDED THAT ANY SUCH SALE, ASSIGNMENT,
TRANSFER, PLEDGE OR OTHER DISPOSITION IS BETWEEN PERSONS WHO ARE
DESIGNATED AS NON-RESIDENTS OF BERMUDA FOR THE PURPOSES OF THE EXCHANGE
CONTROL ACT, 1972."
Section 4.2 Restrictive Legends on Certificates Representing Shares
Issuable Upon Exercise of Warrants. In addition to any other legend required by
the Company's documents, or applicable law, each certificate representing
16
the shares issuable upon exercise of the Warrants, shall (unless otherwise
permitted by the provisions of this Article IV) be stamped or otherwise
imprinted with a legend in substantially the following form:
"ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, THE TERMS AND
CONDITIONS CONTAINED IN THE BYE-LAWS OF CGA GROUP, LTD. (THE "COMPANY"),
THE SHAREHOLDERS AGREEMENT AND THE COMMON STOCK WARRANT ACQUISITION
AGREEMENT, WHICH ARE AVAILABLE FOR EXAMINATION BY HOLDERS OF THESE SHARES
AT THE REGISTERED OFFICE OF THE COMPANY. IN ADDITION TO THE FOREGOING
RESTRICTIONS, THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR UNDER THE
SECURITIES LAWS OF ANY JURISDICTION AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT IS IN EFFECT UNDER
THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS WITH RESPECT TO SUCH
SHARES OR A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY IS
PROVIDED TO THE COMPANY TO THE EFFECT THAT NO REGISTRATIONS ARE REQUIRED
UNDER SUCH SECURITIES LAWS. THE PRIOR APPROVAL OF THE BERMUDA MONETARY
AUTHORITY IS NOT REQUIRED FOR ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR
OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
PROVIDED THAT ANY SUCH SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER
DISPOSITION IS BETWEEN PERSONS WHO ARE DESIGNATED AS NON-RESIDENTS OF
BERMUDA FOR THE PURPOSES OF THE EXCHANGE CONTROL ACT, 1972."
Section 4.3 Notice of Proposed Transfers. (a) The holder of any
securities constituting Warrants, or the shares issuable upon the exercise of
the Warrants, bearing either the entire restrictive legend set forth in Section
4.1 or Section 4.2, respectively ("Restricted Shares"), by acceptance thereof,
agrees that, unless a registration statement is in effect under the Securities
Act and under applicable securities laws with respect to such Restricted Shares,
prior to any transfer or attempted transfer of such Restricted Shares, such
holder will give the Company (i) unless the transferee is an Affiliate (as
defined in the Shareholders Agreement) of the transferor written notice
describing the proposed transfer of any Restricted Shares in reasonable detail
only to the extent necessary to evaluate whether such transfer is in compliance
with applicable securities laws, the Shareholders Agreement (with respect to the
Warrant Shares, but not the Warrants) and the Bye-laws sections 61 through 63,
(ii) unless the
17
transferee is an Affiliate (as defined in the Shareholders Agreement) of the
transferor, such other information about the proposed transfer of such
Restricted Shares or the proposed transferee of such Restricted Shares as the
Company may reasonably request only to the extent necessary to evaluate whether
such transfer is in compliance with applicable securities laws, the Shareholders
Agreement (with respect to the Warrant Shares, but not the Warrants) and the
Bye-laws sections 61 through 63, and (iii) an opinion of counsel (both counsel
and opinion reasonably satisfactory to the Company (it being understood that
in-house counsel for such holder shall be considered satisfactory to the
Company)) to the effect that the proposed transfer of such Restricted Shares may
be effected without registration of such Restricted Shares under the Securities
Act and under other applicable securities laws. The Company hereby acknowledges
that no prior approval of the Bermuda Monetary Authority is necessary for any
transfer of Restricted Shares between persons who are designated as
non-residents of Bermuda for the purposes of the Bermuda Exchange Control Act,
1972.
(b) If the holder of the Restricted Shares delivers to the Company
an opinion of counsel that subsequent transfers of such Restricted Shares will
not require registration or qualification under the Securities Act or under
other applicable securities laws, the Company will, or will cause the transfer
agent, if any, for such Warrants or shares, as the case may be, promptly after
such contemplated transfer to deliver new certificates for such Restricted
Shares that do not bear that section of the restrictive legend set forth in
Section 5.1 above imposed by the Securities Act and under other applicable
securities laws of any other jurisdictions. If the foregoing conditions
entitling the holder to effect a proposed transfer of such Restricted Shares
without registration under the Securities Act and under other applicable
securities laws have not been satisfied, the holder shall not transfer the
Restricted Shares, and the Company will cause the transfer agent not to transfer
such Restricted Shares on its books or issue any certificates representing such
Restricted Shares. Any purported transfer not in accordance with the terms
hereof shall be void.
