UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
OCTOBER 23, 2002
Date of Report (Date of earliest event reported)
WHITE MOUNTAINS INSURANCE GROUP, LTD.
(Exact name of registrant as specified in its charter)
BERMUDA 1-8993 94-2708455
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number) Identification No.)
28 GATES STREET, WHITE RIVER JUNCTION, VERMONT 05001
(Address of principal executive offices)
(802) 295-4500
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
On October 23, 2002, White Mountains Insurance Group, Ltd. (NYSE: WTM)
entered into a definitive agreement to sell $225 million of equity in a
private transaction. Franklin Mutual Advisers, LLC, an existing shareholder
of White Mountains, has subscribed to purchase $200 million of convertible
preference shares based on a value of $295 per common share. These
convertible preference shares will be exchanged for 677,966 common shares of
White Mountains if shareholder approval is received for the transaction
pursuant to New York Stock Exchange requirements. White Mountains intends to
seek shareholder approval at its 2003 Annual General Meeting of Members
(Shareholders). Highfields Capital Management LP, an institutional investor,
has subscribed to purchase 84,745 common shares for $25 million, also based
on a value of $295 per common share.
The Subscription Agreements and related exhibits are attached herewith as
Exhibits 99 (a) through 99 (e) and are incorporated by reference herein in their
entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following exhibits are filed herewith:
Exhibit No. Description
----------- -----------
99(a) Subscription Agreement dated as of October 23, 2002,
between investment funds managed by Franklin Mutual
Advisers, LLC and White Mountains Insurance Group, Ltd.
99(b) Exhibit A entitled "Terms and Conditions of Convertible
Preference Shares of White Mountains Insurance Group,
Ltd." to Subscription Agreement dated as of October 23,
2002, between investment funds managed by Franklin
Mutual Advisers, LLC and White Mountains Insurance
Group, Ltd.
99(c) Exhibit B entitled "Registration Rights Agreement" to
Subscription Agreement dated as of October 23, 2002,
between investment funds managed by Franklin Mutual
Advisers, LLC and White Mountains Insurance Group, Ltd.
99(d) Subscription Agreement dated as of October 23, 2002,
between investment funds managed by Highfields Capital
Management LP and White Mountains Insurance Group, Ltd.
99(e) Exhibit A entitled "Registration Rights Agreement" to
Subscription Agreement dated as of October 23, 2002,
between investment funds managed by Highfields Capital
Management LP and White Mountains Insurance Group, Ltd.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHITE MOUNTAINS INSURANCE GROUP, LTD.
Dated: October 24, 2002 By: /s/ J. Brian Palmer
----------------------------
J. Brian Palmer
Chief Accounting Officer
EXHIBIT 99(a)
EXECUTION COPY
SUBSCRIPTION AGREEMENT dated as of October 23, 2002, between
each of the entities named in Schedule I hereto (each, a
"PURCHASER" and, together, the "PURCHASERS") and WHITE MOUNTAINS
INSURANCE GROUP, LTD., a company existing under the laws of
Bermuda ("WTM").
WHEREAS WTM desires to sell to each Purchaser, and each Purchaser
desires to purchase from WTM, preference shares of WTM (the "SECURITIES") upon
the terms and subject to the conditions set forth in this agreement and the
summary of terms attached hereto as Exhibit A (the "TERM SHEET"), which is
incorporated by reference to and expressly made a part of this agreement
(together, the "AGREEMENT"); and
WHEREAS pursuant to this Agreement and subject to and conditioned upon
the terms and provisions hereof, the parties desire to set forth certain rights
and obligations of the Purchasers with respect to the Securities acquired by the
Purchasers pursuant hereto, and WTM and each of the Purchasers wish to make
various additional agreements, all as expressly set forth below.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"CLOSING" shall have the meaning given to such term in Article IV.
"CLOSING DATE" shall have the meaning given to such term in
Article IV.
"EXCLUDED LIENS" means Liens imposed by or arising from this
Agreement.
"LIENS" means liens, security interests, claims, pledges and
encumbrances of any kind.
"MATERIAL ADVERSE EFFECT" with respect to any person means a material
adverse effect on (a) the business, financial condition or results of operations
of such person
2
and its subsidiaries, taken as a whole, or (b) the ability of such person to
perform its obligations under this Agreement.
"REGISTRATION RIGHTS AGREEMENT" means a registration rights agreement
between WTM and the Purchasers dated as of the Closing Date and in the form of
Exhibit B hereto.
"SECURITIES ACT" means the Securities Act of 1933.
ARTICLE II
PURCHASE AND SALE
On the Closing Date, and upon the terms and subject to the conditions
herein set forth, WTM agrees to issue and sell to each Purchaser, free and clear
of all Liens other than any Excluded Liens, and each Purchaser hereby agrees to
purchase and accept from WTM, a face amount of Securities equal to the amount
set forth opposite each Purchaser's name in Schedule I hereto (with respect to
each Purchaser, its "ALLOCATED SECURITIES"). Subject to the terms and conditions
of this Agreement and in reliance upon the representations, warranties and
agreements of each Purchaser hereunder, WTM shall deliver to each Purchaser on
the Closing Date (against payment of the Purchase Price provided for in Article
III) certificates representing the Allocated Securities registered in the name
of each Purchaser or a designated affiliate thereof.
ARTICLE III
PURCHASE PRICE
On the Closing Date, each Purchaser shall pay to WTM the amount set
forth opposite such Purchaser's name in Schedule I hereto (with respect to such
Purchaser, the "PURCHASE PRICE") for the purchase of its Allocated Securities.
The Purchase Price shall be paid in immediately available funds by wire transfer
to a bank account designated by WTM.
3
ARTICLE IV
THE CLOSING
SECTION 4.01. CLOSING DATE. Upon the terms and subject to the
conditions herein set forth, the purchase and sale provided for herein (the
"CLOSING") will take place (a) at the offices of Cravath, Swaine & Moore, 825
Eighth Avenue, New York, NY 10019, at 10:00 a.m., New York City time, on October
24, 2002 or (b) at such other time, date and place as shall be fixed by
agreement among the parties hereto. The date and time of Closing are herein
referred to as the "CLOSING DATE".
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WTM
WTM represents and warrants to each Purchaser as follows:
SECTION 5.01. AUTHORITY OF SELLER. WTM has been duly formed and is
validly existing under the laws of Bermuda. The issuance, sale and delivery by
WTM of the Securities has been duly authorized by WTM. Upon issuance and
delivery as contemplated by Article II of this Agreement and upon payment
therefor as contemplated by Article III of this Agreement, the Securities will
have been duly authorized, validly issued, fully paid and nonassessable. This
Agreement has been duly and validly executed and delivered by WTM and is the
legal, valid and binding obligation of WTM enforceable against WTM in all
material respects in accordance with its terms. No action, consent or approval
by, or filing with, any Federal, state, municipal, foreign or other court or
governmental or administrative body or agency, or any other regulatory or
self-regulatory body (a "GOVERNMENTAL AUTHORITY"), by reason of authority over
the affairs of WTM, is required to be made by WTM in connection with the
execution and delivery by WTM of this Agreement or the consummation by WTM of
the transactions contemplated hereby, other than (a) those which may be required
solely by reason of any Purchaser's (as opposed to any other third party's)
participation in the transaction contemplated hereby and (b) such other
consents, approvals and filings, the failure of which to obtain would not have a
Material Adverse Effect on WTM.
4
SECTION 5.02. NO CONFLICTS; NO VIOLATIONS. None of the execution,
delivery or performance of this Agreement by WTM will (a) result in any
violation of or be in conflict with or constitute a default under any term of
the constitutive documents of WTM, (b) result in any material breach of any
terms or provisions of, or constitute a material default under, any material
contract, agreement or instrument to which WTM is a party or by which WTM or its
property is bound or (c) violate any judgment, order, decree, statute, law, rule
or regulation applicable to WTM except for in the case of the foregoing clauses
(b) and (c), any violation, conflict, breach or default which would not have a
Material Adverse Effect on WTM.
SECTION 5.03. BROKERS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of WTM.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
Each Purchaser, severally and not jointly, represents and warrants to
WTM as follows:
SECTION 6.01. AUTHORITY OF PURCHASER. (a) Purchaser has been duly
formed and is validly existing under the laws of the state or jurisdiction of
its incorporation or formation. Purchaser has full right, power and authority to
consummate the transactions contemplated herein. This Agreement has been duly
and validly executed and delivered by Purchaser and is the legal, valid and
binding obligation of Purchaser enforceable against Purchaser in all material
respects in accordance with its terms. No action, consent or approval by, or
filing with, any Governmental Authority, by reason of authority over the affairs
of Purchaser, is required to be made or obtained by Purchaser in connection with
the execution and delivery by Purchaser of this Agreement or the consummation by
Purchaser of the transactions contemplated hereby other than such consents,
approvals and filings, the failure of which to obtain would not have a Material
Adverse Effect on Purchaser.
(b) No action, consent or approval by, or filing with, any
Governmental Authority, by reason of authority
5
over the affairs of Purchaser, is required to be made or obtained by Purchaser
in connection with the conversion contemplated by Section 6 of Exhibit A (the
"Conversion") other than the filing of pre-merger notifications and report forms
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act").
SECTION 6.02. NO CONFLICTS; NO VIOLATIONS. None of the execution,
delivery or performance of this Agreement or the receipt of WTM Common Shares
pursuant to the Conversion by Purchaser will (a) result in any violation of or
be in conflict with or constitute a default under any term of constitutive
documents of Purchaser, (b) result in any material breach of any terms or
provisions of, or constitute a material default under, any material contract,
agreement or instrument to which Purchaser is a party or by which Purchaser or
its property is bound or (c) violate any judgment, order, decree, statute, law,
rule or regulation applicable to Purchaser, except for in the case of the
foregoing clauses (b) and (c), any violation, conflict, breach or default which
would not have a Material Adverse Effect on Purchaser.
SECTION 6.03. INVESTMENT INTENTION; NO RESALES. Purchaser is acquiring
the Securities hereunder for investment, solely for its own account and not with
a view to, or for resale in connection with, the distribution thereof. Purchaser
will not resell, transfer, assign or distribute the Securities except in
compliance with this Agreement, the Registration Rights Agreement and the
registration requirements of the Securities Act and applicable state securities
laws or pursuant to an available exemption therefrom.
SECTION 6.04. ACCREDITED INVESTOR; ABILITY TO BEAR RISK; EVALUATION OF
RISKS. Purchaser is an "ACCREDITED INVESTOR" (as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act). The financial
situation of Purchaser is such that it can afford to bear the economic risk of
holding the Securities. Purchaser can afford to suffer the complete loss of its
investment in the Securities. The knowledge and experience of Purchaser in
financial and business matters is such that it, together with its advisors, is
capable of evaluating the risks of the investment in the Securities. Purchaser
acknowledges that no representations, express or implied, are being made with
respect to WTM, the Securities, or otherwise, other than those expressly set
forth herein.
6
SECTION 6.05. SECURITIES UNREGISTERED. Purchaser has been advised by
WTM that (a) the offer and sale of the Securities have not been registered under
the Securities Act, (b) the offering and sale of the Securities is intended to
be exempt from registration under the Securities Act pursuant to Section 4(2) of
the Securities Act and (c) there is no established market for the Securities and
it is not anticipated that there will be any public market for the Securities in
the foreseeable future.
SECTION 6.06. BROKERS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of any Purchaser.
ARTICLE VII
CONDITIONS
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF THE PURCHASERS. The
obligations of each Purchaser to perform under this Agreement are subject to the
satisfaction or waiver by such Purchaser of each of the following conditions:
(a) the delivery to the Purchaser by WTM of its Allocated Securities and a duly
executed Registration Rights Agreement and (b) the absence on the Closing Date
of any injunction or other order, or statute, rule or regulation, of any
Governmental Authority prohibiting the consummation of the sale and purchase of
the Securities hereunder.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF WTM. The obligations of WTM
to perform under this Agreement are subject to the satisfaction or waiver by WTM
of each of the following conditions: (a) the execution and delivery to WTM by
each Purchaser of the Registration Rights Agreement and (b) the absence on the
Closing Date of any injunction or other order, or statute, rule or regulation,
of any Governmental Authority preventing or the prohibiting the consummation of
the sale and purchase of the Securities hereunder.
7
ARTICLE VIII
AGREEMENT
SECTION 8.01. REGISTRATION RIGHTS AGREEMENT. WTM and each of the
Purchasers hereby agree to duly execute and deliver on the Closing Date the
Registration Rights Agreement.
