Execution Copy
8,000,000 Ordinary Shares
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
UNDERWRITING AGREEMENT
July 17, 2003
BEAR, STEARNS & CO. INC.
UBS Securities LLC
A.G. Edwards & Sons, Inc.
Keefe, Bruyette & Woods, Inc.
Putnam Lovell NBF Securities Inc.
as representatives of the
several Underwriters named in
Schedule I attached hereto (the "Representatives")
c/o Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, New York 10179
Ladies and Gentlemen:
Scottish Annuity & Life Holdings, Ltd., an exempted company limited by
shares organized and existing under the laws of the Cayman Islands (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 8,000,000 shares (the "Firm Shares") of its
ordinary shares, par value US$0.01 per share (the "Ordinary Shares") and for the
sole purpose of covering over-allotments in connection with the sale of the Firm
Shares, at the option of the Underwriters, up to an additional 1,050,000 shares
(the "Additional Shares") of Ordinary Shares. The Firm Shares and any Additional
Shares purchased by the Underwriters are referred to herein as the "Shares." The
Shares are more fully described in the Registration Statement referred to below.
Bear, Stearns & Co. Inc. ("Bear Stearns") and UBS Securities LLC ("UBS") are
acting as lead managers (the "Lead Managers") in connection with the offering
and sale of the Shares contemplated herein (the "Offering").
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-104545),
and amendments thereto, and related preliminary prospectuses for the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the registration of certain securities (the "Shelf
Securities") of the Company to be sold from time to time by the Company. Such
registration statement, as so amended (including post-effective amendments, if
any), has been declared effective by the Commission and copies of which have
heretofore been delivered to the Underwriters. The registration statement, as
amended at the time it became effective, is hereinafter referred to as the
"Registration Statement." If the Company has filed or is required pursuant to
the terms hereof to file a registration statement pursuant to Rule 462(b) under
the Securities Act registering additional shares of Ordinary Shares (a "Rule
462(b) Registration Statement"), then, unless otherwise specified, any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462(b) Registration Statement. Other than a Rule 462(b) Registration Statement,
which became effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the Commission. All of the
Shares have been registered under the Securities Act pursuant to the
Registration Statement or, if any Rule 462(b) Registration Statement is filed,
will be duly registered under the Securities Act with the filing of such Rule
462(b) Registration Statement. No stop order suspending the effectiveness of
either the Registration Statement or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or,
threatened by the Commission. The Company, if required by the Securities Act and
rules and regulations of the Commission (together, the "Rules and Regulations"),
proposes to file a prospectus supplement with the Commission pursuant to Rule
424(b) of the Rules and Regulations. The prospectus supplement specifically
relating to the Ordinary Shares, in the form in which it is to be filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations (the "Prospectus
Supplement"), along with the basic prospectus included in the Registration
Statement at the time it became effective (the "Basic Prospectus"), is
hereinafter referred to as the "Prospectus," except that if any revised
prospectus or prospectus supplement shall be provided to the Underwriters by the
Company for use in connection with the offering and sale of the Shares (the
"Offering") which differs from the Prospectus (whether or not such revised
prospectus or prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b) of the Rules and Regulations), the term "Prospectus"
shall refer to such revised prospectus or prospectus supplement, as the case may
be, from and after the time it is first provided to the Underwriters for such
use. Any preliminary prospectus supplement or prospectus supplement subject to
completion included in the Registration Statement or filed with the Commission
pursuant to Rule 424 under the Securities Act specifically relating to the
Ordinary Shares together with the Basic Prospectus is hereafter called a
"Preliminary Prospectus." Any reference herein to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") on or before the effective date of the Registration
Statement, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to
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the Registration Statement, any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include (i) the filing of any document under the
Exchange Act after the effective date of the Registration Statement, the date of
such Preliminary Prospectus or the date of the Prospectus, as the case may be,
which is incorporated therein by reference and (ii) any such document so filed.
All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, the Preliminary Prospectus and the Prospectus, or any
amendments or supplements to any of the foregoing, shall be deemed to include
any copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR").
(b) At the time of the effectiveness of the Registration
Statement, any 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus is
first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, when any supplement to or amendment of the Prospectus is filed with
the Commission, when any document filed under the Exchange Act was or is filed
and at the Closing Date and the Additional Closing Date, if any (as hereinafter
respectively defined), the Registration Statement and the Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the Rules and Regulations and did not and will not contain an
untrue statement of a material fact and did not or will not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein (i) in the case of the Registration Statement, not misleading
and (ii) in the case of the Prospectus or any related Preliminary Prospectus in
light of the circumstances under which they were made, not misleading. When any
related Preliminary Prospectus was first filed with the Commission (whether
filed as part of the registration statement for the registration of the Shares
or any amendment thereto or pursuant to Rule 424(a) of the Rules and
Regulations) and when any amendment thereof or supplement thereto was first
filed with the Commission, such Preliminary Prospectus and any amendments
thereof and supplements thereto complied in all material respects with the
applicable provisions of the Securities Act and the Rules and Regulations and
the Exchange Act and the respective rules and regulations thereunder and did not
contain an untrue statement of a material fact and did not omit to state any
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. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or Preliminary Prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Lead Managers specifically for use therein. The parties
acknowledge and agree that the information provided by or on behalf of any
Underwriter consists solely of paragraphs 3, 12, 13 and 14 under the caption
"Underwriting" in the Prospectus.
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(c) Ernst & Young LLP, who have certified the financial
statements and supporting schedules of the Company included or incorporated in
the Registration Statement, are independent public accountants as required by
the Securities Act, the Exchange Act and the Rules and Regulations.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
the Registration Statement and the Prospectus, the Company has not paid any
dividends on its Ordinary Shares and there has been no material adverse change
or any development involving a prospective material adverse change on (i) the
business, prospects, properties, operations, condition (financial or other),
stockholders' equity or results of operations of the Company and each subsidiary
of the Company (each, a "Subsidiary" and together, the "Subsidiaries"), taken as
a whole; (ii) the Ordinary Shares or long-term debt of the Company; (iii) the
Offering; or (iv) the consummation of the transactions contemplated by this
Agreement or the Company's performance of its obligations hereunder (a "Material
Adverse Change" or "Material Adverse Effect"), whether or not arising from
transactions in the ordinary course of business, and since the date of the
latest balance sheet presented in the Registration Statement and the Prospectus,
neither the Company nor any of the Subsidiaries has incurred or undertaken any
liabilities or obligations, direct or contingent, or entered into any
transactions which are material to the Company and the Subsidiaries taken as a
whole, except for liabilities or obligations which are reflected in the
Registration Statement and the Prospectus.
(e) The Company has the corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus. This Agreement and the transactions contemplated
by this Agreement, the Registration Statement and the Prospectus have been duly
and validly authorized by the Company. This Agreement has been duly and validly
executed and delivered by the Company.
(f) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus do not and will not (i) conflict with
or result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
the Subsidiaries pursuant to any indenture, mortgage, deed of trust, loan
agreement or other agreement, instrument, franchise, license or permit to which
the Company or any of the Subsidiaries is a party or by which the Company or any
of the Subsidiaries or their respective properties or assets may be bound or
(ii) violate or conflict with any provision of the memorandum of association,
articles of association, certificate or articles of incorporation, charter,
by-laws or other organizational documents of the Company or any of the
Subsidiaries or any judgment, decree, order, statute, rule or
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regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of the Subsidiaries or any of their
respective properties, operations or assets. No consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of the Subsidiaries or any of their
respective properties or assets is required to be made or obtained by the
Company for the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, by the Registration
Statement and by the Prospectus, including the issuance, sale and delivery of
the Shares to be issued, sold and delivered by the Company hereunder, except (A)
the registration under the Securities Act of the Shares, which has become
effective, and (B) such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits as may be required
under state securities, Blue Sky or insurance securities laws or the rules of
the National Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Shares by the Underwriters.
(g) The Company has the authorized capitalization set forth in
the Prospectus and all of the issued Ordinary Shares of the Company have been
duly and validly authorized and issued in compliance with all applicable state,
federal and foreign securities laws, are fully paid and non-assessable and were
not issued in violation of or subject to any preemptive or similar rights that
entitle or will entitle any person to acquire any Shares or any security
convertible, exchangeable or exercisable into Shares from the Company upon
issuance or sale by the Company of Shares in the Offering, except for such
rights as may have been fully satisfied or waived prior to the effectiveness of
the Registration Statement; the Shares to be delivered on the Closing Date and
the Additional Closing Date, if any (as hereinafter respectively defined), have
been duly and validly authorized and, when delivered by the Company in
accordance with this Agreement, will be duly and validly issued, fully paid and
non-assessable and will have been issued in compliance with all applicable
state, federal and foreign securities laws and will not have been issued in
violation of or subject to any preemptive or similar rights that entitle or will
entitle any person to acquire any Shares from the Company upon issuance thereof
by the Company; and all of the issued shares of capital stock of each of its
Subsidiaries have been duly and validly authorized and issued and are fully paid
and non-assessable and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims; the Ordinary Shares, the
Firm Shares and the Additional Shares conform to the descriptions thereof
contained or incorporated by reference in the Registration Statement and the
Prospectus.
