EXHIBIT B
PURCHASE AGREEMENT
This PURCHASE AGREEMENT made this 19th day of November, 2001, between IPC
HOLDINGS, LTD., a company incorporated under the laws of the Islands of Bermuda
(the "Company") of the one part, and AMERICAN INTERNATIONAL GROUP, INC., a
company incorporated under the laws of the State of Delaware in the United
States of America ("AIG") of the second part.
WITNESSETH:
WHEREAS, AIG currently owns 6,100,000 shares of the Company's Common
Shares, par value $0.01 per share (the "Common Shares"), which represent 24.336%
of the 25,065,572 outstanding Common Shares of the Company;
WHEREAS, in connection with its initial investment in the Company in June
1993, the Company granted AIG an option to purchase additional Common Shares on
the terms and conditions specified in the Option Agreement, dated June 29, 1993,
between the Company and AIG (the "Original Option Agreement");
WHEREAS, in connection with the Company's initial public offering in March
1996, the Company and AIG entered into an Amended and Restated Option Agreement
(the "Amended Option Agreement"), which amended the Original Option Agreement by
giving effect to the recapitalization of the Company that occurred immediately
prior to the initial public offering and which granted to AIG the right to
purchase 2,775,000 additional Common Shares of the Company on the terms and
conditions therein specified;
WHEREAS, the Company has informed AIG that it intends to make a proposed
public offering (the "Proposed Offering") of 15,200,000 of its Common Shares
(the "Firm Public Offering Shares") in a firm commitment underwriting co-led by
Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxxx Sachs & Co., which offering is
expected to close in December 2001, plus up to an additional 2,280,000 shares
(the "Optional Public Offering Shares") if the underwriters exercise in full
their over-allotment option provided in the underwriting agreement (the
"Over-Allotment Option") relating to the Proposed Offering;
WHEREAS, AIG has indicated to the Company that it wishes to purchase from
the Company additional Common Shares such that AIG will retain, following its
exercise in full of its option pursuant to the Amended Option Agreement and the
Proposed Offering (including any exercise of the Over-Allotment Option by the
underwriters), its 24.336% ownership of the Company's outstanding Common Shares
and the Company believes it is in the best interests of the Company for AIG to
maintain its ownership level at such percentage;
NOW, THEREFORE, the Company and AIG agree as follows:
1. (a) Pursuant to Section 2(b) of the Amended Option Agreement, the
Company hereby notifies AIG of its intention to file a registration statement
with the U.S. Securities and Exchange Commission in connection with the Proposed
Offering.
(b) Pursuant to Section 2(b) of the Amended Option Agreement, AIG
hereby notifies the Company that it intends to exercise in full its option to
purchase Common Shares pursuant to Section 1(d)(ii)(A) of the Amended Option
Agreement, such exercise to be effective at the time of, and contingent upon,
the consummation of the Proposed Offering.
2. (a) The Company hereby agrees that, contingent upon the consummation
of the Proposed Offering, it shall sell, transfer, convey and deliver to AIG at
the time of the
-2-
delivery of the Firm Public Offering Shares pursuant to the Proposed Offering,
and AIG agrees that at such time it shall purchase from the Company, 2,113,700
Common Shares (the "Firm AIG Shares"). The Company hereby further agrees that,
contingent upon the consummation of the Proposed Offering and any exercise of
the Over-Allotment Option by the underwriters in the underwriters' discretion in
whole or in part, the Company shall sell, transfer, convey and deliver to AIG at
the time of delivery of the Optional Public Offering Shares, and AIG agrees that
at such time it shall purchase from the Company, up to 733,300 additional Common
Shares (the "Optional AIG Shares"), the precise number of Optional AIG Shares to
be so sold and purchased to be in the same proportion as the proportion to which
the Over-Allotment Option is exercised (rounded down to the nearest round lot
number of shares) in order that AIG maintain its current beneficial ownership of
approximately 24.336% of the outstanding Common Shares of the Company.
Furthermore, in the event the Company and the underwriters for the Proposed
Offering agree between themselves to alter the number of Firm Public Offering
Shares and/or Optional Public Offering Shares after the date hereof, the Company
and AIG agree that the number of AIG Firm Shares and AIG Optional Shares shall
be proportionately adjusted (each rounded down to the nearest round lot number
of shares) in an amount that, after giving effect to the issuance of Common
Shares pursuant to the option granted to AIG under the Amended Option Agreement
and the purchase of Common Shares hereunder, AIG will own that number of whole
Common Shares that results in it maintaining beneficial ownership of 24.336% of
all of the then outstanding Common Shares of the Company.
(b) All shares purchased by AIG hereunder shall be purchased in cash at
the initial public offering price specified in the Proposed Offering.
3. The Company represents and warrants to AIG that (i) upon the
consummation of the transactions covered by this Agreement, AIG will receive
good and valid
-3-
title to the Common Shares sold pursuant to this Agreement free and clear of
any lien, pledge or encumbrance of any kind, and (ii) the Common Shares sold
pursuant to this Agreement constitute validly issued shares of the capital
stock of the Company.
4. (a) AIG acknowledges that (i) it is capable of evaluating the merits
and risks of the acquisition of the Common Shares, (ii) it is acquiring the
Common Shares for its own account, as principal, (iii) it is acquiring the
Common Shares for investment and not with a view to the resale or distribution
in a public offering of all or any part of such Common Shares, and (iv) it has
not sought the advice of the Company with respect to the tax, accounting, legal
or other regulatory or investment issues relating to the Common Shares hereunder
and the consummation of the transactions contemplated by this Agreement and has
relied only on the advice of its own legal counsel and other advisors.
(b) Both the parties acknowledge and agree that the sale of the Common
Shares offered hereby is not registered under U.S. Federal or state securities
laws, and the Common Shares are being offered and sold in reliance upon the
exemptions from registration provided by the no-action letters regarding Black
Box Incorporated (publicly available June 26, 1990) and Squadron, Ellenoff,
Pleasant and Xxxxxx (publicly available February 28, 1992), and applicable
exemptions under state securities laws.
5. The parties acknowledge and agree that all Common Shares purchased by
AIG hereunder shall be "Registrable Shares" as defined in that certain
Registration Rights Agreement, dated as of March 13, 1996, among the Company,
AIG and the other rightholders specified therein.
-4-
6. (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(b) All representations, warranties and agreements contained herein or
made in writing by or on behalf of AIG and the Company pursuant hereto shall
survive the execution and delivery of this Agreement and the purchase and sale
of the Common Shares hereunder.
(c) This Agreement may be executed by the parties hereto in separate
and several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above mentioned.
IPC HOLDINGS, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
-----------------------------------
Title: Vice President and Secretary
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Title: Senior Vice Chairman
-6-