SECTION 8.02. BEST EFFORTS; FURTHER ACTIONS. Each of WTM and the
Purchasers will use its best efforts to take or cause to be taken all action and
to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement including the Conversion. If, at any
time after the Closing Date, any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest each Purchaser with full
title to the Securities, the proper officers, directors, partners or duly
authorized representatives of each party to this Agreement shall take all such
necessary action. The Purchasers will file any pre-merger notification and
report forms required under the HSR Act with respect to the Conversion, and make
any and all other filings that WTM or the Purchasers deem necessary with respect
to the Conversion, and each Purchaser will use its best efforts to ensure that
all waiting periods and approvals required under the HSR Act and any other
approvals that may be required in connection with the Conversion are satisfied
and obtained prior to the receipt of the Required Shareholder Approval (as
defined in Exhibit A).
SECTION 8.03. CONSENTS. Each of WTM and the Purchasers will cooperate
with each other, and use its best efforts, in filing any necessary applications,
reports or other documents with, giving any notices to, and seeking any consents
from, all regulatory bodies and all governmental agencies and authorities
(including the filing of any pre-merger notification and report forms under the
HSR Act) and all third parties (including, without limitation, any other
equityholders) as may be necessary or desirable in connection with the
consummation of the transactions contemplated by this Agreement including the
Conversion.
SECTION 8.04. PUBLIC ANNOUNCEMENTS. Each of WTM, the Purchasers, and
their respective affiliates, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press
8
release or other public statement with respect to the sale and purchase of the
Securities and the transactions contemplated by this Agreement and shall not
issue any press release, disclose the name of any Purchaser or make any such
public statement without the advance approval of the other parties following
such consultation (such approval not to be unreasonably withheld or delayed),
except as may be required by applicable law, court process or by the
requirements of any securities exchange.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENT AND WAIVER. This Agreement may not be amended
or supplemented except by an instrument in writing signed by each of the
Purchasers and WTM. Any term or provision of this Agreement may be waived, but
only in writing by the party which is entitled to the benefit thereof. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or shall
be deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
SECTION 9.02. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one instrument. It shall not be necessary for each
party to sign each counterpart so long as every party has signed at least one
counterpart.
SECTION 9.03. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or sent by registered or certified mail (return receipt requested),
9
postage prepaid, or by telecopy to the parties to this Agreement at the
following addresses or at such other address for a party as shall be specified
by like notice:
If to WTM, at:
White Mountains Insurance Group, Ltd.
28 Gates Street
White River Junction, NH 05001
Attention: Corporate Secretary
Telecopy: (802) 295-4550
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Philip A. Gelston, Esq.
Telecopy: (212) 474-3700
If to the Purchasers, at the appropriate address specified on its
signature page.
All such notices and communications shall be deemed to have been received on the
date of delivery, on the date that the telecopy is confirmed as having been
received or on the third business day in New York after the mailing thereof, as
the case may be.
SECTION 9.04. ASSIGNMENT. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by any party to this Agreement without the prior written consent of
the other parties, and any attempt to assign any right, remedy, obligation or
liability arising hereunder without such consent shall be void.
SECTION 9.05. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, written and oral.
SECTION 9.06. BINDING EFFECT; PARTIES IN INTEREST. This Agreement
shall be binding upon and inure to the benefit of the parties to this Agreement
and their respective successors and permitted assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or
10
remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 9.07. EXPENSES, INDEMNIFICATION. (a) Whether or not the
purchase and sale of the Securities is consummated, each party hereto shall pay
its own fees and expenses incident to preparing for, entering into and carrying
out this Agreement and the consummation of the transactions contemplated hereby.
(b) A party in breach of this Agreement shall, on demand, indemnify
and hold harmless the other parties for and against all reasonable out-of-pocket
expenses, including legal fees, incurred by such other parties by reason of the
enforcement and protection of its rights under this Agreement. The payment of
such expenses is in addition to any other relief to which such other party may
be entitled.
SECTION 9.08. APPLICABLE LAW AND JURISDICTION; SERVICE OF PROCESS;
WAIVER OF JURY TRIAL. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to any
applicable principles of conflict of laws to the extent that the application of
the laws of another jurisdiction would be required thereby. Any and all suits,
legal actions or proceedings against any party hereto arising out of this
Agreement shall be brought in the United States Federal court sitting in the
Southern District of New York, or, if such court shall not have jurisdiction, in
the Supreme Court of the State of New York sitting in the County of New York,
and each party hereby submits to and accepts the exclusive jurisdiction of such
courts for the purpose of such suits, legal action or proceedings. Each party
hereto hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any such suit, legal action or proceeding in any
such court and hereby further waives any claim that any suit, legal action or
proceeding brought in any such court has been brought in an inconvenient forum.
The parties hereto agree that service of process in connection with any suit,
legal action or proceeding brought hereunder or in connection herewith may be
made by any means of service of process permitted by law.
(b) Each party waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect of any litigation
arising out of or relating to this Agreement. Each party (i) certifies that no
representative, agent or attorney of another party has presented, expressly or
otherwise, that such other party
11
would not, in the event of litigation, seek to enforce the foregoing waiver and
(ii) acknowledges that it has been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications set forth in this
Section 9.08.
SECTION 9.09. ARTICLE AND SECTION HEADINGS. The article, section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
SECTION 9.10. TERMINATION. This Agreement may be terminated at any
time prior to the Closing by the mutual consent of each of the Purchasers and
WTM.
SECTION 9.11. SPECIFIC ENFORCEMENT. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, the
non-breaching party would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto will waive
the defense in any action for specific performance that a remedy at law would be
adequate and that the parties hereto, in addition to any other remedy to which
they may be entitled at law or in equity, shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof without the necessity of
proving actual damage or securing or posting any bond or providing prior notice.
12
IN WITNESS WHEREOF, each party hereto has executed this Agreement as
of the day and year first above written.
WHITE MOUNTAINS INSURANCE
GROUP, LTD.,
by
-----------------------------------
Name:
Title:
13
MUTUAL SHARES FUND
MUTUAL QUALIFIED FUND
MUTUAL BEACON FUND
MUTUAL DISCOVERY FUND
MUTUAL EUROPEAN FUND
MUTUAL FINANCIAL SERVICES FUND
FRANKLIN MUTUAL BEACON FUND
FRANKLIN MUTUAL BEACON FUND (JAPAN)
FRANKLIN MUTUAL EUROPEAN FUND
MUTUAL BEACON FUND (CANADA)
MUTUAL SHARES SECURITIES FUND
MUTUAL DISCOVERY SECURITIES FUND
MUTUAL SHARES II FUND
---------------------------------
BY: FRANKLIN MUTUAL ADVISERS, LLC
by
--------------------------------------
Name: Bradley Takahashi
Title: Vice President
Address for notices pursuant to
Section 9.03 of this Agreement:
Franklin Mutual Advisers, LLC
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Attention: Bradley Takahashi
Telecopy: (973) 912-0646
SCHEDULE I
NUMBER OF
CONVERTIBLE
PREFERENCE
NAMES SHARES PURCHASE PRICE
- ----- ----------- --------------
MUTUAL SHARES FUND ........................... 264,064 $ 77,898,880
MUTUAL QUALIFIED FUND ........................ 126,940 $ 37,447,300
MUTUAL BEACON FUND ........................... 139,203 $ 41,064,885
MUTUAL DISCOVERY FUND ........................ 61,515 $ 18,146,925
MUTUAL EUROPEAN FUND ......................... 20,972 $ 6,186,740
MUTUAL FINANCIAL SERVICES FUND ............... 14,148 $ 4,173,660
FRANKLIN MUTUAL BEACON FUND .................. 12,283 $ 3,623,485
FRANKLIN MUTUAL BEACON FUND (JAPAN) .......... 84 $ 24,780
FRANKLIN MUTUAL EUROPEAN FUND ................ 1,594 $ 470,230
MUTUAL BEACON FUND (CANADA) .................. 3,148 $ 928,660
MUTUAL SHARES SECURITIES FUND ................ 30,898 $ 9,114,910
MUTUAL DISCOVERY SECURITIES FUND ............. 2,796 $ 824,820
MUTUAL SHARES II FUND ........................ 321 $ 94,695
- --------------------------------------------------------------------------------
Total 677,966 $ 199,999,970
=========== ==============
EXHIBIT 99(b)
EXHIBIT A
TERMS AND CONDITIONS
OF
CONVERTIBLE PREFERENCE SHARES
OF
WHITE MOUNTAINS INSURANCE GROUP, LTD.
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as the "Convertible Preference Shares" (the "CONVERTIBLE PREFERENCE
SHARES") and the number of shares constituting such series shall be 700,000.
Section 2. DIVIDENDS AND DISTRIBUTION. (a) The holders of Convertible
Preference Shares, in preference to the holders of common shares, par value
$1.00 per share (the "COMMON SHARES"), of the Company and of any other shares of
any other class or series of the share capital of the Company (such Common
Shares and other share capital to be referred to collectively as "JUNIOR
SHARES"), shall be entitled to receive, subject to Section 54 of The Companies
Act 1981 (the "ACT"), and when, as and if declared by the Board of Directors out
of net profits or net assets of the Company legally available for the payment of
dividends, cumulative dividends payable in cash at the annual rate of $2.95 per
share, and no more, in equal semi-annual payments on June 30 and December 31 (or
if either of such days is not a Business Day, the Business Day next preceding
such day) in each year (each such date being referred to herein as a
"SEMI-ANNUAL DIVIDEND PAYMENT DATE" and any dividend not paid on such date being
referred to herein as "PAST DUE"), commencing on the first Semi-Annual Dividend
Payment Date that occurs after the issuance of the Convertible Preference
Shares, which is expected to be December 31, 2002. The Board of Directors may
fix a record date for the determination of holders of Convertible Preference
Shares entitled to receive payment of a dividend declared thereon, which record
date shall be no more than 60 days nor less than 10 days prior to the date fixed
for the payment thereof.
(b) Dividends payable pursuant to paragraph (a) of this Section 2
shall begin to accrue and be cumulative from the date of original issue of the
Convertible Preference Shares. The amount of dividends so payable shall be
determined on the basis of a 365-day year. On the first Semi-Annual Dividend
Payment Date, the holders of shares of Convertible Preference Shares shall be
entitled pursuant to this paragraph (b) to receive, when, as and if declared by
the Board of Directors out of the net profits or net assets of the Company
legally available for the payment of dividends, a cumulative cash dividend per
share in the
2
amount of (i) $2.95 multiplied by (ii) a fraction equal to the number of days
from (but not including) such date of original issue to (and including) the
first Semi-Annual Dividend Payment Date divided by 365, and no more.
(c) If any applicable dividend payment or redemption payment is not
made on a Semi-Annual Dividend Payment Date or the date set for such redemption,
respectively, thereafter all such dividend payments and redemption payments that
are past due and unpaid shall accrue and accumulate additional dividend amounts
at an annual rate of 1% compounded each year with respect to any amounts past
due, with the amount of such additional dividend amounts added to such amounts
past due until all such amounts past due shall have been paid in full.
(d) If any dividend or redemption payment on the Convertible
Preference Shares is not paid when due, the Company shall be prohibited from
declaring, paying or setting apart for payment any dividends or making any other
distributions on any Junior Shares, and from redeeming, purchasing or otherwise
acquiring (or making any payment to or available for a sinking fund for the
redemption, purchase or other acquisition of any shares of such stock) (either
directly or through any Subsidiary) any Junior Shares, until all (i) Accrued
Dividends and (ii) redemption payments that are past due are paid in full.
Dividends paid on the Convertible Preference Shares in an amount less than the
total amount of such Accrued Dividends payable and due on such shares shall be
allocated PRO RATA on a share-by-share basis among all such shares at the time
outstanding.
(e) The holders of Convertible Preference Shares shall not be entitled
to receive any dividends or other distributions except as provided in this
Exhibit.
Section 3. VOTING RIGHTS. The holders of shares of Convertible
Preference Shares shall have no voting rights, and their consent shall not be
required for the taking of any corporate action, EXCEPT:
(a) for any voting rights provided in the Company's Bye-laws, as
they may be amended or restated from time to time (the "BYE-LAWS");
(b) for any voting rights required by the Act; and
3
(c) for so long as any Convertible Preference Shares shall be
outstanding, the Company shall not present to the Members any proposal to
amend, alter or repeal the Company's Memorandum of Continuance, as it may
be amended or restated from time to time (the "MEMORANDUM OF CONTINUANCE"),
or Bye-laws or this Exhibit A or otherwise alter or change the preferences,
rights or powers of the Convertible Preference Shares, in each case in a
manner that adversely affects the preferences, rights or powers of the
Convertible Preference Shares or increases the authorized number of
Convertible Preference Shares, without first obtaining the consent or
approval of the holders of at least two-thirds of the number of
then-outstanding shares of Convertible Preference Shares, voting as a
single class, given in person or by proxy at a meeting at which the holders
of such shares shall be entitled to vote separately as a class, or by
written consent.