(h) The only subsidiaries (as defined in Rule 405 of the
Securities Act) of the Company are those listed on Schedule III attached hereto.
Each of the Company and the Subsidiaries has been duly organized and is validly
existing as a corporation or a company limited by shares in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in
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which the character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business makes such qualification necessary, except
for those failures to be so qualified or in good standing which will not in the
aggregate have a Material Adverse Effect on the condition (financial or
otherwise), results of operations, business, properties or prospects of the
Company and the Subsidiaries taken as a whole. Each of the Company and the
Subsidiaries has all requisite power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses and
permits (collectively, the "Consents") of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted and as described in the Registration
Statement and the Prospectus, with such exceptions as would not have,
individually or in the aggregate a Material Adverse Effect. No Consent contains
a materially burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus.
(i) Each of the Company and the Subsidiaries which is engaged in
the business of insurance or reinsurance (each, an "Insurance Subsidiary" and
together, the "Insurance Subsidiaries") holds such insurance license,
certificates and permits from governmental authorities (including, without
limitation, from the insurance regulatory agencies of the various jurisdictions
where it conducts business) (the "Insurance Licenses") as are necessary to the
conduct of its business as described in the Prospectus; the Company and each
Insurance Subsidiary have fulfilled and performed all obligations necessary to
maintain the Insurance Licenses; there is no pending or, to the knowledge of the
Company after due inquiry, threatened action, suit, proceeding or investigation
that could reasonably be expected to result in the revocation, termination or
suspension of any Insurance License; and no insurance regulatory agency or body
has issued, or to our knowledge, commenced any proceeding for the issuance of,
any order or decree impairing, restricting or prohibiting the payment of
dividends or the making of any loan by any Subsidiary to its parent, which would
have, individually or in the aggregate, a Material Adverse Effect.
(j) All reinsurance treaties and arrangements to which the
Company or any Subsidiary is a party as a cedant are in full force and effect;
neither the Company nor any Subsidiary is in material violation of or in
material default in the performance, observance or fulfillment of any
obligation, agreement, covenant or condition contained therein; neither the
Company nor any Subsidiary has received any notice from any of the other parties
to such treaties or arrangements that such other party intends not to perform
such treaty; and, to the best knowledge of the Company and the Subsidiaries, the
Company and the Subsidiaries have no reason to believe that any of the other
parties to such treaties or arrangements will be unable to perform such treaty
or arrangement except to the extent adequately and properly reserved for in the
consolidated financial statements of the Company included in the Prospectus.
(k) The 2002 statutory annual statements of each of the Insurance
Subsidiaries required to prepare such statements and the statutory balance
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sheets and income statements included in such statutory annual statements
together with related schedules and notes, have been prepared, in all material
respects, in conformity with statutory accounting principles or practices
required or permitted by the appropriate insurance department of the
jurisdiction of domicile of each such Insurance Subsidiary, and such statutory
accounting practices have been applied on a consistent basis throughout the
periods involved, except as may otherwise be indicated therein or in the notes
thereto, and present fairly, in all material respects, the statutory financial
position of the Insurance Subsidiaries as of the dates thereof, and the
statutory basis results of operations of the Insurance Subsidiaries for the
periods covered thereby.
(l) The Company and the Insurance Subsidiaries have made no
material changes in their insurance reserving practices since December 31, 2001,
except where such change in such insurance reserving practices would not
reasonably be expected to have a Material Adverse Effect.
(m) The Company is not aware of any threatened or pending
downgrading of any Insurance Subsidiary's financial strength rating from A.M.
Best Company, Inc., Standard & Poor's Rating Services, Inc., Moody's Investor
Services or Fitch Ratings (collectively, the "Rating Agencies").
(n) Except as described in the Registration Statement and the
Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation, or arbitration, including routine
litigation, to which the Company or any of the Subsidiaries is a party or of
which any property of the Company or any of the Subsidiaries is the subject
which, individually or in the aggregate, if determined adversely to the Company
or any of the Subsidiaries, is reasonably likely to have a Material Adverse
Effect, and to the best of the Company's knowledge, no such proceeding is
threatened or contemplated by governmental authorities or threatened or
contemplated by others.
(o) Neither the Company nor its Subsidiaries nor to the Company's
knowledge, any of its affiliates has taken, nor will any of them take, directly
or indirectly, any action designed to cause or result in, or which constitutes
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Ordinary Shares to facilitate the sale or
resale of the Shares.
(p) Except for the Subsidiaries or as otherwise set forth in the
Prospectus, the Company owns no capital stock, ordinary shares or other
beneficial interest, directly or indirectly, in any corporation, partnership,
joint venture or other business entity.
(q) The financial statements of the Company, including the notes
thereto, and supporting schedules included or incorporated by reference in the
Registration Statement and the Prospectus present fairly in all material
respects the financial position of the Company and its consolidated subsidiaries
and the other entities
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for which financial statements are included in the Registration Statement and
the Prospectus as of the dates indicated and condition and results of operations
for the periods specified; except as otherwise stated in the Registration
Statement, said financial statements have been prepared in conformity with U.S.
generally accepted accounting principles ("GAAP") in all material respects
applied on a consistent basis throughout the periods involved; and the
supporting schedules included in the Registration Statement present fairly in
all material respects the information required to be stated therein. No other
financial statements or supporting schedules are required to be included in the
Registration Statement or Prospectus. The other financial and statistical
information and data relating to the Company and its consolidated subsidiaries
included in the Registration Statement and the Prospectus present fairly in all
material respects the information included therein and have been prepared on a
basis consistent with that of the financial statements included or incorporated
by reference in the Registration Statement and the Prospectus and the books and
records of the respective entities presented therein.
(r) Except as disclosed in the Registration Statement and
Prospectus, no holder of securities of the Company has any rights to the
registration of securities of the Company because of the filing of the
Registration Statement or otherwise in connection with the sale of the Shares
contemplated hereby, and any such rights so disclosed have been effectively
waived by the holders thereof.
(s) The Company is not, and upon consummation of the transactions
contemplated hereby, and at all times up to and including the application of net
proceeds as described in the Prospectus, will not be, subject to registration as
an "investment company" under the Investment Company Act of 1940.
(t) Any real property and buildings held under lease or sublease
by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and the Subsidiaries. Neither the Company nor any of the Subsidiaries
has received any notice of any claim adverse to their ownership of any real or
personal property or of any claim against the continued possession of any real
property, whether owned or held under lease or sublease by the Company or any of
the Subsidiaries.
(u) The Company and each of the Subsidiaries have accurately
prepared and timely filed all federal, state and other tax returns that are
required to be filed by each of them and have paid or made provision for the
payment of all taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes and all taxes which the
Company and each of the Subsidiaries are obligated to withhold from amounts
owing to employees, creditors and third parties, with respect to the periods
covered by such tax returns (whether or not such amounts are shown as due on any
tax return), except in any case where the failure to file any such return or to
make any such provision, individually or in the aggregate, would not have a
Material Adverse
8
Effect. No deficiency assessment with respect to a proposed adjustment of the
Company's or any of the Subsidiaries' federal, state, or other taxes is pending
or, to the best of the Company's knowledge, threatened. There is no tax lien,
whether imposed by any federal, state, or other taxing authority, outstanding
against the assets, properties or business of the Company or any of the
Subsidiaries.
(v) As of the date hereof and on the Closing Date, the Company
and its Subsidiaries expect to engage predominantly in traditional insurance and
reinsurance activities that involve substantial transfer of insurance or annuity
risks, and intend to operate in a manner that they will not (1) engage in
certain nontraditional insurance or reinsurance activities that do not involve a
sufficient amount of risk transfer or (2) maintain financial reserves in excess
of the reasonable needs of the insurance business of the Company and its
Subsidiaries, either of which would cause the insurance company exception to the
passive foreign investment company rules described in Section 1297 of the
Internal Revenue Code of 1986, as amended from time to time (the "Code") not to
apply to the Company or its Subsidiaries.
(w) The Ordinary Shares are registered pursuant to Section 12(b)
of the Exchange Act and the outstanding Ordinary Shares (including the Shares)
are listed on the New York Stock Exchange (the "NYSE"), and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Ordinary Shares under the Exchange Act or de-listing the
Ordinary Shares from the NYSE, nor has the Company received any notification
that the Commission or the NYSE is contemplating terminating such registration
or listing.
(x) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(y) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all respects with the requirements
of the Securities Act, the Exchange Act, the Rules and Regulations and the rules
and regulations of the Commission under the Exchange Act, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, did not and, at the Closing Date, will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(z) Except as disclosed in the Registration Statement and
Prospectus, the Company and the Subsidiaries have no (i) significant
deficiencies in the design or operation of internal controls which could
adversely affect their ability to record, process, summarize and report
financial data and have identified for Ernst & Young LLP any material weaknesses
in internal controls; (ii) instances of fraud, whether or not material, that
involve management or other employees who have a significant role
9
in their internal controls; or (iii) significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
March 31, 2003, including any corrective actions with regard to significant
deficiencies and material weaknesses.