(c) The restrictions imposed by this Agreement with respect to the
Securities Act and under other applicable securities laws of any other
jurisdictions upon the transferability of any particular Restricted Shares shall
cease and terminate when such Restricted Shares have been sold pursuant to an
effective registration statement under the Securities Act and under other
applicable securities laws or transferred pursuant to Rule 144 promulgated under
the Securities Act. The holder of any
18
Restricted Shares as to which such restrictions shall have terminated shall be
entitled to receive from the Company, without expense, a new certificate
representing Warrants or shares, as the case may be, that does not bear the
restrictive legend set forth above imposed by the Securities Act and under other
applicable securities laws of any other jurisdictions but shall retain the
restrictive legends set forth above imposed by the requirements of the Bye-laws
and the Shareholders Agreement (with respect to the Warrant Shares but not the
Warrants).
(d) As used in this Agreement, the term "transfer" encompasses any
sale, transfer, pledge or other disposition of any Shares referred to herein.
ARTICLE V
MISCELLANEOUS
Section 5.1 Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the parties contained in this
Agreement and in any document delivered or to be delivered pursuant to this
Agreement and in connection with the Closing hereunder shall survive the
Closing. The parties have made no representations or warranties other than those
that are expressly set forth in this Agreement, any document delivered in
connection herewith and the Other Closing Documents.
Section 5.2 Entire Agreement. This Agreement (including the
Schedules, Exhibits and Annexes hereto) together with the Other Closing
Documents to which the parties hereto are parties, constitutes the entire
agreement among the parties hereto and supersede all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof.
Section 5.3 Severability. Any provision of this Agreement that is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or lack of authorization without invalidating the remaining
provisions hereof or affecting the validity, unenforceability or legality of
such provision in any other jurisdiction.
Section 5.4 assignability. Except in connection with the transfer of
Warrants or Warrant Shares, as the case may be, as contemplated by this
Agreement, and, in the case of Warrant Shares, by the Company's Bye-laws and the
Shareholders Agreement, this Agreement and the rights hereunder shall not be
assignable by any Investor without
19
the prior written consent of the Company. The Company may not assign its
obligations hereunder without the consent of the holders of the Warrants and the
Warrant Shares.
Section 5.5 Amendment; Waiver. No provision of this Agreement may be
amended, waived or otherwise modified except by an instrument in writing
executed by the Company and the holders of ninety percent (90%) of the Warrant
Shares and the Warrants relating to the unexercised Warrants.
Section 5.6 Headings. The Articles and Section headings contained in
this Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
Section 5.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
Section 5.8 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of New York without giving effect to the
principles of conflicts of laws thereof.
Section 5.9 Notices and Payments. (a) All notices, requests, demands
and other communications hereunder shall be in writing and, except to the extent
otherwise provided in this Agreement, shall be deemed to have been duly given if
delivered by same day or next day courier or mailed, registered mail, return
receipt requested, or transmitted by telegram, telex or facsimile (i) if to an
Investor, at such Investor's address appearing on Schedule 1 hereto or at any
other address such Investor may have provided in writing to the Company and (ii)
if to the Company, at Xxxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxxx XX 00, Xxxxxxx,
Xxxxxxxxx: Secretary, or such other address as the Company may have furnished to
the Investors in writing. A notice hereunder shall be deemed to have been given
on the day such notice is sent or transmitted; provided, however, that if such
notice is sent by next-day courier it shall be deemed to have been given the day
following sending and, if by registered mail, five days following sending.
(b) Unless otherwise provided in this Agreement, payments hereunder
shall be made by wire transfer of immediately available funds.
20
Section 5.10 Indemnification.
(a) The Company shall defend, hold harmless and indemnify each
Investor and its affiliates from and against all damages, losses, costs and
expenses (including reasonable legal expenses) to which any of such Persons
becomes subject as a result of any inaccuracy in any representation or warranty
of the Company contained in this Agreement or the breach of any covenant or
agreement of the Company contained in this Agreement or the Company's Bye-laws.