Section 4. REDEMPTION. (a) On October 31, 2012 (the "REDEMPTION
DATE"), if any Convertible Preference Shares remain outstanding, the Company
shall, subject to Section 42 of the Act, (i) redeem all outstanding Convertible
Preference Shares by paying therefor in cash $295.00 per share and (ii) cause
the declaration, as payable, of all Accrued Dividends on the outstanding
Convertible Preference Shares to the Redemption Date and shall pay all such
declared Accrued Dividends. The amount payable in connection with the redemption
of all of the outstanding Convertible Preference Shares pursuant to this Section
4 shall be referred to as the "REDEMPTION PRICE". For the period beginning on
the first day after the immediately preceding Semi-Annual Dividend Payment Date
and ending on the Redemption Date, the holders of shares of Convertible
Preference Shares shall be entitled to receive a cash dividend per share in the
amount of (i) $2.95 multiplied by (ii) a fraction equal to the number of days in
such period divided by 365.
(b) On or prior to the Redemption Date, the Company shall Set Apart
for Payment the Redemption Price and thereafter the Convertible Preference
Shares shall be deemed to have been redeemed on the Redemption Date, whether or
not the certificate(s) for such Convertible Preference Shares shall be
surrendered for redemption and canceled. Upon surrender to the Company by the
holders of such certificate(s) for Convertible Preference Shares, the Company
shall cause the Redemption Price to be paid to such holders.
Section 5. REACQUIRED SHARES. Any Convertible Preference Shares
redeemed, converted, purchased or otherwise
4
acquired by the Company in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof, and, if necessary to provide for the
lawful redemption or purchase of such shares, the capital represented by such
shares shall be reduced in accordance with the Act. All such shares shall upon
their cancellation become authorized but unissued preference shares, par value
$1.00 per share, of the Company and may be reissued as part of another series of
preference shares, par value $1.00 per share, of the Company.
Section 6. CONVERSION. (a) Immediately after (i) the approval from the
New York Stock Exchange of the listing of the Company's Common Shares issued in
exchange for the Convertible Preference Shares and the satisfaction of any
conditions to such approval (other than issuance of the Company Common Shares)
and (ii) any approvals, if required, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, then on the date the Company makes such
determination, each Convertible Preference Share shall, subject to Section 42A
of the Act, be automatically and immediately bought back by the Company from its
holder, the consideration for such repurchase being the immediate issue by the
Company to that holder of a number of Company Common Shares equal to the
Conversion Number.
(b) To the extent not previously converted under Section 6(a), after
March 31, 2005, each Convertible Preference Share shall be convertible at any
time at the holder's option; PROVIDED that, if the Required Shareholders
Approval has not been obtained at the time of any such conversion, in lieu of
issuing Common Shares, subject to Section 42 of the Act, the Company shall pay
the holder in cash, for each Convertible Preference Share converted, an amount
equal to the closing price per Common Share on the trading day immediately
preceding the date of delivery of the Conversion Notice (as defined below). Any
cash payment by the Company to a holder of the Convertible Preference Shares
converted pursuant to this provision shall be made by the Company on the next
March 31 or September 30 (each such date, a "PAYMENT DATE") following the date
of receipt by the Company of written notice (a "CONVERSION NOTICE") from the
holder of its election to convert any of its Convertible Preference Shares into
Common Shares, if such Conversion Notice was given at least 60 days prior to
such Payment Date, and on the Payment Date following the next Payment Date, if
such written notice was given less than 60 days prior to the next Payment Date.
5
Section 7. ADJUSTMENT OF CONVERSION NUMBER. (a) SHARE DIVIDENDS,
SUBDIVISIONS, RECLASSIFICATIONS, COMBINATIONS. If the Company declares a
dividend or makes a distribution on the outstanding Common Shares in Common
Shares, or subdivides or reclassifies the outstanding Common Shares into a
greater number of Common Shares, or combines the outstanding Common Shares into
a smaller number of Common Shares, then, in each such event,
(i) the then applicable Conversion Number shall be adjusted so
that the registered holder of each Convertible Preference Share shall
be entitled to receive, upon the conversion thereof, the number of
Common Shares which such holder would have been entitled to receive
immediately after the happening of any of the events described above
had such Convertible Preference Share been converted immediately prior
to the happening of such event or the record date therefor, whichever
is earlier; and
(ii) an adjustment to the Conversion Number made pursuant to this
clause (a) shall become effective (A) in the case of any such dividend
or distribution, immediately after the close of business on the record
date for the determination of holders of Common Shares entitled to
receive such dividend or distribution or (B) in the case of any such
subdivision, reclassification or combination, at the close of business
on the day upon which such corporate action becomes effective.
(b) ISSUANCE OF COMMON SHARES OR CONVERTIBLE SECURITIES.
(i) If the Company issues any Common Shares or Convertible
Securities, other than any Permitted Issuance or issuance to which
Section 7(a) or (c) applies, without consideration or at a price per
Common Share (or having an exercise or conversion price per Common
Share) less than the closing price per Common Share on the trading day
immediately preceding the date of such issuance, then in each such
event, the then applicable Conversion Number shall be adjusted so that
the registered holder thereof shall be entitled to receive, upon the
conversion of a Convertible Preference Share, the number of Common
Shares determined by multiplying the then applicable Conversion Number
by a fraction, of which:
6
(A) the numerator shall be the sum of (I) the number of
Common Shares outstanding on such date and (II) the number of
additional Common Shares issued (or into which the Convertible
Securities may be exercised or converted), and
(B) the denominator shall be the sum of (I) the number of
Common Shares outstanding on such date and (II) the number of
Common Shares which the aggregate consideration receivable by the
Company for the total number of Common Shares so issued (or into
which the Convertible Securities may be exercised or convert)
would purchase at the Fair Market Value on such date. For
purposes of this subparagraph, the aggregate consideration
receivable by the Company in connection with the issuance of
Common Shares or of securities exercisable for or convertible
into Common Shares shall be deemed to be equal to the sum of the
net offering price (after deduction of any related expenses
payable to third parties) of all such securities plus the minimum
aggregate amount, if any, payable upon exercise or conversion of
any such Convertible Securities into Common Shares.
(ii) an adjustment to the Conversion Number made pursuant to this
clause (b) shall become effective immediately after the date of such
issuance.
(iii) upon the expiration or termination of any unexercised
Convertible Securities or of conversion or exchange privileges
pursuant to any Convertible Securities for which any adjustment to the
Conversion Number was made pursuant to this clause (b), the then
applicable Conversion Number shall be readjusted and shall thereafter
be such number as would have been determined had the Conversion Number
been originally adjusted (or had the original adjustment not been
required, as the case may be) on the basis of (A) the Common Shares,
if any, actually issued or sold upon the exercise of such Convertible
Securities or conversion or exchange right of such Convertible
Securities and (B) the consideration actually received by the Company
upon such exercise, conversion or exchange plus the consideration, if
any, actually received by the Company for the issuance or sale of all
of such Convertible Securities whether or not exercised. No such
7
readjustment shall have the effect of decreasing the Conversion Number
by an amount in excess of the amount of the adjustment initially made
for the issuance or sale of such Convertible Securities.
(c) ISSUANCES UPON MERGER, AMALGAMATION, CONSOLIDATION OR SALE OF
COMPANY. If the Company shall be a party to any transaction (including a merger,
amalgamation, consolidation, sale of all or substantially all of the Company's
assets, liquidation or recapitalization of the Common Shares and excluding any
transaction to which Section 7(a) or (b) applies) in which the previously
outstanding Common Shares shall be changed into or, pursuant to the operation of
law or the terms of the transaction to which the Company is a party, exchanged
for different securities of the Company or common shares or other securities of
another corporation or interests in a noncorporate entity or other property
(including cash) or any combination of any of the foregoing, then, as a
condition of the consummation of such transaction, lawful and adequate provision
shall be made so that each holder of Convertible Preference Shares shall be
entitled, upon conversion, to an amount per Convertible Preference Share equal
to (A) the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as applicable, into which or for which each Common Share is
changed or exchanged multiplied by (B) the Conversion Number in effect
immediately prior to the consummation of such transaction.
(d) ADJUSTMENT TO CERTIFICATE. Irrespective of any adjustments in the
Conversion Number or the kind of shares purchasable upon conversion of the
Convertible Preference Shares, certificates theretofore or thereafter issued may
continue to express the same Conversion Number and kind of shares as are stated
on the certificates initially issuable pursuant to this Exhibit A, but such
Conversion Price and number and kind of shares shall be understood to be
adjusted as provided herein.
(e) NOTICES OF ADJUSTMENT.
(i) Upon any adjustment of the Conversion Number pursuant to
Section 7, the Company shall promptly, but in any event within 10 days
thereafter, cause to be given to each registered holder of a Convertible
Preference Share, at its address appearing on the Register of Members by
registered mail, postage prepaid, a certificate signed by an executive
officer setting forth the Conversion Number and/or the number of shares of
other securities or assets issuable upon the conversion of each Convertible
Preference Share as so adjusted and describing in reasonable detail the
facts
8
accounting for such adjustment and the method of calculation used. Where
appropriate, such certificate may be given in advance and included as a
part of the notice required to be mailed under the other provisions of this
Section 7.
(ii) In the event the Company proposes to take (or receives notice of)
any action which would require an adjustment of the Conversion Number
pursuant to Section 7, then the Company shall cause to be given to each
registered holder of Convertible Preference Shares at its address appearing
on the Register of Members, at least 10 days prior to the applicable record
date or effective date for such action, a written notice in accordance with
Section 7: (A) stating such record date or effective date, (B) describing
such action in reasonable detail and (C) stating the date as of which it is
expected that holders of record of Common Shares shall be entitled to
receive any applicable dividends or distributions or to exchange their
shares for securities or other property, if any, deliverable upon such
action. The failure to give the notice required by this Section 7(f) or any
defect therein shall not affect the legality or validity of any such action
or the vote upon any such action.
Section 8. LIQUIDATION, DISSOLUTION OR WINDING UP. (a) If the Company
shall adopt a plan of liquidation or of dissolution, or commence a voluntary
case under applicable bankruptcy, insolvency or similar laws, or consent to the
entry of an order for relief in any involuntary case under any such law or to
the appointment of a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Company or of any substantial part of
its property, or make an assignment for the benefit of its creditors, or admit
in writing its inability to pay its debts generally as they become due and on
account of such event the Company shall liquidate, dissolve or wind up, or upon
any other liquidation, dissolution or winding up of the Company, no distribution
shall be made to the holders of Junior Shares, unless, prior thereto, the
holders of Convertible Preference Shares shall have received $50.00 per share
plus all Accrued Dividends thereon to the date of such payment (the "LIQUIDATION
PREFERENCE").
(b) Neither the consolidation, merger, amalgamation or other business
combination of the Company with or into any other Person or Persons nor the
sale, lease, exchange or conveyance of all or any part of the property, assets
or business of the Company to a Person or Persons shall be deemed to be a
9
liquidation, dissolution or winding up of the Company for purposes of this
Section 8.
Section 9. RANK. The Convertible Preference Shares shall rank, with
respect to preferences and relative, participating, optional and other special
rights of the shares of such series and the qualifications, limitations and
restrictions thereof, including, without limitation, with respect to the payment
of dividends and redemption payments and the distribution of assets, prior to
all Junior Shares of the Company; PROVIDED that, with respect to any event that
would require payment of the Liquidation Preference pursuant to Section 8(a),
the Convertible Preference Shares shall rank prior to all Junior Shares with
respect to distributions up to an amount equal to such Liquidation Preference,
and with respect to all other distributions, PARI PASSU with all Common Shares
of the Company.
Section 10. TRANSFER. Except to the extent required by applicable law,
Convertible Preference Shares may not be transferred, other than (i) with the
prior written consent of the Company, which consent shall not be unreasonably
withheld, (ii) by any Initial Holder to one of its Affiliates or (iii) to the
Company or any Initial Holder. The Convertible Preference Shares have not been
registered under the Securities Act and may not be offered or sold in the United
States or to any citizen or resident of the United States in the absence of a
valid registration under the Securities Act except in reliance on an exemption
from the registration requirements of the Securities Act.