(aa) No relationship, direct or indirect, exists between or among
any of the Company or any affiliate of the Company, on the one hand, and any
director, officer, stockholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by the Securities
Act, the Exchange Act or the Rules and Regulations to be described in the
Registration Statement or the Prospectus which is not so described and described
as required. There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement and the Prospectus. The Company has not,
in violation of Section 13(k) of the Exchange Act, directly or indirectly,
including through a Subsidiary (other than as permitted under such section for
depositary institutions), extended or maintained credit, arranged for the
extension of credit, or renewed an extension of credit, in the form of a
personal loan to or for any director or executive officer of the Company.
(bb) The audit committee of the Company's Board of Directors
complies with the current independence requirements of the NYSE, applicable to
the Company.
(cc) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person that would give rise to a valid claim against the Company
or any Underwriter for a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus or, to the Company's knowledge, any
arrangements, agreements, understandings, payments or issuance with respect to
the Company or any of its officers, directors, employees or Subsidiaries that
may affect the Underwriters' compensation as determined by the NASD.
(dd) Neither the Company, any Subsidiary nor, to the Company's
knowledge, any of its employees or agents has at any time during the last five
years (i) made any unlawful contribution to any candidate for foreign office, or
failed to disclose fully any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States of any jurisdiction
thereof.
(ee) There are no contracts or other documents (including,
without limitation, any voting agreement), which are required to be described in
the Prospectus or filed as exhibits to the Registration Statement or the
Prospectus by the
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Securities Act or by the Rules and Regulations and which have not been so
described or filed.
(ff) Neither the Company nor any of the Subsidiaries (i) is in
violation of its memorandum of association, articles of association, certificate
or articles of incorporation, charter or by-laws, (ii) is in default (and no
event has occurred which, with notice or lapse of time or both, would constitute
such a default) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which it is a party or by which it is bound
or to which any of its property or assets is subject or (iii) is in violation in
any respect of any statute or any judgment, decree, order, rule or regulation of
any court or governmental or regulatory agency or body having jurisdiction over
the Company or any of the Subsidiaries or any of their properties or assets,
except in the case of (iii), any violation or default that would not have a
Material Adverse Effect on the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and the
Subsidiaries taken as a whole.
(gg) Each of the Company and the Subsidiaries owns or possesses
adequate right to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark registrations,
copyrights, licenses, formulae, customer lists, and know-how and other
intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses as being conducted and
as described in the Registration Statement and Prospectus and have no reason to
believe that the conduct of their respective businesses will conflict with, and
have not received any notice of any claim of conflict with, any such right of
others, which claim, if the subject of an unfavorable decision, ruling or
judgment, could reasonably be expected to result in a Material Adverse Effect.
To the best of the Company's knowledge, all material technical information
developed by and belonging to the Company which has not been patented has been
kept confidential. Neither the Company nor any of its Subsidiaries has granted
or assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the current products and services of the Company
or those products and services described in the Registration Statement and
Prospectus.
(hh) No labor disturbance by the employees of the Company or any
of the Subsidiaries exists or, to the best of the Company's knowledge, is
imminent which might be expected to have a Material Adverse Effect.
(ii) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section 4975
of the Code, or "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or any
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of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of the
Company or any of its Subsidiaries which could have a Material Adverse Effect;
each employee benefit plan of the Company or any of its Subsidiaries is in
compliance in all material respects with applicable law; including ERISA and the
Code; the Company has not incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from any
"pension plan" (as defined in ERISA); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which could cause the loss of
such qualification.
(jj) The statistical and market-related data included in the
Prospectus are based on or derived from sources which are reliable and accurate.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the Underwriters and the Underwriters
severally agree to purchase from the Company, at a purchase price per share of
US$19.66, the number of Firm Shares set forth opposite the respective names of
the Underwriters in Schedule I hereto plus any additional number of Shares which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of Simpson Thacher
& Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 ("Underwriters'
Counsel") or at such other place as shall be agreed upon by the Lead Managers
and the Company, at 10:00 A.M., New York City time on the third or fourth
business day (as permitted under Rule 15c6-1 under the Exchange Act) (unless
postponed in accordance with the provisions of Section 9 hereof) following the
date of this Agreement, or such other time not later than ten business days
after such date as shall be agreed upon by the Lead Managers and the Company
(such time and date of payment and delivery being herein called the "Closing
Date").
(c) Payment for the Firm Shares shall be made to or upon the
order of the Company of the purchase price by wire transfer in Federal (same
day) funds to the Company upon delivery of certificates for the Firm Shares to
the Lead Managers through the facilities of The Depository Trust Company for the
respective accounts of the several Underwriters against receipt therefor signed
by the Lead Managers. Certificates for the Shares to be delivered to the Lead
Managers shall be registered in such name or names and shall be in such
denominations as the Lead Managers may request at least two business days before
the Closing Date. The Company will permit the Lead Managers
12
to examine and package such certificates for delivery at least one full business
day prior to the Closing Date.
(d) In addition, on the basis of the representations, warranties,
covenants and agreements contained herein, but subject to the terms and
conditions set forth herein, the Company hereby grants to the Underwriters the
option to purchase up to 1,200,000 Additional Shares at the same purchase price
per share to be paid by the Underwriters to the Company for the Firm Shares as
set forth in this Section 2, for the sole purpose of covering over-allotments in
the sale of Firm Shares by the Underwriters. This option may be exercised at any
time and from time to time, in whole or in part on one or more occasions, on or
before the thirtieth day following the date of the Prospectus, by written notice
by the Lead Managers to the Company. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised and the
date and time, as reasonably determined by the Lead Managers, when the
Additional Shares are to be delivered (such date and time being herein sometimes
referred to as the "Additional Closing Date"); provided, however, that the
Additional Closing Date shall not be earlier than the Closing Date or earlier
than the second full business day after the date on which the option shall have
been exercised nor later than the eighth full business day after the date on
which the option shall have been exercised (unless such time and date are
postponed in accordance with the provisions of Section 9 hereof). Certificates
for the Additional Shares shall be registered in such name or names and in such
authorized denominations as the Lead Managers may request in writing at least
two full business days prior to the Additional Closing Date. The Company will
permit the Lead Managers to examine and package such certificates for delivery
at least one full business day prior to the Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter shall be
the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 9 hereof) bears to the total number of Firm Shares, subject, however,
to such adjustments to eliminate any fractional shares as the Lead Managers in
their sole discretion shall make.
Payment for the Additional Shares shall be made to or upon the order of
the Company of the purchase price by wire transfer in Federal (same day) funds
to the Company at the offices of Underwriters' Counsel, or such other location
as may be mutually acceptable upon delivery of the certificates for the
Additional Shares to you for the respective accounts of the Underwriters.
3. Offering. Upon authorization of the release of the Firm Shares by
the Lead Managers, the Underwriters propose to offer the Shares for sale to the
public upon the terms and conditions set forth in the Prospectus.
13
4. Covenants of the Company. The Company covenants and agrees with
each of the Underwriters that:
(a) The Registration Statement and any amendments thereto have
become effective, and the Company will file the Prospectus pursuant to Rule
424(b) within the prescribed time period and will provide evidence satisfactory
to you of such timely filing.
The Company will notify you immediately (and, if requested by the Lead
Managers, will confirm such notice in writing) (i) when any post-effective
Amendment to the Registration Statement becomes effective, (ii) of any request
by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information, (iii) of the
Company's intention to file or prepare any amendments to the Registration
Statement (including pursuant to rule 462(b)), the term sheet or any supplement,
revision or amendment to the Registration Statement or the Prospectus, (iv) of
the mailing or the delivery to the Commission for filing of any amendment of or
supplement to the Registration Statement or the Prospectus, (v) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of the
initiation, or the threatening, of any proceedings therefor, it being understood
that the Company shall make every effort to avoid the issuance of any such stop
order, (vi) of the receipt of any comments from the Commission, and (vii) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for that purpose. If the Commission shall propose
or enter a stop order at any time, the Company will make every reasonable effort
to prevent the issuance of any such stop order and, if issued, to obtain the
lifting of such order as soon as possible. The Company will not file any
amendment to the Registration Statement or any amendment of or supplement to the
Prospectus (including the prospectus required to be filed pursuant to Rule
424(b)) that differs from the Prospectus on file at the time of the
effectiveness of the Registration Statement before or after the effective date
of the Registration Statement, or file any document under the Exchange Act if
such document would be deemed to be incorporated by reference into the
Prospectus to which you shall object in writing after being timely furnished in
advance a copy thereof. The Company will provide the Lead Managers with copies
of all such amendments, filings and other documents a sufficient time prior to
any filing or other publication thereof to permit the Lead Managers a reasonable
opportunity to review and comment thereon.