(b) In the event a party entitled to indemnification under this
Agreement (an "Indemnified Party") becomes aware of a claim, liability, expense
or other event with respect to which such party is entitled to indemnification
(an "Indemnification Event"), such Indemnified Party shall promptly give notice
of such Indemnification Event to the Company. The failure by any Indemnified
Party to give such notice to the Company within a reasonable period of time
shall relieve the Company of its obligations under this Section 5.10, if and to
the extent that it has been prejudiced by a lack of timely and adequate notice.
The Company shall have the right to defend, contest, settle or otherwise resolve
any Indemnification Event involving a third-party claim (a "Third-Party
Indemnification Event") as long as the Indemnification Event may not possibly
give rise to a non-monetary liability, including, without limitation,
injunctions and criminal liability; provided, however, that the Company shall
not settle or compromise any Third-Party Indemnification Event without the
Indemnified Party's prior written consent thereto, unless the terms of such
settlement or compromise provide for an unconditional release of the Indemnified
Parties. Notwithstanding the foregoing, any Indemnified Party shall have the
right to employ separate counsel (including local counsel), and the Company
shall bear the reasonable costs, fees and expenses of such separate counsel if
(i) the use of counsel chosen by the Company to represent such Indemnified Party
would present such counsel with any actual or potential conflict of interest,
(ii) the actual or potential defendants in, or targets of, any Third-Party
Indemnification Event include both such Indemnified Party and the Company or any
affiliate thereof and such Indemnified Party shall have reasonably concluded
that there may be legal defenses available to it which are different from or
additional to those available to the Company or any affiliate thereof which is
an actual or potential defendant in, or target of, such Third-Party
Indemnification Event, (iii) the Indemnification Event may give rise to a
non-monetary liability including without limitation injunctions and criminal
liability, or (iv) the Company has authorized such Indemnified Party to employ
separate counsel. The
21
Indemnified Parties and the Company shall cooperate fully in defending any
Third-Party Indemnification Event, and the Company shall have reasonable access
to the books and records and personnel of the Indemnified Parties that are
relevant hereto.
(c) The indemnification provisions of this Section 5.10 shall be in
addition to any rights each Indemnified Party may otherwise have.
Section 5.11 Submission to Jurisdiction.
The Company irrevocably submits to the non-exclusive jurisdiction of
any New York State or federal courts sitting in The City of New York and any
court sitting in Bermuda, and any appellate court from any thereof, in any suit,
action or proceeding arising out of or relating to this Agreement or any of the
Other Closing Documents or the transactions contemplated hereby or thereby (a
"Related Proceeding"), and the Company hereby irrevocably agrees that all claims
in respect of any Related Proceeding may be heard and determined in such New
York State or federal court or any court sitting in Bermuda. The Company hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of any Related Proceeding and any
objection to any Related Proceeding whether on the grounds of venue, residence
or domicile. A final judgment in any such suit, action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
any other manner provided by law.
The Company hereby irrevocably appoints the CT Corporation System
(the "Process Agent"), with an office on the date hereof at 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx, Xxxxxx Xxxxxx of America, as its agent to receive on behalf of
the Company and its property service of copies of the summons and complaint and
any other process that may be served in any Related Proceeding in such New York
State or federal court sitting in The City of New York. Service may be made by
U.S. registered mail or other comparable means or by delivering by hand a copy
of such process to the Company in care of the Process Agent at the address
specified above for the Process Agent (such service to be effective upon the
mailing or delivery by hand of such process to the office of the Process Agent),
and the Company hereby irrevocably authorizes and directs the Process Agent to
accept on its behalf such service. Failure of the Process Agent to give notice
to the Company, or failure of the Company to receive notice of such service of
process, shall not affect in any way the validity of such service on the Process
Agent or the Company. As an alternative method of service, the Company also
irrevocably consents to the service of any and all
22
process in any Related Proceeding in a New York State or federal court sitting
in The City of New York by sending by U.S. registered mail or other comparable
means copies of such process to the Company at its address under Section 5.10
(such service to be effective seven days after mailing thereof). The Company
covenants and agrees that it shall take any and all reasonable action, including
the execution and filing of any and all documents, that may be necessary to
continue the designation of the Process Agent in full force and effect, and to
cause the Process Agent to continue to act as such. Nothing herein shall affect
the right of any party to serve legal process in any other manner permitted by
law or affect the right of any party to bring any suit, action or proceeding
against any other party or its property in the courts of other jurisdictions.
To the extent that the Company has or hereafter may acquire any
immunity from any legal action, suit or proceeding, from jurisdiction of any
court or from setoff or any legal process (whether through service or notice,
attachment in aid of execution or otherwise) with respect to itself or any of
its property, the Company hereby irrevocably waives and agrees not to plead or
claim such immunity in respect of its obligations under this Agreement and the
other Closing Documents.