Section 11. DEFINITIONS. For the purposes of this Exhibit:
"ACCRUED DIVIDENDS", with respect to a particular date (the
"APPLICABLE DATE"), means all unpaid dividends payable pursuant to Section 2
and/or Section 4, whether or not declared, accrued to the Applicable Date,
including any additional dividend amounts accrued on past due dividend or
redemption payments pursuant to Section 2(c).
"ACT" means the Companies Act of 1981 as amended from time to time.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
means the
10
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a person, whether through the ownership of voting
securities, by contract, or otherwise.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"BUSINESS DAY" means any day other than a Saturday, Sunday, or a day
on which banking institutions in Bermuda or the State of New York are authorized
or obligated by law or executive order to close.
"COMPANY" means White Mountains Insurance Group, Ltd.
"CONVERSION NUMBER" means initially one (1) and thereafter shall be
subject to adjustment from time to time pursuant to the terms of Section 7
hereof.
"CONVERTIBLE SECURITIES" means any rights, warrants, options or other
securities convertible into or exercisable or exchangeable for Common Shares,
other than any Permitted Issuances.
"FAIR MARKET VALUE" means, as of any date, with respect to a Common
Share, the average of the closing prices of a Common Share for the ten
consecutive trading days immediately prior to the determination date or, if the
Common Shares are not listed or admitted to trade on any national securities
exchange, the fair market value per share as determined in good faith by the
Board of Directors of the Company in reliance upon an opinion of a nationally
recognized investment bank and certified in a resolution sent to each holder of
Convertible Preference Shares.
"INITIAL HOLDERS" means each purchaser of Convertible Preference
Shares pursuant to the Subscription Agreement, dated as of October 23, 2002,
among such purchasers and the Company.
"MEMBERS" means the shareholders of the Company.
"PERMITTED ISSUANCE" means (a) any shares, warrants, options, rights
or other securities of the Company outstanding on the date hereof (and the
issuance of any Common Shares upon the exercise or conversion thereof), (b) any
Common Shares issued upon exercise of the Warrants, (c) any securities of the
Company that are issued in connection with, and on terms substantially
consistent with, the Transactions, (d) any share options or other securities of
the Company granted pursuant to any employee
11
benefit plan or program of the Company and any Common Shares or other securities
of the Company issued upon exercise thereof, (e) any securities of the Company
issued in consideration for the acquisition of a business and (f) any public
offering of any securities of the Company.
"PERSON" means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a Company, a
partnership, a trust or other entity.
"REQUIRED SHAREHOLDERS APPROVAL" means the shareholder approval
required pursuant to Section 312.03(b) of the New York Stock Exchange Listed
Company Manual to issue Common Shares necessary for the conversion set forth in
Section 6(a).
"SECURITIES ACT" shall mean the United States Securities Act of 1933,
and the rules and regulations promulgated thereunder.
"SET APART FOR PAYMENT" means the Company shall have deposited with a
bank or trust company doing business in the Borough of Manhattan, the City of
New York, and having a capital and surplus of at least $50,000,000, in trust for
the exclusive benefit of the holders of Convertible Preference Shares, funds
sufficient to satisfy the Company's payment obligation.
"SUBSIDIARY" of any Person means any Company or other entity of which
a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.
"TRANSACTIONS" means an issuance, on terms substantially consistent
with the terms of the issuance of Convertible Preferences Shares to Franklin
Mutual Advisers, LLC pursuant to the Subscription Agreement dated October 23,
2002 or the issuance of Common Shares to Highfields Capital Management LP
pursuant to the Subscription Agreement dated October 23, 2002, in order to raise
funds to repay the principal of, and accrued interest on, the seller notes that
were issued to CGU Holdings LLC on June 1, 2000. "Transactions" shall include
the issuance of Common Shares to Highfields Capital Management LP pursuant to
the Subscription Agreement dated October 23, 2002.
"WARRANTS" means the warrants to purchase 1,714,285 Common Shares sold
pursuant to the Warrant Agreement among the Company and Berkshire Hathaway Inc.,
dated as of May 30, 2001.
EXHIBIT 99(c)
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of October
___, 2002, by and between the Purchasers listed on the signature pages hereto
(the "PURCHASERS"), and WHITE MOUNTAINS INSURANCE GROUP, LTD., a company
existing under the laws of Bermuda (the "COMPANY").
W I T N E S S E T H:
WHEREAS, this Agreement is entered into pursuant to that certain
Subscription Agreement between the Purchasers and the Company dated as of
October 23, 2002 (the "SUBSCRIPTION AGREEMENT"), pursuant to which, among other
things, the Purchasers agreed to purchase from the Company, for a purchase price
of $199,999,970, 677,966 Convertible Preference Shares, convertible into Common
Shares under the terms and conditions set forth in the resolution of the Board
of Directors related thereto (the "RESOLUTION"); and
WHEREAS, in connection with the transactions contemplated by the
Subscription Agreement, the parties hereto desire to provide for certain rights
and obligations in respect of the Common Shares as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained herein and in the Subscription
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"AFFILIATE" of a specified Person means any Person that is a direct or
indirect wholly owned subsidiary of such Person.
"BEST EFFORTS" means the commercially reasonable efforts that a prudent
person desirous of achieving a result would use in good faith in similar
circumstances to ensure that such result may be achieved as expeditiously as can
reasonably be expected.
"BOARD" means the board of directors of the Company.
"COMMON SHARES" means common shares of the Company, par value $1.00 per
share.
"COMPANY REGISTRATION STATEMENT" shall have the meaning ascribed to such
term in Section 2(f).
"CONVERSION SHARES" means the Common Shares issuable or issued upon
conversion of the Convertible Preference Shares, as the number and/or type of
such shares may be adjusted from time to time pursuant to the terms and
conditions of the Subscription Agreement and the Resolution.
"DELAY PERIOD" shall have the meaning ascribed to such term in
Section 2(f).
"DEMAND" shall have the meaning ascribed to such term in Section 2(a).
"DEMAND REGISTRATION" shall have the meaning ascribed to such term in
Section 2(a).
"DISADVANTAGEOUS CONDITION" shall have the meaning ascribed to such term in
Section 2(f).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any successor statute.
"HOLDER" or "HOLDERS" means each Purchaser or any Permitted Transferee
thereof which is the record holder of Registrable Securities.
"MINIMUM NUMBER" means 250,000 Common Shares; PROVIDED that, the Minimum
Number shall be adjusted by the same ratio as the number of outstanding Common
Shares is adjusted in the event of any reclassification, share combination,
share subdivision, share dividend or similar event with respect to the Common
Shares.
"OTHER HOLDERS" shall have the meaning ascribed to such term in
Section 3(b).
"OTHER SECURITIES" shall have the meaning ascribed to such term in
Section 3.
"PERMITTED TRANSFEREE" shall mean (i) any Affiliate of a Holder or (ii) any
permitted transferee of Convertible Preference Shares under Section 10 of the
Resolution.
"PERSON" means any person or entity of any nature whatsoever, specifically
including an individual, a firm, a company, a corporation, a partnership, a
trust or other entity.
"PURCHASER" means each person other than the Company listed on the
signature pages of this Agreement as a party hereto.
"REGISTRABLE SECURITIES" means the Conversion Shares and any stock or other
securities into which or for which such Conversion Shares may hereafter be
changed, converted or exchanged upon any reclassification, share combination,
share subdivision, share dividend, merger, consolidation or similar transactions
or events, including without limitation according to the terms of the
Subscription Agreement and the Resolution; PROVIDED that any such securities
shall cease to be Registrable Securities if (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with the plan of distribution set forth in such registration statement or (ii)
such securities shall have been transferred pursuant to Rule 144.
"REGISTRATION EXPENSES" means all reasonable expenses in connection with
any registration of securities pursuant to this Agreement including, without
limitation, the following: (i) SEC filing fees; (ii) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Registrable Securities to be disposed of under the
Securities Act; (iii) all expenses in connection with the preparation, printing
and filing of the registration statement, any preliminary
- 2 -
prospectus or final prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to any stockholders, underwriters and
dealers and all expenses incidental to delivery of the Registrable Securities;
(iv) the cost of producing blue sky or legal investment memoranda; (v) all
expenses in connection with the qualification of the Registrable Securities to
be disposed of for offering and sale under state securities laws, including the
reasonable fees and disbursements of counsel for the underwriters and the
Holders in connection with such qualification and in connection with any blue
sky and legal investments surveys; (vi) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Registrable Securities to be disposed of; (vii)
transfer agents', depositories' and registrars' fees and the fees of any other
agent appointed in connection with such offering; (viii) all security engraving
and security printing expenses; (ix) all fees and expenses payable in connection
with the listing of the Registrable Securities on each securities exchange or
inter-dealer quotation system on which a class of common equity securities of
the Company is then listed; (x) all reasonable out-of-pocket expenses of the
Company incurred in connection with road-show presentations, if any; (xi)
courier, overnight delivery, word processing, duplication, telephone and
facsimile expenses; (xii) any one-time payment for directors and officers
insurance directly related to such offering, provided the insurer provides a
separate statement for such payment and (xiii) the reasonable and documented
fees and expenses of one law firm for the Holders; PROVIDED, HOWEVER, that each
Selling Holder shall pay (y) all underwriting discounts, commissions, fees and
expenses (including legal expenses other than as provided above) of any person
with respect to the Registrable Securities sold by or on behalf of such Holders.
In no event shall the Company pay or be responsible for the fees and
disbursements of counsel for the underwriters in connection with any such
registrations, except as provided in clause (v) above.
"REQUESTING HOLDER" shall have the meaning ascribed to such term in
Section 3.
"RESOLUTION" has the meaning set forth in the preamble to the Agreement.
"RULE 144" means Rule 144 promulgated under the Securities Act, or any
successor rule to similar effect.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor statute.
"SELLING HOLDER" means any Holder selling Registrable Securities by means
of a registration statement pursuant to this Agreement.
"SUBSCRIPTION AGREEMENT" has the meaning set forth in the preamble to the
Agreement.
2. DEMAND REGISTRATION.
(a) At any time after the issuance of Conversion Shares upon
conversion of Convertible Preference Shares pursuant to the terms and conditions
of the Resolution, upon written notice (a "DEMAND") from those Holders together
holding not less than the Minimum Number of the Registrable Securities
requesting that the Company effect the
- 3 -
registration under the Securities Act (a "DEMAND REGISTRATION") of any or all of
the Registrable Securities held by such Holder(s), which notice shall specify
the intended method or methods of disposition of such Registrable Securities,
the Company promptly shall give written notice to each other Holder of the
receipt by the Company of such Demand. Within 10 days of the date of the written
notice by the Company, each other Holder that wishes to participate in such
Demand Registration shall notify the Company in writing indicating that such
Holder wishes to have its Registrable Securities included in the Demand
Registration and the number of Registrable Securities it desires to include in
the Demand Registration. The Company shall use its Best Efforts to prepare and
file a registration statement under the Securities Act relating to the
Registrable Securities to be offered as soon as practicable, but in no event
later than 60 days (90 days if the applicable registration form is other than
Form S-3) after the date such Demand is given, and use its Best Efforts to cause
the same to become effective as promptly as practicable thereafter, in the
manner set forth in Section 5.
(b) Notwithstanding any other provision of this Agreement to the
contrary, a Demand Registration requested by any Holder(s) pursuant to this
Section 2 shall not be deemed to have been effected: (i) if it is withdrawn as a
result of a Disadvantageous Condition as described in Section 2(f)(iv); (ii) if
after it has become effective such registration is interfered with by any stop
order, injunction or other order or requirement of the SEC or other governmental
agency or court for any reason other than a misrepresentation or an omission by
such Holder(s) and, as a result thereof, less than 75% of the Registrable
Securities requested to be registered can be completely distributed in
accordance with the plan of distribution set forth in the related registration
statement; (iii) if the conditions to closing that relate to the Company
specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied or waived; or (iv) if, with
respect to such Demand Registration, the Company fails to keep the related
registration statement effective for the period required under
Section 5(a)(i)(x).
(c) In the event that any registration pursuant to this Section 2
shall involve, in whole or in part, an underwritten offering, the Holder(s)
initiating the Demand Registration pursuant to Section 2(a) shall have the right
to designate an underwriter as the sole lead managing underwriter of such
underwritten offering, subject to the Company's consent which shall not be
unreasonably withheld.