(b) The Company shall comply with the Securities Act and the
Exchange Act to permit completion of the distribution as contemplated in this
Agreement, Registration Statement and Prospectus. If at any time when a
prospectus relating to the Shares is required to be delivered under the
Securities Act or the Exchange Act in connection with the sales of Shares, any
event shall have occurred as a result of which the Prospectus as then amended or
supplemented would, in the judgment of the
14
Underwriters or the Company, include an 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, in the light of the circumstances existing at the
time of delivery to the purchaser, not misleading, or if it shall be necessary
at any time to amend or supplement the Prospectus or Registration Statement to
comply with the Securities Act, the Exchange Act or the Rules and Regulations,
or to file under the Exchange Act so as to comply therewith any document
incorporated by reference in the Registration Statement or the Prospectus or in
any amendment thereof or supplement thereto, the Company will notify you
promptly and prepare and file with the Commission, subject to the second
paragraph of Section 4(a) hereof, an appropriate amendment or supplement (in
form and substance satisfactory to you) which will correct such statement or
omission or which will effect such compliance and will use its best efforts to
have any amendment to the Registration Statement declared effective as soon as
possible.
(c) The Company will promptly deliver to each of the Underwriters
and Underwriters' Counsel a signed copy of the Registration Statement, including
all consents and exhibits filed therewith and all documents incorporated by
reference therein and all amendments thereto, and the Company will promptly
deliver to each of the Underwriters such number of copies of any Preliminary
Prospectus, the Prospectus, the Registration Statement, and all amendments of
and supplements to such documents, if any, and all documents incorporated by
reference in the Registration Statement and Prospectus or any amendment thereof
or supplement thereto, as you may reasonably request. Prior to 10:00 A.M., New
York time, on the business day next succeeding the date of this Agreement and
from time to time thereafter the Company will furnish the Underwriters with
copies of the Prospectus in New York City in such quantities as you may
reasonably request.
(d) The Company consents to the use and delivery of the
Preliminary Prospectus by the Underwriters in accordance with Rule 430 and
Section 5(b) of the Securities Act. The Company shall also furnish to each of
the Underwriters copies of the Prospectus as requested by any of the
Underwriters.
(e) The Company will use its best efforts, in cooperation with
you, at or prior to the time of effectiveness of the Registration Statement, to
qualify the Shares for offering and sale under the securities laws relating to
the offering or sale of the Shares of such jurisdictions as you may designate
and to maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(f) The Company will make generally available to its security
holders and to the Underwriters as soon as practicable, but in any event not
later than fifteen months after the end of the Company's fiscal quarter in which
the effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act) falls, an
15
earnings statement of the Company and the Subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158).
(g) During the period of 90 days from the date of the Prospectus,
the Company will not, directly or indirectly, without the Lead Managers' prior
written consent, issue, sell, offer or agree to sell, grant any option for the
sale of, pledge, make any short sale or maintain any short position, establish
or maintain a "put equivalent position" (within the meaning of Rule 16-a-1(h)
under the Exchange Act ), enter into any swap, derivative transaction or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Ordinary Shares (whether any such transaction
is to be settled by delivery of Ordinary Shares, other securities, cash or other
consideration) or otherwise dispose of, any Ordinary Shares (or any securities
convertible into, exercisable for or exchangeable for Ordinary Shares) or
interest therein of the Company or of any of the Subsidiaries, and the Company
will obtain the undertaking of each of its officers and directors and such of
its shareholders as have been heretofore designated by you and listed on
Schedule II attached hereto not to engage in any of the aforementioned
transactions on their own behalf, other than the Company's sale of Shares
hereunder and the Company's issuance of Ordinary Shares upon (i) the exercise of
warrants outstanding on the date hereof; (ii) the exercise of currently
outstanding options; and (iii) the grant and exercise of options under, or the
issuance and sale of shares pursuant to, employee stock option plans in effect
on the date hereof. The Company will not without the Lead Managers' prior
written consent file a registration statement under the Securities Act in
connection with any transaction by the Company or any person that is prohibited
pursuant to the foregoing, except for registration statements (x) on Form S-8
relating to employee benefit plans, (y) on Form S-4 relating to corporate
reorganizations or other transactions under Rule 145 or (z) required to be filed
pursuant to a registration rights agreement in effect prior to the date hereof.
(h) During the period of three years from the effective date of
the Registration Statement, the Company will furnish to you copies of all
reports or other communications (financial or other) furnished to security
holders (except to the extent available through the Commission's EDGAR System)
or from time to time publicly disseminated, and to deliver to you (i) as soon as
they are available, copies of any reports and financial statements and proxy or
information statements furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company is listed;
and (ii) such additional information concerning the business and financial
condition of the Company as you may from time to time reasonably request (such
financial information to be on a consolidated basis to the extent the accounts
of the Company and the Subsidiaries are consolidated in reports furnished to its
security holders generally or to the Commission).
16
(i) The Company will apply the net proceeds it receives from the
sale of the Shares as set forth under the caption "Use of Proceeds" in the
Prospectus.
(j) The Company will use its best efforts to list the Shares on
the NYSE.
(k) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act, will file
all documents required to be filed with the Commission pursuant to Section 13,
14 or 15 of the Exchange Act within the time periods required by the Exchange
Act and the rules and regulations thereunder.
(l) The Company will not take directly or indirectly, any action
which constitutes or is designed to cause or result in, or which could
reasonably be expected to constitute, cause or result in, the stabilization or
manipulation of the price of any security to facilitate the sale or resale of
the Shares.
5. Payment of Expenses. Whether or not the transactions contemplated
in this Agreement, the Registration Statement and the Prospectus are consummated
or this Agreement is terminated, the Company hereby agrees to pay all costs and
expenses incident to the performance of the obligations of the Company
hereunder, including the following: (i) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the registration of the
Shares under the Securities Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the cost of duplicating and binding any Agreement among Underwriters, this
Agreement, the blue sky memoranda, closing documents (including any compilations
thereof) and any other documents in connection with the offering, purchase, sale
and delivery of the Shares; (iii) all expenses in connection with the
qualification of the Shares for offering and sale under state or foreign
securities or blue sky laws as provided in Section 4(e) hereof, including the
fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the blue sky survey; (iv) all fees and
expenses in connection with listing the Shares on the NYSE; (v) all travel
expenses of the Company's officers and employees and any other expense of the
Company incurred in connection with attending or hosting meetings with
prospective purchasers of the Shares; (vi) any stock transfer taxes incurred in
connection with this Agreement or the Offering; and (vii) the filing fees
incident to, and the reasonable fees and disbursements of counsel for the
Underwriters in connection with, securing any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the Shares.
The Company also will pay or cause to be paid: (i) the cost of preparing stock
certificates; (ii) the cost and charges of any transfer agent or registrar; and
(iii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided
17
for in this Section 5. It is understood, however, that except as provided in
this Section, and Sections 7, 8 and 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, stock
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6 "Closing Date" shall refer to the
Closing Date for the Firm Shares and any Additional Closing Date, if different,
for the Additional Shares), to the absence from any certificates, opinions,
written statements or letters furnished to you or to Underwriters' Counsel
pursuant to this Section 6 of any misstatement or omission, to the performance
by the Company of its obligations hereunder, and to each of the following
additional terms and conditions:
(a) If a post-effective amendment to the Registration Statement
is required to be filed under the Securities Act, such post-effective amendment
shall have become effective and all necessary approvals from the NYSE shall have
been received not later than 5:30 P.M., New York time, on the date of this
Agreement or at such later time and date as shall have been consented to in
writing by you; the Prospectus containing information relating to the
description of the Shares and the method of distribution and similar matters
shall have been filed with the Commission pursuant to Rule 424(b) within the
applicable time period; and, at or prior to the Closing Date no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereof shall have been issued and no proceedings therefor shall have
been initiated or threatened by the Commission.
(b) At the Closing Date, you shall have received the favorable
written opinion of (i) LeBoeuf, Lamb, Greene & MacRae, L.L.P., United States
counsel for the Company, (ii) Paul Goldean, Esq., General Counsel of the Company
and (iii) Maples and Calder, Cayman Islands counsel for the Company, each dated
the Closing Date and addressed to the Underwriters in the forms attached hereto
as Annexes I(A), I(B) and II, respectively.
(c) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory in
form and substance to the Lead Managers and to Underwriters' Counsel, and the
Underwriters shall have received from said Underwriters' Counsel a favorable
opinion, dated as of the Closing Date with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as you may require, and the Company shall have furnished to
Underwriters' Counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
18
(d) At the Closing Date, you shall have received a certificate of
the Chief Executive Officer and Chief Financial Officer of the Company, dated
the Closing Date, to the effect that (i) the condition set forth in subsection
(a) of this Section 6 has been satisfied, (ii) as of the date hereof and as of
the Closing Date the representations and warranties of the Company set forth in
Section 1 hereof are accurate, (iii) as of the Closing Date all agreements,
conditions and obligations of the Company to be performed or complied with
hereunder on or prior thereto have been duly performed or complied with, (iv)
except (A) as disclosed in the Registration Statement and Prospectus and (B) for
such losses or interferences as would not result, individually or in the
aggregate, in a Material Adverse Effect, the Company and the Subsidiaries have
not 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) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus there has
not been any Material Adverse Change in the capital stock or Ordinary Shares of
the Company or any of the Subsidiaries or any change, or any development
involving a prospective change, in the business, prospects, properties,
operations, condition (financial or otherwise) or results of operations of the
Company and the Subsidiaries taken as a whole, except in each case as described
in or contemplated by the Prospectus.