Section 5.12 Transfer Agent and Registrar
(a) The Company shall provide from and after the Closing Date for a
transfer agent and registrar (collectively, the "Agent") for the Warrants issued
hereunder. The Agent shall keep a register for the registration and transfer of
the Warrants.
(b) Upon surrender of any Warrant certificate at the office of the
Agent, the Company, at the request of the holder thereof, will deliver at the
Company's expense, new Warrant certificates in exchange therefor, in
denominations as requested by such holder.
23
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
COMPANY:
CGA GROUP, LTD.
By: /S/ XXXXXXX X. PRICE
----------------------
Name: Xxxxxxx X. Price
Title: President & CEO
MUTUAL DISCOVERY FUND
BY: FRANKLIN MUTUAL ADVISORS, INC.
By: /S/ E.N. XXXXXXXXX
-----------------------
Name: E.N. Xxxxxxxxx
Title: V.P., General Counsel
& Asst. Secretary
MUTUAL QUALIFIED FUND
BY: FRANKLIN MUTUAL ADVISORS, INC.
By: /S/ E.N. XXXXXXXXX
-----------------------
Name: E.N. Xxxxxxxxx
Title: V.P., General Counsel
& Asst. Secretary
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
XXXXXXXXXXX CHAMPION INCOME FUND
By: /S/ XXXXX XXXXXXXXXXX
--------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Vice President
XXXXXXXXXXX HIGH YIELD FUND
By: /S/ XXXXX XXXXXXXXXXX
--------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Vice President
XXXXXXXXXXX MULTI-SECTOR INCOME
TRUST
By: /S/ XXXXXX XXXXX
--------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
XXXXXXXXXXX STRATEGIC INCOME FUND
By: /S/ XXXXX X. XXXXX
--------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS
FOR THE ACCOUNT OF XXXXXXXXXXX HIGH
INCOME FUND
By: /S/ XXXXX X. XXXXX
--------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS
FOR THE ACCOUNT OF STRATEGIC BOND
FUND
By: /S/ XXXXX X. XXXXX
--------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
THE XXXXXX FIDUCIARY TRUST COMPANY
ON BEHALF OF:
XXXXXX HIGH YIELD FIXED INCOME
TRUST (DBT)
XXXXXX HIGH YIELD MANAGED TRUST
By: /S/ XXXX X. X'XXXX
--------------------------
Name: Xxxx X. X'Xxxx
Title: Vice President
XXXXXX DIVERSIFIED INCOME TRUST
XXXXXX DIVERSIFIED INCOME TRUST II
XXXXXX FUNDS TRUST - XXXXXX HIGH
YIELD TOTAL RETURN FUND
XXXXXX HIGH YIELD ADVANTAGE FUND
XXXXXX HIGH YIELD TRUST
PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM VARIABLE TRUST - PUTNAM VT
DIVERSIFIED INCOME FUND
XXXXXX VARIABLE TRUST - XXXXXX VT
HIGH YIELD FUND
By: /S/ XXXX X. X'XXXX
--------------------------
Name: Xxxx X. X'Xxxx
Title: Vice President
ACE LIMITED
By: /S/ XXXXX XXXX
--------------------------
Name: Xxxxx Xxxx
Title: Executive VP
& General Counsel
THIRD AVENUE TRUST, ON BEHALF OF
THE THIRD AVENUE VALUE FUND SERIES
By: /S/ XXXXX X. XXXXX
--------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
LENNAR FINANCIAL SERVICES, INC.
By: /S/ XXXXX XXXXXXXX
--------------------------
Name: Xxxxx Xxxxxxxx
Title: Executive Vice President
and Chief Financial
Officer
Common Stock
Warrant Acquisition Agreement
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: /S/ XXXX X. XXXXXXXXX
--------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Assistant Vice President
Common Stock
Warrant Acquisition Agreement
PM GROUP LIFE INSURANCE COMPANY
By: /S/ XXXXX X. CARD
--------------------------
Name: Xxxxx X. Card
Title: Vice President
CAPITAL REINSURANCE COMPANY
By: /S/ XXXXXXX X. XXXXXXXXXXX
--------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Vice President
& Treasurer
XXXXXXXXX, LUFKIN & XXXXXXXX
SECURITIES CORPORATION
By: /S/ XXXX X. XXXXXXXX
--------------------------
Name: Xxxx X. Xxxxxxxx
Title: Managing Director