(d) In the event that the Holders participating in a Demand
Registration are advised in writing (with a copy to the Company) by the lead
managing underwriter designated by the initiating Holder(s) pursuant to
Section 2(c) that, in such firm's good-faith opinion, marketing factors require
a limitation on the number of shares to be underwritten, the number of shares to
be included in the underwriting and registration shall be allocated to the
Holders participating in the Demand Registration PRO RATA based on the number of
Registrable Securities requested to be included in the Demand Registration by
each such Holder.
(e) Unless the number of shares to be underwritten has been limited in
accordance with Section 2(d), the Company shall have the right to cause the
registration of additional securities for sale for the account of any person
(including the Company) in any registration of Registrable Securities requested
by any Holder(s) pursuant to Section 2(a); PROVIDED that in the event that such
Holder(s) are advised in writing (with a copy to the Company) by the lead
managing underwriter designated by the initiating Holder(s)
- 4 -
pursuant to Section 2(c) that, in such firm's good-faith opinion, marketing
factors require a limitation on the number of shares to be underwritten, the
number of shares to be included in the underwriting and registration shall be
allocated first to the Holder(s) taking part in the Demand Registration pursuant
to Section 2(a) and second to such additional persons (including the Company)
seeking to participate in such registration on such basis as the Company may
determine.
(f) Notwithstanding any other provision of this Agreement to the
contrary, (i) the Company shall not be required to effect a Demand Registration
within a period of six months after the effective date of any other registration
statement of the Company, provided that, if required pursuant to Section 3,
notice of such registration statement has been given to all Holders pursuant to
Section 3, (ii) the Company shall not be obligated to effect more than a total
of one Demand Registration pursuant to this Section 2, (iii) the Company shall
not be required to effect a Demand Registration if the Demand related thereto is
delivered during the period commencing 45 days prior to the estimated date of
filing by the Company of a registration statement pertaining to a public
offering of securities of the Company (a "COMPANY REGISTRATION STATEMENT") that
are the same as, or convertible into or exchangeable for, Common Shares (other
than a registration statement on Form S-8 or successor form) and ending on the
date of effectiveness of such registration statement; PROVIDED, that in no event
shall the Company be required to file a registration statement pertaining to a
Demand Registration at any time prior to 90 days after the effectiveness of any
Company Registration Statement and (iv) with respect to any registration
statement filed, or to be filed, pursuant to this Section 2, if the Company
shall furnish to the Holder(s) requesting such registration a certified
resolution of the Board stating that in the good faith judgment of the Board it
would not (because of the existence of, or in anticipation of, any acquisition
or material financing activity, or the unavailability for reasons beyond the
Company's control of any required financial statements, or any other event or
condition of similar significance to the Company) be in the best interests (a
"DISADVANTAGEOUS CONDITION") of the Company for such a registration statement to
be maintained effective, or to be filed and become effective, the Company may
postpone the filing or the effectiveness of such registration statement, or
delay the filing of any amendment thereto, until the earlier of 90 days
following the date such certified resolution is furnished to such Holder(s) or
the date such Disadvantageous Condition no longer exists (such period, a "DELAY
PERIOD"); PROVIDED, HOWEVER, that the Delay Periods in any six consecutive
months may not exceed 90 days. Upon receipt of any such notice of a
Disadvantageous Condition, the Holder(s) selling securities pursuant to an
effective registration statement shall discontinue use of the prospectus
contained in such registration statement and, if so directed by the Company,
shall deliver to the Company all copies, other than permanent file copies then
in such Holders' possession, of the prospectus then covering such Registrable
Securities or, in the event no registration statement shall have been filed, all
drafts of the registration statement and the prospectus covering such
Registrable Securities.
3. PIGGYBACK REGISTRATION. At any time after the issuance of
Conversion Shares pursuant to the conversion of Convertible Preference Shares
pursuant to the terms of the Resolution, if the Company proposes to register any
of its Common Shares or any other of its common equity securities (collectively,
"OTHER SECURITIES") under the Securities Act (other than a registration (i) on
Form S-4 or S-8 or any successor form thereto, (ii) filed in connection with an
offering of securities solely to the Company's existing shareholders or (iii)
pursuant to a registration under Section 2), whether or not for sale for its own
account, in a manner which would permit registration
- 5 -
of Registrable Securities for sale for cash to the public under the Securities
Act, at each such time it will give prompt written notice to each Holder of its
intention to do so at least thirty (30) days prior to the anticipated filing
date of the registration statement relating to such registration. Such notice
shall offer each such Holder the opportunity to include in such registration
statement such number of Registrable Securities as each such Holder may request.
Upon the written request of any such Holder (each, a "REQUESTING HOLDER") made
within twenty (20) days after the receipt of the Company's notice (which request
shall specify the number of Registrable Securities intended to be disposed of
and the intended method of disposition thereof), the Company shall use its Best
Efforts to effect, in the manner set forth in the applicable provisions of
Section 5, in connection with the registration of the Other Securities, the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register, to the extent required to permit the
disposition (in accordance with such intended methods thereof) of the
Registrable Securities so requested to be registered, provided that:
(a) if, at any time after giving such written notice of its intention
to register any of its securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to
each Requesting Holder of Registrable Securities and thereupon shall be
relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith as provided in Section 4),
without prejudice, however, to the rights of Holders to request that such
registration be effected as a registration under Section 2;
(b) if the registration referred to in the first sentence of this
Section 3 is to be an underwritten registration on behalf of the Company or
on behalf of the holders of securities (other than Registrable Securities)
of the Company (the "OTHER HOLDERS"), and the managing underwriter
designated by the Company or the Other Holders, as applicable, advises the
Company in writing that, in such firm's good-faith opinion, marketing
factors require a limitation on the number or amount of shares to be
underwritten, the Company shall include in such registration: (1) first,
all securities the Company or any Other Holder, as applicable, proposes to
sell for its own account and (2) second, up to such number or amount of
securities (including Registrable Securities) recommended by such managing
underwriter, to such additional persons seeking to participate in such
registration, allocated PRO RATA based on the number of shares requested to
be included by such additional persons;
(c) in the event that any registration pursuant to this Section 3
shall involve, in whole or in part, an underwritten offering, each
Requesting Holder pursuant to this Section 3 hereby agrees to sell such
portion of its Registrable Securities to be registered pursuant to Section
3(a) to the managing underwriter(s) designated by the Company or the Other
Holders, as applicable, on the same terms and conditions that apply to the
Company and/or the Other Holders; PROVIDED, HOWEVER, that any such
Requesting Holder shall be permitted to withdraw all or part of the
Registrable Securities from such registration at any time prior to the
execution of the underwriting agreement relating thereto and PROVIDED
FURTHER, HOWEVER, the Requesting Holders shall only be required to make
representations
- 6 -
and warranties and provide indemnity as is customary for selling
stockholders in similar registrations; and
(d) no registration of Registrable Securities effected under this
Section 3 shall relieve the Company of its obligation to effect a
registration of Registrable Securities pursuant to Section 2 hereof.
4. EXPENSES. The Company agrees to pay all Registration Expenses with
respect to any offerings pursuant to Section 2 or Section 3 hereof. In addition,
but not in duplication of, the foregoing, each Holder shall be entitled to
reimbursement from the Company for any out-of-pocket losses actually incurred in
the event, and only to the extent, that such Holder suffers such losses as a
result of such Holder's inability to make delivery of sold Registrable
Securities due to the Company's breach of its commitment to provide timely
notice as required by Section 5(a)(v).
5. REGISTRATION AND QUALIFICATION.
(a) If and whenever the Company is required to use its Best Efforts to
effect the registration of any Registrable Securities under the Securities Act
as provided in Section 2 or 3 hereof, the Company shall:
(i) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to (x) keep such registration statement effective until
the earlier of such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the
Holder(s) thereof set forth in such registration statement or the
expiration of 90 days after such registration statement becomes effective
and (y) comply with the provisions of the Securities Act applicable to the
Company with respect to the securities covered by such registration
statement;
(ii) furnish to the Selling Holder(s) and to any underwriter of such
Registrable Securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits) and such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the requirements
of the Securities Act, and such other documents, as the Selling Holder(s)
or such underwriter may reasonably request in order to facilitate the
public sale of the Registrable Securities, and a copy of any and all
transmittal letters or other correspondence to, or received from, the SEC
or any other governmental agency or self-regulatory body or other body
having jurisdiction (including any domestic or foreign securities exchange)
relating to such offering;
(iii) unless the exemption from state regulation of securities
offerings under Section 18 of the Securities Act applies, use its Best
Efforts to register or qualify all Registrable Securities covered by such
registration statement under the securities or blue sky laws of such
jurisdictions as the Selling Holders or any underwriter of such Registrable
Securities shall reasonably request; PROVIDED that the Company shall not be
required to (A) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this
- 7 -
paragraph (iii), (B) subject itself to taxation in any such jurisdiction or
(C) consent to general service of process in any such jurisdiction;
(iv) furnish, at the written request of any Holder requesting
registration pursuant to Section 2, if the method of distribution is by
means of an underwritten offering, on the date that the Registrable
Securities are delivered to the underwriters for sale pursuant to such
registration or, if such Registrable Securities are not being sold through
underwriters, on the date that the registration statement with respect to
such Registrable Securities becomes effective: (x) an opinion of counsel
for the Company, dated such date and (y) a "cold comfort" letter dated such
date and the date the offering is priced, signed by the independent public
accountants who have certified the Company's financial statements included
in such registration statement, covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities;
(v) promptly notify the Selling Holders in writing (x) at any time
when a prospectus relating to a registration pursuant to Section 2 or 3
hereof is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (y) of any
request by the SEC or any other regulatory body or other body having
jurisdiction for any amendment of or supplement to any registration
statement or other document relating to such offering, and in either such
case (x) or (y) at the request of the Selling Holders, subject to
Section 2(f)(iv) and Section 4 hereof, prepare and furnish to the Selling
Holders a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(vi) use its Best Efforts to comply with all applicable rules and
regulations of the SEC and to make available to its securities holders, as
soon as reasonably practicable, an earnings statement covering the period
of at least twelve (12) months, but not more than eighteen (18) months,
beginning after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(vii) furnish unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be
requested by the Selling Holders or the underwriters, with expenses
therewith to be paid in accordance with Section 4 hereof.
- 8 -
(b) The Holder(s) of Registrable Securities on whose behalf
Registrable Securities are to be distributed by one or more underwriters shall
be parties to any underwriting agreements relating to the distribution of such
Registrable Securities.
6. UNDERWRITING, DUE DILIGENCE.
(a) If requested by the underwriters for any underwritten offering of
Registrable Securities pursuant to a registration requested under Section 2 of
this Agreement, the Company shall enter into an underwriting agreement in
customary form with such underwriters for such offering, such agreement to
contain such representations and warranties by the Company and such other terms
and provisions as are customarily contained in underwriting agreements with
respect to such distributions, including, without limitation, indemnities and
contribution substantially to the effect and to the extent provided in Section 7
hereof and the provision of opinions of counsel and accountants' letters to the
effect and to the extent provided in Section 5(a)(iv) hereof. The Holders on
whose behalf the Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement. Such
underwriting agreement shall also contain such representations and warranties by
the Holders on whose behalf the Registrable Securities are to be distributed as
are customarily contained in underwriting agreements with respect to such
distributions. The Selling Holders may require that any additional securities
included in a Demand Registration be included on the same terms and conditions
as the Registrable Securities that are included therein.
(b) In the event that any registration pursuant to Section 3 shall
involve, in whole or in part, an underwritten offering, the Company may require
the Registrable Securities requested to be registered pursuant to Section 3 to
be included in such underwriting on the same terms and conditions as shall be
applicable to the other securities being sold through underwriters under such
registration. If requested by the underwriters for such underwritten offering,
the Holders on whose behalf the Registrable Securities are to be distributed
shall enter into an underwriting agreement with such underwriters, such
agreement to contain such representations and warranties by the Holders and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to such distributions, including, without limitation,
indemnities and contribution substantially to the effect and to the extent
provided in Section 7 hereof. Such underwriting agreement shall also contain
such representations and warranties by the Company and such other person or
entity for whose account securities are being sold in such offering as are
customarily contained in underwriting agreements with respect to such
distributions.