(e) At the time this Agreement is executed and at the Closing
Date, you shall have received a comfort letter, from Ernst & Young LLP,
independent public accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date addressed to the Underwriters
and in form and substance satisfactory to the Underwriters and Underwriters'
counsel.
(f) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock, Ordinary Shares or long-term debt of the Company or any of the
Subsidiaries or any other change (whether or not arising from transactions in
the ordinary course of business), or any development involving a prospective
change, in or affecting the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company and the
Subsidiaries taken as a whole, including, without limitation, the occurrence of
a fire, flood, explosion or other calamity at any of the properties owned or
leased by the Company or any of its Subsidiaries, the effect of which, in any
such case described above, is, in the judgment of the Underwriters, so material
and adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the terms and in the manner
contemplated in the Prospectus (exclusive of any supplement).
19
(g) You shall have received a duly executed lock-up agreement
from each person who is a director or officer of the Company and each
shareholder as shall have been heretofore designated by you and listed on
Schedule II hereto substantially in the form attached hereto as Annex III.
(h) At the Closing Date, the Shares shall have been approved for
listing on the NYSE.
(i) The Company shall have complied with the provisions of
Section 4(c) hereof with respect to the furnishing of prospectuses.
(j) The Company shall have furnished the Underwriters and
Underwriters' Counsel with such other certificates, opinions or other documents
as they may have reasonably requested.
(k) None of Company's Insurance Subsidiaries shall have been
downgraded by any of the Rating Agencies nor have been put on credit watch with
negative implications (or similar action) by any of the Rating Agencies.
(l) At the Closing Date, the National Association of Securities
Dealers, Inc. shall have confirmed that it has not raised any objection with
respect to the fairness and reasonableness of the underwriting terms and
arrangements.
(m) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would, as of the
Closing Date, prevent the issuance or sale of the Shares; and no injunction or
order of any federal, state or foreign court shall have been issued that would,
as of the Closing Date, prevent the issuance or sale of the Shares.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the Lead
Managers or to Underwriters' Counsel pursuant to this Section 6 shall not be in
all material respects reasonably satisfactory in form and substance to the Lead
Managers and to Underwriters' Counsel, all obligations of the Underwriters
hereunder may be cancelled by the Lead Managers at, or at any time prior to, the
Closing Date and the obligations of the Underwriters to purchase the Additional
Shares may be cancelled by the Lead Managers at, or at any time prior to, the
Additional Closing Date. Notice of such cancellation shall be given to the
Company in writing or by telephone. Any such telephone notice shall be confirmed
promptly thereafter in writing.
20
7. Indemnification.
(a) The Company shall indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses whatsoever
as incurred (including but not limited to reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the Shares, as
originally filed or any amendment thereof, or any related Preliminary Prospectus
or the Prospectus, or in any supplement thereto or amendment thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the Lead
Managers expressly for use therein. The parties agree that such information
provided by or on behalf of any Underwriter through the Lead Managers consists
solely of the material referred to in the last sentence of Section 1(b) hereof;
provided, further, that the foregoing indemnity agreement with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter who
failed to deliver a Prospectus (as then amended or supplemented, provided by the
Company to the several Underwriters in the requisite quantity and on a timely
basis to permit proper delivery on or prior to the Closing Date) to the person
asserting any losses, claims, damages and liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading, if such material misstatement or omission or alleged
material misstatement or omission was cured, as determined by a court of
competent jurisdiction in a decision not subject to further appeal, in such
Prospectus and such Prospectus was required by law to be delivered at or prior
to the written confirmation of sale to such person. This indemnity agreement
will be in addition to any liability which the Company may otherwise have,
including but not limited to other liability under this Agreement.
(b) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, and
each other person, if any, who controls the Company within the meaning of
Section 15 of the
21
Securities Act or Section 20 of the Exchange Act, against any losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to reasonable attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related Preliminary Prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the Lead
Managers specifically for use therein; provided, however, that in no case shall
any Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares to be purchased by such
Underwriter hereunder. The parties agree that such information provided by or on
behalf of any Underwriter through the Lead Managers consists solely of the
material referred to in the last sentence of Section 1(b) hereof. This indemnity
will be in addition to any liability which any Underwriter may otherwise have,
including but not limited to other liability under this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of any claims or the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the claim or the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve the indemnifying party from any liability which it may have under
this Section 7 to the extent that it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability that such
indemnifying party may have otherwise than on account of the indemnity agreement
hereunder). In case any such claim or action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate, at its own expense in the
defense of such action, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided however, that
counsel to the indemnifying party shall not (except with the written consent of
the indemnified party) also be counsel to the indemnified party. Notwithstanding
the foregoing, the indemnified party or parties shall have the right to
22
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties unless
(i) the employment of such counsel shall have been authorized in writing by one
of the indemnifying parties in connection with the defense of such action, (ii)
the indemnifying parties shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of commencement of
the action, (iii) the indemnifying party does not diligently defend the action
after assumption of the defense, or (iv) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior written
consent of the indemnified parties, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 7 or Section 8 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and
(ii) does not include a statement as to or an admission of fault, culpability or
any failure to act, by or on behalf of the indemnified party, and (y) the
indemnifying party confirms in writing its indemnification obligations hereunder
with respect to such settlement, compromise or judgment.
8. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Underwriters, who may also be liable
for contribution, including persons who control the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, officers
of the Company who signed the Registration Statement and directors of the
Company) as incurred to which the Company and one or more of the Underwriters
may be subject, in such proportions as are appropriate to reflect the relative
benefits received by the Company and the Underwriters from the Offering or, if
such allocation is not permitted by applicable law, in such proportions as are
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or
23
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the Offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company bears to (y) the underwriting discount or commissions received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault of each of the Company and of the
Underwriters 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 and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 8 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any judicial, regulatory or other legal or
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 8, (i) no Underwriter
shall be required to contribute any amount in excess of the amount by which the
discounts and commissions applicable to the Shares underwritten by it and
distributed to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of the immediately preceding sentence. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 8 or
otherwise. The obligations of the Underwriters to contribute pursuant to this
24
Section 8 are several in proportion to the respective number of Shares to be
purchased by each of the Underwriters hereunder and not joint.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
do not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, the Firm Shares or Additional Shares to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
the respective proportions which the numbers of Firm Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of Firm
Shares set forth opposite the names of the non-defaulting Underwriters, subject,
however, to such adjustments to eliminate fractional shares as the Lead Managers
in their sole discretion shall make.
(b) In the event that such default relates to more than 10% of
the Firm Shares or Additional Shares, as the case may be, the Lead Managers may
in their discretion arrange for themselves or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to
purchase such Firm Shares or Additional Shares, as the case may be, to which
such default relates on the terms contained herein. In the event that within
five calendar days after such a default the Lead Managers do not arrange for the
purchase of the Firm Shares or Additional Shares, as the case may be, to which
such default relates as provided in this Section 9, this Agreement or, in the
case of a default with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Shares shall
thereupon terminate, without liability on the part of the Company with respect
thereto (except in each case as provided in Sections 5, 7, 8, 10 and 11(d)) or
the Underwriters, but nothing in this Agreement shall relieve a defaulting
Underwriter or Underwriters of its or their liability, if any, to the other
Underwriters and the Company for damages occasioned by its or their default
hereunder.
(c) In the event that the Firm Shares or Additional Shares to
which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
the Lead Managers or the Company shall have the right to postpone the Closing
Date or Additional Closing Date, as the case may be for a period, not exceeding
five business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party
25
substituted under this Section 9 with like effect as if it had originally been a
party to this Agreement with respect to such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Underwriters, and the Company
contained in this Agreement or in certificates of officers of the Company or any
Subsidiary submitted hereto or thereto, including the agreements contained in
Section 5, the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8, 10, 11(d), 14 and 15 hereof shall survive the termination of this
Agreement, including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the execution of
this Agreement. If either the public offering price or the purchase price per
Share has not been agreed upon prior to 5:00 P.M., New York City time, on the
fifth full business day after this Agreement shall have become effective, this
Agreement shall thereupon terminate without liability to the Company or the
Underwriters except as herein expressly provided.