(c) In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act, the
Company shall give the Selling Holders and the underwriters, if any, and their
respective counsel and accountants, such reasonable and customary access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified the
Company's financial statements as shall be necessary, in the opinion of such
Selling Holders and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
- 9 -
7. INDEMNIFICATION AND CONTRIBUTION.
(a) In the case of any registration of any Registrable Securities
under the Securities Act pursuant to Sections 2 and 3 of this Agreement, the
Company agrees to indemnify and hold harmless each Selling Holder, its officers
and directors, each underwriter of Registrable Securities so offered and each
person, if any, who controls any of the foregoing persons within the meaning of
the Securities Act, from and against any and all losses, claims, damages,
expenses, judgments or liabilities, joint or several, to which they or any of
them may become subject, under the Securities Act or otherwise, including any
amount paid in settlement of any litigation commenced or threatened, and shall
promptly reimburse them, as and when incurred, for any reasonable legal or other
expenses incurred by them in connection with investigating any claims and
defending any actions, insofar as such losses, claims, damages, expenses,
judgments or liabilities shall arise out of, or shall be based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement on the effective date thereof (including any prospectus
filed under Rule 424 of the Securities Act) or any amendment thereof or
supplement thereto, or in any document incorporated by reference therein, or any
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 shall not be liable to the Selling Holders
in any such case to the extent that any such loss, claim, damage, expense,
judgment or liability arises out of, or is based upon, any untrue statement or
alleged untrue statement, or any omission, if such statement or omission shall
have been made in reliance upon and in conformity with information relating to
the Selling Holder(s) furnished to the Company in writing by or on behalf of any
Selling Holder specifically for use in the preparation of the registration
statement (including any prospectus filed under Rule 424 of the Securities Act)
or any amendment thereof or supplement thereto. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of a
Selling Holder and shall survive the transfer of such securities. The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to each Selling Holder, its officers and directors, underwriters
of the Registrable Securities or any controlling person of the foregoing.
(b) In the case of any registration of any Registrable Securities
under the Securities Act pursuant to Sections 2 and 3 of this Agreement, each
Selling Holder agrees to indemnify and hold harmless the Company, its officers
and directors and each person, if any, who controls any of the foregoing within
the meaning of the Securities Act (and if requested by the underwriters, each
underwriter who participates in the offering and each person, if any, who
controls any such underwriter within the meaning of the Securities Act), from
and against any and all losses, claims, damages, expenses, judgments or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act or otherwise, including any amount paid in settlement
of any litigation commenced or threatened, and shall promptly reimburse them, as
and when incurred, for any legal or other expenses incurred by them in
connection with investigating any claims and defending any actions, insofar as
any such losses, claims, damages, expenses, judgments or liabilities shall arise
out of, or shall be based upon, any untrue statement or alleged untrue statement
of a material fact relating to such Selling Holder contained in the registration
statement on the effective date thereof (including any prospectus filed under
Rule 424 of the Securities Act) or any amendment thereof or supplement thereto,
or any omission or alleged omission to state therein a material fact relating to
such Selling Holder required to be stated therein or necessary to make the
statements therein not
- 10 -
misleading, but in each case only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission relating to such
Selling Holder was made in reliance upon information relating to such Selling
Holder furnished to the Company in writing by or on behalf of such Selling
Holder specifically for use in the preparation of such registration statement
(including any prospectus filed under Rule 424 of the Securities Act); PROVIDED,
HOWEVER, that in no event shall any Selling Holder be liable for any amount in
excess of the net proceeds received from the sale of the Registrable Securities
by such Selling Holder in the subject offering. The foregoing indemnity is in
addition to any liability which any Selling Holder may otherwise have to the
Company, or any of its directors, offices or controlling persons.
(c) PROCEDURE FOR INDEMNIFICATION. Each party indemnified under
paragraph (a) or (b) of this Section 7 shall, promptly after receipt of notice
of any claim or the commencement of any action against such indemnified party in
respect of which indemnity may be sought, notify the indemnifying party in
writing of the claim or the commencement thereof; PROVIDED that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party on account of the indemnity agreement contained
in paragraph (a) or (b) of this Section 7, except to the extent the indemnifying
party was prejudiced by such failure, and in no event shall relieve the
indemnifying party from any other liability which it may have to such
indemnified party. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; PROVIDED that each indemnified party, its officers and
directors, if any, and each person, if any, who controls such indemnified party
within the meaning of the Securities Act, shall have the right to employ
separate counsel reasonably approved by the indemnifying party to represent them
if the named parties to any action (including any impleaded parties) include
both such indemnified party and an indemnifying party or an affiliate of an
indemnifying party, and such indemnified party shall have been advised by
counsel either (i) that there may be one or more legal defenses available to
such indemnified party that are different from or additional to those available
to such indemnifying party or such affiliate or (ii) a conflict may exist
between such indemnified party and such indemnifying party or such affiliate,
and in that event the fees and expenses of one such separate counsel for all
such indemnified parties shall be paid by the indemnifying party. An indemnified
party will not enter into any settlement agreement which is not approved by the
indemnifying party, such approval not to be unreasonably withheld. The
indemnifying party may not agree to any settlement of any such claim or action
which provides for any remedy or relief other than monetary damages for which
the indemnifying party shall be responsible hereunder, without the prior written
consent of the indemnified party, which consent shall not be unreasonably
withheld. In any action hereunder as to which the indemnifying party has assumed
the defense thereof with counsel reasonably satisfactory to the indemnified
party, the indemnified party shall continue to be entitled to participate in the
defense thereof, with counsel of its own choice, but, except as set forth above,
the indemnifying party shall not be obligated hereunder to reimburse the
indemnified party for the costs
- 11 -
thereof. In all instances, the indemnified party shall cooperate fully with the
indemnifying party or its counsel in the defense of each claim or action.
If the indemnification provided for in this Section 7 shall for any
reason be unavailable to an indemnified party in respect of any loss, claim,
damage, expense, judgment or liability, or any action in respect thereof,
referred to herein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage, expense, judgment or
liability in respect thereof, or action in respect thereof, in such proportion
as shall be appropriate to reflect the relative fault of the indemnifying party
on the one hand and the indemnified party on the other with respect to the
statements or omissions which resulted in such loss, claim, damage, expense,
judgment or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party on the one hand or the indemnified party on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission,
but not by reference to any indemnified party's stock ownership in the Company.
In no event, however, shall a Selling Holder be required to contribute in excess
of the amount of the net proceeds received by such Selling Holder in connection
with the sale of Registrable Securities in the offering which is the subject of
such loss, claim, damage or liability. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage, expense, judgment or
liability, or action in respect thereof, referred to above in this paragraph
shall be deemed to include, for purposes of this paragraph, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claims. 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.
8. RULE 144. The Company shall take such measures and file such
information, documents and reports to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC thereunder
and will take such further action as any Holder of Registrable Securities may
reasonably request, all to the extent necessary or desirable from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144.
Upon the request of any Holder of Registrable Securities, the Company will
deliver to such Holder a written statement, certified by an authorized executive
officer of the Company, as to whether the Company has complied with such
requirements. The Company shall have no obligation to effect a registration of
Registrable Securities pursuant to Section 2 or Section 3 hereof if such
Registrable Securities may be sold without registration under the Securities Act
within the limitation of the exemption provided by Rule 144(k).
- 12 -
9. HOLDBACK. Each of the Company and the Selling Holders agrees, if so
required by the managing underwriter, not to sell, make any short sale of, loan,
grant any option for the purchase of (other than pursuant to employee benefit
plans), effect any public sale or distribution of or otherwise dispose of the
Company's equity securities or securities convertible into or exchangeable or
exercisable for any such securities during the 30 days prior to and the 90 days
after any underwritten registration pursuant to Section 2 or 3 hereof has become
effective, except as part of such underwritten registration and except, in the
case of the Company, pursuant to registrations on Form S-4 or S-8 or any
successor form thereto.
10. TRANSFER OF REGISTRATION RIGHTS.
(a) A Holder may transfer all or any portion of its rights under this
Agreement only to a Permitted Transferee. The Holder making such transfer shall
promptly notify the Company in writing stating the name and address of any
Permitted Transferee and identifying the amount of Registrable Securities with
respect to which the rights under this Agreement are being transferred and the
nature of the rights so transferred. In connection with any such transfer, the
term "Holder" as used in this Agreement shall, where appropriate to assign the
rights and obligations of a Holder hereunder to such Permitted Transferee, be
deemed to refer to the Permitted Transferee, as holder of such Registrable
Securities.
(b) After any such transfer, the Holder making such transfer shall
retain its rights under this Agreement with respect to all other Registrable
Securities still owned by such Holder.
(c) Upon the request of the Holder making such transfer, the Company
shall execute a Registration Rights Agreement with such Permitted Transferee or
a proposed Permitted Transferee substantially similar to this Agreement.
11. MISCELLANEOUS.
(a) INJUNCTIONS. Each party acknowledges and agrees that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
Therefore, each party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court having jurisdiction, such remedy
being in addition to any other remedy to which such party may be entitled at law
or in equity.
(b) SEVERABILITY. If any term or provision of this Agreement shall be
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms and provisions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
each of the parties shall use its Best Efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term or provision.
(c) FURTHER ASSURANCES. Subject to the specific terms of this
Agreement, each of the parties hereto shall make, execute, acknowledge and
deliver such other instruments and documents, and take all such other actions,
as may be reasonably
- 13 -
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby.
(d) WAIVERS, ETC. No failure or delay on the part of either party (or
the intended third-party beneficiaries referred to herein) in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power preclude any other or
further exercise thereof or the exercise of any other right or power. No
modification or waiver of any provision of this Agreement nor consent to any
departure therefrom shall in any event be effective unless the same shall be in
writing and signed by an authorized officer of each of the parties, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
(e) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to its subject matter. This Agreement supersedes all
prior agreements and understandings between the parties, whether written or
oral, with respect to the subject matter hereof. The paragraph headings
contained in this Agreement are for reference purposes only, and shall not
affect in any manner the meaning or interpretation of this Agreement.
(f) COUNTERPARTS. For the convenience of the parties, this Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original but all of which together shall be one and the same instrument.
(g) AMENDMENT. This Agreement may be amended only by a written
instrument duly executed by an authorized officer of the Company and an
authorized officer of each Holder.
(h) NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given when received if delivered personally, on the next business day if sent by
overnight courier for next business day delivery (providing proof of delivery),
when confirmation is received, if sent by facsimile or in five business days if
sent by U.S. registered or certified mail, postage prepaid (return receipt
requested) to the other parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to the Company, to:
White Mountains Insurance Group, Ltd.
28 Gates Street
White River Junction, NH 05001
Attention: Corporate Secretary
Facsimile: (802) 295-4550
(ii) if to the Purchasers, at the address set forth below each
Purchaser's name on the signature pages hereto.
(i) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
- 14 -
(j) TERM. This Agreement shall remain in full force and effect until
there are no Registrable Securities outstanding or until terminated by the
mutual agreement of the parties hereto.
(k) ASSIGNMENT. Except as provided herein, the parties may not assign
their rights under this Agreement. This Agreement shall be binding upon and
inure to the benefit of successors to the parties hereto.
(l) PRIORITY OF RIGHTS. The Purchasers agree that the rights granted
hereunder are expressly made subject to the rights of the "Holders" under the
Registration Rights Agreement dated as of May 30, 2001 between the Company and
Berkshire Hathaway Inc. in a manner consistent with such agreement.
- 15 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representative as of the date first above
written.
WHITE MOUNTAINS INSURANCE GROUP, LTD.
by:
--------------------------
Name: Dennis Beaulieu
Title: Corporate Secretary
- 16 -
MUTUAL SHARES FUND
MUTUAL QUALIFIED FUND
MUTUAL BEACON FUND
MUTUAL DISCOVERY FUND
MUTUAL EUROPEAN FUND
MUTUAL FINANCIAL SERVICES FUND
FRANKLIN MUTUAL BEACON FUND
FRANKLIN MUTUAL BEACON FUND (JAPAN)
FRANKLIN MUTUAL EUROPEAN FUND
MUTUAL BEACON FUND (CANADA)
MUTUAL SHARES SECURITIES FUND
MUTUAL DISCOVERY SECURITIES FUND
MUTUAL SHARES II FUND
BY: FRANKLIN MUTUAL ADVISERS, LLC
Address: Franklin Mutual Advisers, LLC
50 John F. Kennedy Parkway
Short Hills, NJ 07078
Attention: Bradley Takahashi
Facsimile: (973) 912-0646
by:
------------------------------
Name: Bradley Takahashi
Title: Vice President
- 17 -
EXHIBIT 99(d)
EXECUTION COPY
SUBSCRIPTION AGREEMENT dated as of October 23, 2002, between
each of the entities named in Schedule I hereto (each, a
"PURCHASER" and, together, the "PURCHASERS") and WHITE MOUNTAINS
INSURANCE GROUP, LTD., a company existing under the laws of
Bermuda ("WTM").
WHEREAS WTM desires to sell to each Purchaser, and each Purchaser
desires to purchase from WTM, common shares of WTM, par value $1.00 per share
(the "SECURITIES") upon the terms and subject to the conditions set forth in
this agreement (the "AGREEMENT"); and
WHEREAS pursuant to this Agreement and subject to and conditioned upon
the terms and provisions hereof, the parties desire to set forth certain rights
and obligations of the Purchasers with respect to the Securities acquired by the
Purchasers pursuant hereto, and WTM and each of the Purchasers wish to make
various additional agreements, all as expressly set forth below.
NOW, THEREFORE, in consideration of the premises and the respective
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"CLOSING" shall have the meaning given to such term in Article IV.
"CLOSING DATE" shall have the meaning given to such term in
Article IV.
"EXCLUDED LIENS" means Liens imposed by or arising from this
Agreement.
"LIENS" means liens, security interests, claims, pledges and
encumbrances of any kind.
"MATERIAL ADVERSE EFFECT" with respect to any person means a material
adverse effect on (a) the business, financial condition or results of operations
of such person and its subsidiaries, taken as a whole, or (b) the ability of
such person to perform its obligations under this Agreement.
2
"REGISTRATION RIGHTS AGREEMENT" means a registration rights agreement
between WTM and the Purchasers dated as of the Closing Date and in the form of
Exhibit A hereto.
"SECURITIES ACT" means the Securities Act of 1933.
ARTICLE II
PURCHASE AND SALE
On the Closing Date, and upon the terms and subject to the conditions
herein set forth, WTM agrees to issue and sell to each Purchaser, free and clear
of all Liens other than any Excluded Liens, and each Purchaser hereby agrees to
purchase and accept from WTM, the number of shares of Securities set forth
opposite each Purchaser's name in Schedule I hereto (with respect to each
Purchaser, its "ALLOCATED SECURITIES"). Subject to the terms and conditions of
this Agreement and in reliance upon the representations, warranties and
agreements of each Purchaser hereunder, WTM shall deliver to each Purchaser on
the Closing Date (against payment of the Purchase Price provided for in Article
III) certificates representing the Allocated Securities registered in the name
of each Purchaser or a designated affiliate thereof.
ARTICLE III
PURCHASE PRICE
On the Closing Date, each Purchaser shall pay to WTM the amount set
forth opposite such Purchaser's name in Schedule I hereto (with respect to such
Purchaser, the "PURCHASE PRICE") for the purchase of its Allocated Securities.
The Purchase Price shall be paid in immediately available funds by wire transfer
to a bank account designated by WTM.
ARTICLE IV
THE CLOSING
SECTION 4.01. CLOSING DATE. Upon the terms and subject to the
conditions herein set forth, the purchase and sale provided for herein (the
"CLOSING") will take place
3
(a) at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY
10019, at 10:00 a.m., New York City time, on the next business day after
approval is received from the New York Stock Exchange with respect to the
listing of the Common Shares (subject to official notice of issuance) or (b) at
such other time, date and place as shall be fixed by agreement among the parties
hereto. The date and time of Closing are herein referred to as the "CLOSING
DATE".
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WTM
WTM represents and warrants to each Purchaser as follows:
SECTION 5.01. AUTHORITY OF SELLER. WTM has been duly formed and is
validly existing under the laws of Bermuda. The issuance, sale and delivery by
WTM of the Securities has been duly authorized by WTM. Upon issuance and
delivery as contemplated by Article II of this Agreement and upon payment
therefor as contemplated by Article III of this Agreement, the Securities will
have been duly authorized, validly issued, fully paid and nonassessable. This
Agreement has been duly and validly executed and delivered by WTM and is the
legal, valid and binding obligation of WTM enforceable against WTM in all
material respects in accordance with its terms. No action, consent or approval
by, or filing with, any Federal, state, municipal, foreign or other court or
governmental or administrative body or agency, or any other regulatory or
self-regulatory body (a "GOVERNMENTAL AUTHORITY"), by reason of authority over
the affairs of WTM, is required to be made by WTM in connection with the
execution and delivery by WTM of this Agreement or the consummation by WTM of
the transactions contemplated hereby, other than (a) those which may be required
solely by reason of any Purchaser's (as opposed to any other third party's)
participation in the transaction contemplated hereby, (b) approval from the New
York Stock Exchange of the listing of the Securities, subject to official notice
of issuance and (c) such other consents, approvals and filings, the failure of
which to obtain would not have a Material Adverse Effect on WTM.
SECTION 5.02. NO CONFLICTS; NO VIOLATIONS. None of the execution,
delivery or performance of this Agreement by WTM will (a) result in any
violation of or be in conflict
4
with or constitute a default under any term of the constitutive documents of
WTM, (b) result in any material breach of any terms or provisions of, or
constitute a material default under, any material contract, agreement or
instrument to which WTM is a party or by which WTM or its property is bound or
(c) violate any judgment, order, decree, statute, law, rule or regulation
applicable to WTM except for in the case of the foregoing clauses (b) and (c),
any violation, conflict, breach or default which would not have a Material
Adverse Effect on WTM.
SECTION 5.03. BROKERS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of WTM.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
Each Purchaser, severally and not jointly, represents and warrants to
WTM as follows:
SECTION 6.01. AUTHORITY OF PURCHASER. Purchaser has been duly formed
and is validly existing under the laws of the state or jurisdiction of its
incorporation or formation. Purchaser has full right, power and authority to
consummate the transactions contemplated herein. This Agreement has been duly
and validly executed and delivered by Purchaser and is the legal, valid and
binding obligation of Purchaser enforceable against Purchaser in all material
respects in accordance with its terms. No action, consent or approval by, or
filing with, any Governmental Authority, by reason of authority over the affairs
of Purchaser, is required to be made or obtained by Purchaser in connection with
the execution and delivery by Purchaser of this Agreement or the consummation by
Purchaser of the transactions contemplated hereby other than such consents,
approvals and filings, the failure of which to obtain would not have a Material
Adverse Effect on Purchaser. Each Purchaser is an "institutional investor" for
purposes of Section 802.64 of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and is eligible for the exemption of such Section 802.64.
5
SECTION 6.02. NO CONFLICTS; NO VIOLATIONS. None of the execution,
delivery or performance of this Agreement by Purchaser will (a) result in any
violation of or be in conflict with or constitute a default under any term of
constitutive documents of Purchaser, (b) result in any material breach of any
terms or provisions of, or constitute a material default under, any material
contract, agreement or instrument to which Purchaser is a party or by which
Purchaser or its property is bound or (c) violate any judgment, order, decree,
statute, law, rule or regulation applicable to Purchaser, except for in the case
of the foregoing clauses (b) and (c), any violation, conflict, breach or default
which would not have a Material Adverse Effect on Purchaser.
SECTION 6.03. INVESTMENT INTENTION; NO RESALES. Purchaser is acquiring
the Securities hereunder for investment, solely for its own account and not with
a view to, or for resale in connection with, the distribution thereof. Purchaser
will not resell, transfer, assign or distribute the Securities except in
compliance with this Agreement, the Registration Rights Agreement and the
registration requirements of the Securities Act and applicable state securities
laws or pursuant to an available exemption therefrom.
SECTION 6.04. ACCREDITED INVESTOR; ABILITY TO BEAR RISK; EVALUATION OF
RISKS. Purchaser is an "ACCREDITED INVESTOR" (as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act). The financial
situation of Purchaser is such that it can afford to bear the economic risk of
holding the Securities. Purchaser can afford to suffer the complete loss of its
investment in the Securities. The knowledge and experience of Purchaser in
financial and business matters is such that it, together with its advisors, is
capable of evaluating the risks of the investment in the Securities. Purchaser
acknowledges that no representations, express or implied, are being made with
respect to WTM, the Securities, or otherwise, other than those expressly set
forth herein.
SECTION 6.05. SECURITIES UNREGISTERED. Purchaser has been advised by
WTM that (a) the offer and sale of the Securities have not been registered under
the Securities Act and (b) the offering and sale of the Securities is intended
to be exempt from registration under the Securities Act pursuant to Section 4(2)
of the Securities Act.
6
SECTION 6.06. BROKERS. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of any Purchaser.
ARTICLE VII
CONDITIONS
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF THE PURCHASERS. The
obligations of each Purchaser to perform under this Agreement are subject to the
satisfaction or waiver by such Purchaser of each of the following conditions:
(a) the delivery to the Purchaser by WTM of its Allocated Securities and a duly
executed Registration Rights Agreement, (b) the absence on the Closing Date of
any injunction or other order, or statute, rule or regulation, of any
Governmental Authority prohibiting the consummation of the sale and purchase of
the Securities hereunder, (c) approval from the New York Stock Exchange of the
listing of the Securities, subject to official notice of issuance and (d) the
representations and warranties of WTM in Article V of this Agreement shall be
true and correct in all material respects as of the Closing Date.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF WTM. The obligations of WTM
to perform under this Agreement are subject to the satisfaction or waiver by WTM
of each of the following conditions: (a) the execution and delivery to WTM by
each Purchaser of the Registration Rights Agreement, (b) the absence on the
Closing Date of any injunction or other order, or statute, rule or regulation,
of any Governmental Authority preventing or the prohibiting the consummation of
the sale and purchase of the Securities hereunder, (c) approval from the New
York Stock Exchange of the listing of the Securities, subject to official notice
of issuance and (d) the representations and warranties of each Purchaser in
Article VI of this Agreement shall be true and correct in all material respects
as of the Closing Date.
7
ARTICLE VIII
AGREEMENT
SECTION 8.01. REGISTRATION RIGHTS AGREEMENT. WTM and each of the
Purchasers hereby agree to duly execute and deliver on the Closing Date the
Registration Rights Agreement.
SECTION 8.02. BEST EFFORTS; FURTHER ACTIONS. Each of WTM and the
Purchasers will use its best efforts to take or cause to be taken all action and
to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. If, at any time after the Closing
Date, any further action is necessary or desirable to carry out the purposes of
this Agreement or to vest each Purchaser with full title to the Securities, the
proper officers, directors, partners or duly authorized representatives of each
party to this Agreement shall take all such necessary action.
SECTION 8.03. CONSENTS. Each of WTM and the Purchasers will cooperate
with each other, and use its best efforts, in filing any necessary applications,
reports or other documents with, giving any notices to, and seeking any consents
from, all regulatory bodies and all governmental agencies and authorities and
all third parties (including, without limitation, any other equityholders) as
may be necessary or desirable in connection with the consummation of the
transactions contemplated by this Agreement.
SECTION 8.04. PUBLIC ANNOUNCEMENTS. Each of WTM, the Purchasers, and
their respective affiliates, will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other public statement with respect to the sale and purchase of the
Securities and the transactions contemplated by this Agreement and shall not
issue any press release, disclose the name of any Purchaser or make any such
public statement without the advance approval of the other parties following
such consultation (such approval not to be unreasonably withheld or delayed),
except as may be required by applicable law, court process or by the
requirements of any securities exchange.
8
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENT AND WAIVER. This Agreement may not be amended
or supplemented except by an instrument in writing signed by each of the
Purchasers and WTM. Any term or provision of this Agreement may be waived, but
only in writing by the party which is entitled to the benefit thereof. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or shall
be deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
SECTION 9.02. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one instrument. It shall not be necessary for each
party to sign each counterpart so long as every party has signed at least one
counterpart.
SECTION 9.03. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or sent by registered or certified mail (return receipt requested),
postage prepaid, or by telecopy to the parties to this Agreement at the
following addresses or at such other address for a party as shall be specified
by like notice:
If to WTM, at:
White Mountains Insurance Group, Ltd.
28 Gates Street
White River Junction, NH 05001
Attention: Corporate Secretary
Telecopy: (802) 295-4550
with a copy to:
9
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Philip A. Gelston, Esq.
Telecopy: (212) 474-3700
If to the Purchasers, at the appropriate address specified on its
signature page.
All such notices and communications shall be deemed to have been received on the
date of delivery, on the date that the telecopy is confirmed as having been
received or on the third business day in New York after the mailing thereof, as
the case may be.
SECTION 9.04. ASSIGNMENT. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by any party to this Agreement without the prior written consent of
the other parties, and any attempt to assign any right, remedy, obligation or
liability arising hereunder without such consent shall be void.
SECTION 9.05. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, written and oral.