(b) The Lead Managers shall have the right to terminate this
Agreement at any time prior to the Closing Date or to terminate the obligations
of the Underwriters to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (A) any domestic or
international event or act or occurrence has materially disrupted, or in the
Lead Managers' opinion will in the immediate future materially disrupt, the
market for the Company's securities or securities in general; or (B) if trading
on the NYSE, the Nasdaq National Market (the "Nasdaq") or the American Stock
Exchange shall have been suspended or been made subject to material limitation,
or minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required, on the NYSE, the
Nasdaq or the American Stock Exchange by the NYSE, the Nasdaq or the American
Stock Exchange or by order of the Commission or any other governmental authority
having jurisdiction; or (C) if a banking moratorium has been declared by any
state or federal authority or if any material disruption in commercial banking
or securities settlement or clearance services shall have occurred; or (D) any
downgrading shall have occurred in the Company's corporate credit rating or the
rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization" as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act or if any such organization
shall have publicly announced that it has under surveillance or
26
review, with possible negative implications, its rating of any of the Company's
debt securities; or (E) (i) if there shall have occurred any outbreak or
escalation of hostilities or acts of terrorism involving the United States or
there is a declaration of a national emergency or war by the United States or
(ii) if there shall have been any other calamity or crisis or any change in
political, financial or economic conditions if the effect of any such event in
(A) or (E) in the Lead Managers' judgment makes it impracticable or inadvisable
to proceed with the offering, sale and delivery of the Firm Shares or the
Additional Shares, as the case may be, on the terms and in the manner
contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall
be in writing.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to Section 9(b) or pursuant to
Section 11(a)), or if the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth herein is not satisfied or because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or comply with any
provision hereof, the Company will reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel),
incurred by the Underwriters in connection herewith. If this Agreement shall be
terminated pursuant to Section 6 (other than pursuant to Section 6(l)) or 11(b)
hereof, then no party shall have any liability hereunder except for the
Company's obligation to pay all out-of-pocket expenses of the Underwriters
(including the fees and expenses of their counsel) incurred in connection with
this Agreement.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or
faxed and confirmed in writing, to such Underwriter c/o Bear, Stearns & Co.
Inc., 383 Madison Avenue, New York, New York 10179, Attention: Stephen Parish,
Senior Managing Director, Equity Capital Markets and to UBS Securities LLC, 299
Park Avenue, New York, NY 10171, New York, New York, Attention: Michelle Bereaux
with a copy to Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York,
New York, 10017, Attention: Gary I. Horowitz, Esq.
(b) if sent to the Company, shall be mailed, delivered, or faxed
and confirmed in writing to the Company at P.O. Box HM 2939, Crown House, Third
Floor, 4 Par-la-Ville Road, Hamilton HM08, Bermuda, Attention: Paul Goldean,
Esq., with a copy to LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th
Street, New York, New York, 10019, Attention: Stephen G. Rooney, Esq.;
provided, however, that any notice to an Underwriter pursuant to Section 7 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set
27
forth in its acceptance facsimile to the Lead Managers, which address will be
supplied to any other party hereto by the Lead Managers upon request. Any such
statements, requests, notices or agreements shall take effect at the time of
receipt thereof.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters and the Company and the controlling
persons, directors, officers, employees and agents referred to in Sections 7 and
8 hereof, and their respective successors and assigns, and no other person shall
have or be construed to have any legal or equitable right, remedy or claim under
or in respect of or by virtue of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and their
respective successors, and said controlling persons, and officers and directors
and their heirs and legal representatives, and it is not for the benefit of any
other person, firm or corporation. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Shares from any of the
Underwriters.
14. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
15. Submission to Jurisdiction and Service of Process. (a) The Company
irrevocably (a) submits to the jurisdiction of any court of the State of New
York in New York County or the United States District Court for the Southern
District of the State of New York for the purpose of any suit, action, or other
proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus (each, a "Proceeding"), (b) agrees that all claims in respect of any
Proceeding may be heard and determined in any such court, (c) waives, to the
fullest extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, (d) agrees not to commence any
Proceeding other than in such courts, and (e) waives, to the fullest extent
permitted by law, any claim that such Proceeding is brought in an inconvenient
forum.
(b) The Company agrees that service of all writs, process and
summonses in any suit, action or proceeding brought in connection with this
Agreement against the Company in any court of the State of New York or any
United States Federal court, in each case, sitting in the Borough of Manhattan,
City and State of New York, may be made upon CT Corporation System at 111 Eighth
Avenue, New York, New York 10011, whom the Company irrevocably appoints as its
authorized agent for service of process. The Company represents and warrants
that CT Corporation System has agreed to act as the Company's agent for service
of process. The Company agrees that such appointment shall be irrevocable until
the irrevocable appointment by the Company of a successor in The City of New
York as its authorized agent for such purpose and the acceptance of such
appointment by such successor. The Company further agrees to take any and all
action, including the filing of any and all documents and instruments that may
be necessary to continue such appointment in full force and effect as aforesaid.
If CT
28
Corporation System shall cease to act as the agent for service of process for
the Company, the Company shall appoint without delay, another such agent and
provide prompt written notice to Bear, Stearns & Co. Inc. of such appointment.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be delivered by facsimile and shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
18. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
[signature page follows]
29
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us. It
is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
By: /s/ Paul Goldean
---------------------------------
Name: Paul Goldean
Title: SVP, General Counsel
BEAR, STEARNS & CO. INC.
By:/s/ Stephen Parish
--------------------------------------
Name: Stephen Parish
Title:
UBS SECURITIES LLC
By:/s/ Michelle Bereaux
--------------------------------------
Name: Michelle Bereaux
Title: Managing Director
By:/s/ Ankur Kamalia
--------------------------------------
Name: Ankur Kamalia
Title: Director
30
Accepted as of the date first above written
A.G. EDWARDS & SONS, INC.
KEEFE, BRUYETTE & WOODS, INC.
PUTNAM LOVELL NBF SECURITIES INC.
By: BEAR, STEARNS & CO. INC.
By:/s/ Stephen Parish
--------------------------------------
Name: Stephen Parish
Title:
UBS SECURITIES LLC
By:/s/ Michelle Bereaux
--------------------------------------
Name: Michelle Bereaux
Title: Managing Director
By:/s/ Ankur Kamalia
--------------------------------------
Name: Ankur Kamalia
Title: Director
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
31
SCHEDULE I
NAME OF UNDERWRITER NUMBER OF FIRM SHARES
TO BE PURCHASED
Bear, Stearns & Co. Inc. ................ 3,209,251
UBS Securities LLC ...................... 2,625,750
A.G. Edwards & Sons, Inc................. 648,333
Keefe, Bruyette & Woods, Inc............. 648,333
Putnam Lovell NBF Securities Inc. ....... 648,333
Fox-Pitt, Kelton Inc..................... 110,000
Sandler O'Neill & Partners, L.P.......... 110,000
Total:......................... 8,000,000
I-1
SCHEDULE II
NAMES OF STOCKHOLDERS SUBJECT TO THE LOCK-UP PROVISION
Pacific Life Insurance Company
Michael Austin
G. William Caulfeild-Browne
Robert M. Chmely
Michael C. French
Paul Goldean
David Huntley
Lord Norman Lamont
Thomas A. McAvity, Jr.
J. Clay Moye
Elizabeth A. Murphy
Hazel R. O'Leary
Glenn S. Schafer
Oscar R. Scofield
Khanh T. Tran
Clifford J. Wagner
Scott E. Willkomm
II-1
SCHEDULE III
LIST OF SUBSIDIARIES
Scottish Annuity & Life Insurance Company (Cayman) Ltd.
Scottish Annuity & Life Holdings (Bermuda) Limited
Scottish Annuity & Life Insurance Company (Bermuda) Limited
Scottish Holdings (Barbados), Ltd.
Scottish Holdings, Inc.
Scottish Annuity & Life International Insurance Company (Bermuda) Ltd.
Scottish Re (U.S.), Inc.
Scottish Re Intermediaries (Canada) Inc.
Scottish Re (Dublin) Limited
Scottish Solutions LLC
Tartan Wealth Management, Inc.
The Scottish Annuity Company (Cayman) Ltd.
World-Wide Holdings Limited
World-Wide Reassurance Company Limited
World-Wide Corporate Capital Limited
World-Wide Insurance PCC Limited
III-1
ANNEX I
Form of Opinion of Company's U.S. Counsel
(i) Scottish Re (U.S.), Inc., a Delaware corporation (the "Delaware
Subsidiary"), is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation with all requisite
corporate power to own its properties and conduct its business as
described in the Registration Statement and the Prospectus.
(ii) The Ordinary Shares currently outstanding are listed, and the Shares to
be sold under the Underwriting Agreement to the Underwriters have been
approved for listing, on the NYSE, subject to notice of issuance.
(iii) The issuance and sale of the Shares by the Company, the execution,
delivery, and performance of the Underwriting Agreement, compliance by
the Company with all provisions of the Underwriting Agreement and the
consummation of the transactions contemplated hereby by the Company do
not and will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default (or an event which with notice
or lapse of time, or both, would constitute a default) under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of the Subsidiaries
pursuant to, any agreement or instrument that is expressed to be
governed by New York law and filed (or incorporated by reference) as an
exhibit to the Registration Statement.
(iv) No consent, approval, authorization, order, registration, filing,
qualification, license or permit pursuant to U.S. Federal law, New York
law, the Delaware General Corporation Law or the Delaware Insurance Code
with any U.S. Federal, New York or Delaware court or any U.S. Federal,
New York or Delaware public, governmental, or regulatory agency or body
having jurisdiction over the Company or any of the Subsidiaries or any
of their respective properties or assets is required for the issuance,
sale and delivery of the Shares, the execution, delivery and performance
of the Underwriting Agreement or the consummation of the transactions
contemplated hereby, except for (1) such as may be required under state
securities or Blue Sky or insurance securities laws in connection with
the purchase and distribution of the Shares by the Underwriters (as to
which such counsel need express no opinion), (2) such as have been made
or obtained under the Securities Act and (3) such as are required by the
National Association of Securities Dealers, Inc. (as to which such
counsel need express no opinion).
(v) The Registration Statement and the Prospectus and any amendments thereof
or supplements thereto (other than the financial statements and
schedules and other financial data included or incorporated by reference
therein, as to which no opinion need be rendered) comply as to form in
all material respects with the
requirements of the Securities Act and the Rules and Regulations. To our
actual knowledge, without due inquiry other than of the attorneys at
this firm who have been involved in the preparation of the Registration
Statement, all documents required by the Rules and Regulations to be
filed in connection with, incorporated by reference, or described in the
Registration Statement have been so filed, incorporated by reference or
described. The documents filed under the Exchange Act and incorporated
by reference in the Registration Statement and the Prospectus or any
amendment thereof or supplement thereto (other than the financial
statements and schedules and other financial data included or
incorporated by reference therein, as to which no opinion need be
rendered) when they were filed with the Commission (or at the time they
were amended, if applicable) complied as to form in all material
respects with the Exchange Act and the Rules and Regulations of the
Commission thereunder.
(vi) The statements in the Prospectus under the captions (A) "Risks Related
to Taxation - Certain tax risks may affect our business", (B) "Risks
Related to Taxation - We may be subject to U.S. federal income
taxation", (C) "Risks Related to Taxation - U.S. persons who own our
ordinary shares may be subject to U.S. federal income taxation on our
undistributed earnings and may recognize ordinary income upon
disposition of our ordinary shares", (D) "Risks Related to Taxation -
U.S. tax-exempt organizations who own our ordinary shares may recognize
unrelated business taxable income", (E) "Risks Related to Taxation -
Change in U.S. tax laws may be retroactive and could subject us and/or
U.S. persons who own our ordinary shares to U.S. income taxation on our
undistributed earnings", (F) the first three paragraphs of "Tax
Matters", (G) "Tax Matters - Taxation of Scottish Holdings and its
Subsidiaries - United States" and (H) "Tax Matters - Taxation of
Shareholders - United States - Taxation of U.S. Shareholders", insofar
as they purport to constitute summaries of matters of United States
federal tax law and regulations or legal conclusions with respect
thereto, constitute accurate summaries of the matters described therein
in all material respects.
(vii) The statements in the Prospectus under the captions "Risks Related To
This Offering - Our Articles of Association and applicable insurance
laws make it difficult to effect a change of control; a large
shareholder may have significant influence over potential change in
control transactions" and "Risks Related To This Offering - Investors
may have difficulties in suing or enforcing judgments against us in the
United States", insofar as such statements constitute a summary of the
U.S. Federal or Delaware legal matters referred to therein relating to
the Delaware General Corporation Law or the Delaware Insurance Code,
fairly present the information called for with respect to such legal
matters.
(viii) The statements in the Company's annual report on Form 10-K, incorporated
by reference into the Prospectus, under the heading "Business -
Regulation" (other than statements appearing under the subcaptions,
"Bermuda", "Cayman Islands", "Ireland", "United Kingdom", "Luxembourg"
and "New
Jurisdictions"), insofar as such statements constitute a summary of the
U.S. Federal or Delaware legal matters referred to therein relating to
the Delaware General Corporation Law or the Delaware Insurance Code,
fairly present the information called for with respect to such legal
matters.
(ix) The Company is not and, after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in
the Prospectus and the Registration Statement, will not be, an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(x) The Registration Statement is effective under the Securities Act, and,
to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefor have been
initiated or threatened by the Commission. All filings required by Rule
424(b) of the Rules and Regulations with respect to the Registration
Statement have been made.
In addition, such opinion shall also contain a statement that such counsel has
participated in conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company and the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, no facts have come to the
attention of such counsel which would lead such counsel to believe that either
the Registration Statement, at the time it became effective, or in the event of
any amendment thereof made prior to the Closing Date, as of the date of such
amendment, contained or incorporated by reference any untrue statement of a
material fact 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 (including the documents incorporated by reference therein), as of
its date (or in the event of any amendment thereof or supplement thereto made
prior to the Closing Date as of the date of such amendment or supplement) and as
of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and schedules and other
financial data included or incorporated by reference therein).
ANNEX I(B)
Form of Opinion of Company's General Counsel
(i) Scottish Re (U.S.), Inc., a Delaware corporation (the "Delaware
Subsidiary"), has been duly organized and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation with all requisite corporate power and other necessary
authority to own its properties and conduct its business as described in
the Prospectus.
(ii) All of the issued shares of the Delaware Subsidiary have been duly and
validly authorized and issued and are fully paid and non-assessable.
(iii) The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company.
(iv) To the best of such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
with any U.S. Federal or any Delaware governmental agency or body acting
pursuant to the Delaware General Corporation Law or Delaware Insurance
Code to which the Company or any of the Subsidiaries is a party or of
which any property of the Company or any of the Subsidiaries is the
subject which, if determined adversely to the Company or any of the
Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(v) The issuance and sale of the Shares by the Company, the execution,
delivery, and performance of the Underwriting Agreement, compliance by
the Company with all provisions of the Underwriting Agreement and the
consummation of the transactions contemplated hereby by the Company do
not and will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default (or an event which with notice
or lapse of time, or both, would constitute a default) under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of the Subsidiaries
pursuant to, any agreement or instrument filed (or incorporated by
reference) as an exhibit to the Registration Statement.
(vi) No consent, approval, authorization, order, registration, filing,
qualification, license or permit pursuant to U.S. Federal law, the
Delaware General Corporation Law or the Delaware Insurance Code with any
U.S. Federal or state court or any U.S. Federal or state public,
governmental, or regulatory agency or body having jurisdiction over the
Company or any of the Subsidiaries or any of their respective properties
or assets is required for the issuance, sale and delivery of the Shares,
the execution, delivery and performance of the Underwriting Agreement or
the consummation of the transactions contemplated
hereby, except for (1) such as may be required under state securities or
Blue Sky or insurance securities laws in connection with the purchase
and distribution of the Shares by the Underwriters (as to which such
counsel need express no opinion), (2) such as have been made or obtained
under the Securities Act and (3) such as are required by the National
Association of Securities Dealers, Inc. (as to which such counsel need
express no opinion).
(vii) The Delaware Subsidiary holds such Insurance Licenses, certificates and
permits from governmental authorities which are necessary to the conduct
of its business as described in the Registration Statement and
Prospectus; to the best knowledge of such counsel, there is no pending
or threatened action, suit, proceeding or threatened action, suit,
proceeding or investigation that could reasonably be expected to result
in the revocation, termination or suspension of any Insurance License;
and to the knowledge of such counsel, no Delaware insurance regulatory
agency or body has issued, or commenced any proceeding for the issuance
of, any order or decree impairing, restricting or prohibiting the
payment of dividends by the Delaware Subsidiary to its parent.
In addition, such opinion shall also contain a statement that such counsel has
participated in conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company and the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, no facts have come to the
attention of such counsel which would lead such counsel to believe that either
the Registration Statement, at the time it became effective, or in the event of
any amendment thereof made prior to the Closing Date, as of the date of such
amendment, contained or incorporated by reference any untrue statement of a
material fact 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 (including the documents incorporated by reference therein), as of
its date (or in the event of any amendment thereof or supplement thereto made
prior to the Closing Date as of the date of such amendment or supplement) and as
of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and schedules and other
financial data included or incorporated by reference therein).
ANNEX II
Form of Opinion of Company's Cayman Island Counsel
(i) The Company has been duly incorporated as an exempted company with
limited liability and is validly existing and in good standing under the
laws of the Cayman Islands. The Company has full corporate power and
authority as a matter of Cayman Islands law to own its properties and
conduct its business as described in the section entitled "Business" in
the Registration Statement and Prospectus.
(ii) The Company has full right, power and authority under its Memorandum and
Articles of Association to enter into, execute, deliver and perform its
obligations under the Underwriting Agreement and to issue the Shares.
(iii) The execution and delivery of the Underwriting Agreement and the
performance by the Company of its obligations thereunder and the issue
of the Shares do not violate or conflict with or result in a breach of
any of the terms or provisions of the Memorandum and Articles of
Association of the Company or any law, public rule or regulation or, as
far as we are aware, any publicly available judgment, decree or order
applicable to the Company in the Cayman Islands currently in force.
(iv) The execution, delivery and performance of the Underwriting Agreement
has been authorized by and on behalf of the Company and no further steps
need to be taken by and on behalf of the Company to authorize the
execution, delivery and performance of the Underwriting Agreement and,
assuming the Underwriting Agreement has been delivered, the Underwriting
Agreement has been duly and validly executed and delivered on behalf of
the Company and constitutes the legal, valid and binding obligations of
the Company enforceable in accordance with its terms.
(v) No authorizations, consents, approvals, licenses, validations, orders,
registrations, filings, qualifications, permits or exemptions are
required by law from any governmental authorities or agencies or other
official bodies in the Cayman Islands in connection with the execution,
creation or delivery of the Underwriting Agreement or the issue, sale
and delivery of the Shares; subject to the payment of the appropriate
stamp duty, enforcement of the Underwriting Agreement; or the execution,
delivery and performance by the Company of its obligations under the
Underwriting Agreement.
(vi) No taxes, fees or charges (other than stamp duty) are payable (either by
direct assessment or withholding) to the government or other taxing
authority in the Cayman Islands under the laws of the Cayman Islands in
respect of: the execution or delivery of the Underwriting Agreement; the
enforcement of the Underwriting Agreement; or payments made under, or
pursuant to, the Underwriting Agreement. The Cayman Islands currently
have no form of
income, corporate or capital gains tax and no estate duty, inheritance
tax or gift tax.
(vii) None of the parties to the Underwriting Agreement (other than the
Company) will be deemed to be resident, domiciled or carrying on
business in the Cayman Islands merely as a consequence of entering into
the Underwriting Agreement.
(viii) The courts of the Cayman Islands will observe and give effect to the
choice of New York law as the governing law of the Underwriting
Agreement.
(ix) At the date hereof, to the best of such counsel's knowledge and belief,
there are no claims or assessments which this firm is handling in
respect of the Company and, based solely on our inspection of the
Register of Writs and Other Originating process in the Grand Court of
the Cayman Islands from 12th November, 1998, there were no actions,
petitions or other legal proceedings pending against the Company in the
courts of the Cayman Islands as at close of business in the Cayman
Islands on July __, 2003.
(x) Although there is no statutory enforcement in the Cayman Islands of
judgments obtained in New York, the courts of the Cayman Islands will
recognize a foreign judgment as the basis for a claim at common law in
the Cayman Islands provided such judgment (A) is given by a competent
foreign court; (B) imposes on the judgment debtor a liability to pay a
liquidated sum for which the judgment has been given; (C) is final; (D)
is not in respect of taxes, a fine or a penalty; and (E) was not
obtained in a manner and is not of a kind the enforcement of which is
contrary to the public policy of the Cayman Islands.
(xi) It is not necessary to ensure the legality, validity, enforceability or
admissibility in evidence of the Underwriting Agreement that any
document be filed, notarized, registered, recorded or enrolled with any
governmental authority or agency or any official body in the Cayman
Islands.
(xii) The authorized share capital of the Company is [US$1,500,000] comprising
[100,000,000] Ordinary Shares and [50,000,000] preferred shares of
US$0.01 par value each, as set forth in the Registration Statement and
the Prospectus. The issue of [20,144,956] Ordinary Shares stated in the
Prospectus to have been issued has been duly authorized by the Company.
The issue of the Shares has been duly authorized by the Company and,
assuming that the subscription monies therefor have been duly paid to
the Company in full by the Underwriters in accordance with the
provisions of the Underwriting Agreement, the Shares will be duly issued
as fully paid and non-assessable shares.
(xiii) The statements made in the Prospectus under "Prospectus Summary", "Risk
Factors", "The Offering", "Market Prices and Dividends",
"Capitalization", "Tax Matters - Cayman Islands" and "Tax Matters -
Taxation of Shareholders - Cayman Islands" and the statements made in
Item 15 of Part II of the Registration
Statement are accurate in so far as such statements are summaries of
Cayman Islands law. The statements made in the Basic Prospectus, in so
far as such statements purport to summarize certain provisions of the
Memorandum and Articles of Association of the Company in relation to the
Ordinary Shares or insofar as such statements constitute a summary of
provisions of Cayman Islands law in relation to the Ordinary Shares,
provide a fair summary of such provisions or such Cayman Islands legal
matters. The statements in the Company's annual report on Form 10-K,
incorporated by reference into the Prospectus, under the heading
"Business" are accurate in so far as such statements are summaries of
Cayman Islands law. The Ordinary Shares, the Firm Shares and the
Additional Shares conform to the descriptions thereof contained or
incorporated by reference in the Registration Statement and the
Prospectus.
(xiv) The submission by the Company in the Underwriting Agreement to the
jurisdiction of any Federal or state court in the State of New York is
legal, valid and binding upon the Company. The appointment of CT
Corporation System as the Company's agent to receive service of process
in any suit, action or proceedings effected in the manner set forth in
Section 15 of the Underwriting Agreement is a legal, valid and binding
appointment.
(xv) Assuming that the Company is entitled to do so as a matter of New York
law, such counsel is not aware of any Cayman Islands law which would
prohibit the Company from (i) waiving any objection to the laying of the
venue in any court in the State of New York, County of New York or (ii)
agreeing not to make any pleading or claim that any action, suit or
proceeding commenced pursuant to Section 15 of the Underwriting
Agreement in any Federal or state court in the State of New York, County
of New York has been brought in an inconvenient forum.
(xvi) Assuming that an Underwriter does not otherwise carry on business in the
Cayman Islands, it is not necessary under the laws of the Cayman Islands
that an Underwriter be authorized, licensed or qualified to carry on
business in the Cayman Islands for the purposes of the entry into,
execution, delivery, performance or enforcement of the Underwriting
Agreement.
(xvii) The Underwriters will not become subject to any income, franchise or
other tax imposed by a governmental authority of the Cayman Islands
solely by reason of the execution, delivery and performance of the
Underwriting Agreement and, subject to paragraph (vi) above, the
Underwriting Agreement will not require the payment of any registration
charge or stamp or similar tax imposed by any governmental authority of
the Cayman Islands.
ANNEX III
July __, 2003
BEAR, STEARNS & CO. INC.
UBS Securities LLC
A.G. Edwards & Sons, Inc.
Keefe, Bruyette & Woods, Inc.
Putnam Lovell NBF Securities Inc.
as Representatives of the
several Underwriters named in
Schedule I attached to the
Underwriting Agreement
c/o Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, New York 10179
Attention: Equity Capital Markets
Scottish Annuity & Life Holdings, Ltd. Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "Agreement") relates to the proposed public
offering (the "Offering") by Scottish Annuity & Life Holdings, Ltd., an exempted
company limited by shares organized and existing under the laws of the Cayman
Islands (the "Company"), of 7,000,000 shares of its ordinary shares, US$0.01 par
value (the "Ordinary Shares").
In order to induce you and the other underwriters for which you act as
representatives (the "Underwriters") to underwrite the Offering, the undersigned
hereby agrees that, without the prior written consent of Bear, Stearns & Co.
Inc. ("Bear Stearns") and UBS Securities LLC ("UBS"), during the period from the
date hereof until ninety (90) days from the date of the final prospectus for the
Offering (the "Lock-Up Period"), the undersigned (a) will not, directly or
indirectly, offer, sell, agree to offer or sell, solicit offers to purchase,
grant any call option or purchase any put option with respect to, pledge, borrow
or otherwise dispose of any Relevant Security (as defined below), (b) will not
establish or increase any "put equivalent position" or liquidate or decrease any
"call equivalent position" with respect to any Relevant Security (in each case
within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder), or (c) will not
otherwise enter into any swap, derivative or other transaction or arrangement
that transfers to another, in whole or in part, any of the economic consequence
of ownership of a Relevant Security, whether or not such transaction is to be
settled by delivery of Relevant Securities, other securities, cash or other
consideration. As used herein "Relevant Security" means any common
stock or other security of the Company or any subsidiary that is convertible
into, or exercisable or exchangeable for common stock or equity securities or
that holds the right to acquire any common stock or equity securities of the
Company or any subsidiary or any other such Relevant Security, except for such
rights as may have been fully satisfied or waived prior to the effectiveness of
the Registration Statement.
The undersigned hereby authorizes the Company during the Lock-Up Period to
cause any transfer agent for the Relevant Securities to decline to transfer, and
to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to cause
the record holder to cause the relevant transfer agent to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, such Relevant Securities. The undersigned hereby further agrees
that, without the prior written consent of Bear Stearns and UBS, during the
Lock-Up Period the undersigned (x) will not file or participate in the filing
with the Securities and Exchange Commission of any registration statement, or
circulate or participate in the circulation of any preliminary or final
prospectus or other disclosure document with respect to any proposed offering or
sale of a Relevant Security and (y) will not exercise any rights the undersigned
may have to require registration with the Securities and Exchange Commission of
any proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
[signature page follows]
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By:
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Print Name:
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