SECTION 9.06. BINDING EFFECT; PARTIES IN INTEREST. This Agreement
shall be binding upon and inure to the benefit of the parties to this Agreement
and their respective successors and permitted assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.07. EXPENSES, INDEMNIFICATION. (a) Whether or not the
purchase and sale of the Securities is consummated, each party hereto shall pay
its own fees and expenses incident to preparing for, entering into and carrying
out this Agreement and the consummation of the transactions contemplated hereby.
(b) A party in breach of this Agreement shall, on demand, indemnify
and hold harmless the other parties for and against all reasonable out-of-pocket
expenses, including legal fees, incurred by such other parties by reason of the
enforcement and protection of its rights under this
10
Agreement. The payment of such expenses is in addition to any other relief to
which such other party may be entitled.
SECTION 9.08. APPLICABLE LAW AND JURISDICTION; SERVICE OF PROCESS;
WAIVER OF JURY TRIAL. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to any
applicable principles of conflict of laws to the extent that the application of
the laws of another jurisdiction would be required thereby. Any and all suits,
legal actions or proceedings against any party hereto arising out of this
Agreement shall be brought in the United States Federal court sitting in the
Southern District of New York, or, if such court shall not have jurisdiction, in
the Supreme Court of the State of New York sitting in the County of New York,
and each party hereby submits to and accepts the exclusive jurisdiction of such
courts for the purpose of such suits, legal action or proceedings. Each party
hereto hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any such suit, legal action or proceeding in any
such court and hereby further waives any claim that any suit, legal action or
proceeding brought in any such court has been brought in an inconvenient forum.
The parties hereto agree that service of process in connection with any suit,
legal action or proceeding brought hereunder or in connection herewith may be
made by any means of service of process permitted by law.
(b) Each party waives, to the fullest extent permitted by applicable
law, any right it may have to a trial by jury in respect of any litigation
arising out of or relating to this Agreement. Each party (i) certifies that no
representative, agent or attorney of another party has presented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to
enforce the foregoing waiver and (ii) acknowledges that it has been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications set forth in this Section 9.08.
SECTION 9.09. ARTICLE AND SECTION HEADINGS. The article, section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
SECTION 9.10. TERMINATION. This Agreement may be terminated at any
time prior to the Closing by the mutual consent of each of the Purchasers and
WTM.
11
SECTION 9.11. SPECIFIC ENFORCEMENT. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, the
non-breaching party would be irreparably harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto will waive
the defense in any action for specific performance that a remedy at law would be
adequate and that the parties hereto, in addition to any other remedy to which
they may be entitled at law or in equity, shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically the terms and provisions hereof without the necessity of
proving actual damage or securing or posting any bond or providing prior notice.
12
IN WITNESS WHEREOF, each party hereto has executed this Agreement as
of the day and year first above written.
WHITE MOUNTAINS INSURANCE
GROUP, LTD.,
by
----------------------------------
Name: Dennis Beaulieu
Title: Corporate
Secretary
13
HIGHFIELDS CAPITAL I LP
By: HIGHFIELDS ASSOCIATES LLC, its General
Partner
by:
------------------------------
Name: Richard Grubman
Title: Senior Managing Member
HIGHFIELDS CAPITAL II LP
By: HIGHFIELDS ASSOCIATES LLC, its General
Partner
by:
------------------------------
Name: Richard Grubman
Title: Senior Managing Member
HIGHFIELDS CAPITAL LTD.
By: HIGHFIELDS CAPITAL MANAGEMENT LP, its
Investment Manager
by:
------------------------------
Name: Richard Grubman
Title: Managing Member of Highfields
GP LLC, General Partner of the
Investment Manager
Address for notices pursuant to Section 9.03
of this Agreement:
Highfields Capital Management LP
200 Clarendon Street
Boston, MA 02116
Attention: Joseph F. Mazzella
Telecopy: (617) 850-7620
SCHEDULE I
NUMBER OF PURCHASE
NAMES COMMON SHARES PRICE
- ----- ------------- ------------
HIGHFIELDS CAPITAL I LP.............. 7,700 $ 2,271,500
HIGHFIELDS CAPITAL II LP............. 16,510 $ 4,870,450
HIGHFIELDS CAPITAL LTD............... 60,535 $ 17,857,825
- -------------------------------------------------------------------------
Total: 84,745 $ 24,999,775
======== ============
EXHIBIT 99(e)
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of October
___, 2002, by and between the Purchasers listed on the signature pages hereto
(the "PURCHASERS"), and WHITE MOUNTAINS INSURANCE GROUP, LTD., a company
existing under the laws of Bermuda (the "COMPANY").
W I T N E S S E T H:
WHEREAS, this Agreement is entered into pursuant to that certain
Subscription Agreement between the Purchasers and the Company dated as of
October 23, 2002 (the "SUBSCRIPTION AGREEMENT"), pursuant to which, among other
things, the Purchasers agreed to purchase from the Company, for a purchase price
of $24,999,775, 84,745 Common Shares of the Company; and
WHEREAS, in connection with the transactions contemplated by the
Subscription Agreement, the parties hereto desire to provide for certain rights
and obligations in respect of the Common Shares as hereinafter provided.
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained herein and in the Subscription
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"AFFILIATE" of a specified Person means any Person that is a direct or
indirect wholly owned subsidiary of such Person.
"BEST EFFORTS" means the commercially reasonable efforts that a prudent
person desirous of achieving a result would use in good faith in similar
circumstances to ensure that such result may be achieved as expeditiously as can
reasonably be expected.
"BOARD" means the board of directors of the Company.
"COMMON SHARES" means common shares of the Company, par value $1.00 per
share.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any successor statute.
"HOLDER" or "HOLDERS" means each Purchaser or any Permitted Transferee
thereof which is the record holder of Registrable Securities.
"OTHER HOLDERS" shall have the meaning ascribed to such term in
Section 2(b).
"OTHER SECURITIES" shall have the meaning ascribed to such term in
Section 2.
"PERMITTED TRANSFEREE" shall mean any Affiliate of a Holder.
"PERSON" means any person or entity of any nature whatsoever, specifically
including an individual, a firm, a company, a corporation, a partnership, a
trust or other entity.
"PURCHASER" means each person other than the Company listed on the
signature pages of this Agreement as a party hereto.
"REGISTRABLE SECURITIES" means the Common Shares issued pursuant to the
terms of the Subscription Agreement and any stock or other securities into which
or for which such Common Shares may hereafter be changed, converted or exchanged
upon any reclassification, share combination, share subdivision, share dividend,
merger, consolidation or similar transactions or events; PROVIDED that any such
securities shall cease to be Registrable Securities if (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with the plan of distribution set forth in such registration
statement or (ii) such securities shall have been transferred pursuant to Rule
144.
"REGISTRATION EXPENSES" means all reasonable expenses in connection with
any registration of securities pursuant to this Agreement including, without
limitation, the following: (i) SEC filing fees; (ii) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Registrable Securities to be disposed of under the
Securities Act; (iii) all expenses in connection with the preparation, printing
and filing of the registration statement, any preliminary prospectus or final
prospectus and amendments and supplements thereto and the mailing and delivering
of copies thereof to any stockholders, underwriters and dealers and all expenses
incidental to delivery of the Registrable Securities; (iv) the cost of producing
blue sky or legal investment memoranda; (v) all expenses in connection with the
qualification of the Registrable Securities to be disposed of for offering and
sale under state securities laws, including the reasonable fees and
disbursements of counsel for the underwriters and the Holders in connection with
such qualification and in connection with any blue sky and legal investments
surveys; (vi) the filing fees incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Registrable Securities to be disposed of; (vii) transfer agents', depositories'
and registrars' fees and the fees of any other agent appointed in connection
with such offering; (viii) all security engraving and security printing
expenses; (ix) all fees and expenses payable in connection with the listing of
the Registrable Securities on each securities exchange or inter-dealer quotation
system on which a class of common equity securities of the Company is then
listed; (x) all reasonable out-of-pocket expenses of the Company incurred in
connection with road-show presentations, if any; (xi) courier, overnight
delivery, word processing, duplication, telephone and facsimile expenses; (xii)
any one-time payment for directors and officers insurance directly related to
such offering, provided the insurer provides a separate statement for such
payment and (xiii) the reasonable and documented fees and expenses of one law
firm for the Holders; PROVIDED, HOWEVER, that each Selling Holder shall pay (y)
all underwriting discounts, commissions, fees and expenses (including legal
expenses other than as provided above) of any person with respect to the
Registrable Securities sold by or on behalf of such Holders. In no event shall
the Company pay or be responsible for the fees and disbursements of counsel for
the underwriters in connection with any such registrations, except as provided
in clause (v) above.
- 2 -
"REQUESTING HOLDER" shall have the meaning ascribed to such term in
Section 2.
"RULE 144" means Rule 144 promulgated under the Securities Act, or any
successor rule to similar effect.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor statute.
"SELLING HOLDER" means any Holder selling Registrable Securities by means
of a registration statement pursuant to this Agreement.
"SUBSCRIPTION AGREEMENT" has the meaning set forth in the preamble to the
Agreement.
2. PIGGYBACK REGISTRATION. If at any time the Company proposes to
register any of its Common Shares or any other of its common equity securities
(collectively, "OTHER SECURITIES") under the Securities Act (other than a
registration (i) on Form S-4 or S-8 or any successor form thereto or (ii) filed
in connection with an offering of securities solely to the Company's existing
shareholders), whether or not for sale for its own account, in a manner which
would permit registration of Registrable Securities for sale for cash to the
public under the Securities Act, at each such time it will give prompt written
notice to each Holder of its intention to do so at least thirty (30) days prior
to the anticipated filing date of the registration statement relating to such
registration. Such notice shall offer each such Holder the opportunity to
include in such registration statement such number of Registrable Securities as
each such Holder may request. Upon the written request of any such Holder (each,
a "REQUESTING HOLDER") made within twenty (20) days after the receipt of the
Company's notice (which request shall specify the number of Registrable
Securities intended to be disposed of and the intended method of disposition
thereof), the Company shall use its Best Efforts to effect, in the manner set
forth in the applicable provisions of Section 4, in connection with the
registration of the Other Securities, the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register, to the extent required to permit the disposition (in accordance with
such intended methods thereof) of the Registrable Securities so requested to be
registered, provided that:
(a) if, at any time after giving such written notice of its intention
to register any of its securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to
each Requesting Holder of Registrable Securities and thereupon shall be
relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith as provided in Section 3);
(b) if the registration referred to in the first sentence of this
Section 2 is to be an underwritten registration on behalf of the Company or
on behalf of the holders of securities (other than Registrable Securities)
of the Company (the "OTHER HOLDERS"), and the managing underwriter
designated by the Company or
- 3 -
the Other Holders, as applicable, advises the Company in writing that, in
such firm's good-faith opinion, marketing factors require a limitation on
the number or amount of shares to be underwritten, the Company shall
include in such registration: (1) first, all securities the Company or such
Other Holder whose exercise of registration rights is being satisfied by
such registration, as applicable, proposes to sell for its own account and
(2) second, up to such number or amount of securities (including
Registrable Securities) recommended by such managing underwriter, to the
Requesting Holders and such other additional persons seeking to participate
in such registration, allocated PRO RATA based on the number of shares
requested to be included by such additional persons; and
(c) in the event that any registration pursuant to this Section 2
shall involve, in whole or in part, an underwritten offering, each
Requesting Holder pursuant to this Section 2 hereby agrees to sell such
portion of its Registrable Securities to be registered pursuant to Section
2(a) to the managing underwriter(s) designated by the Company or the Other
Holders, as applicable, on the same terms and conditions that apply to the
Company and/or the Other Holders; PROVIDED, HOWEVER, that any such
Requesting Holder shall be permitted to withdraw all or part of the
Registrable Securities from such registration at any time prior to the
execution of the underwriting agreement relating thereto and PROVIDED
FURTHER, HOWEVER, the Requesting Holders shall only be required to make
representations and warranties and provide indemnity as is customary for
selling stockholders in similar registrations.
3. EXPENSES. The Company agrees to pay all Registration Expenses with
respect to any offerings pursuant to Section 2 hereof. In addition, but not in
duplication of, the foregoing, each Holder shall be entitled to reimbursement
from the Company for any out-of-pocket losses actually incurred in the event,
and only to the extent, that such Holder suffers such losses as a result of such
Holder's inability to make delivery of sold Registrable Securities due to the
Company's breach of its commitment to provide timely notice as required by
Section 4(a)(v).
4. REGISTRATION AND QUALIFICATION.
(a) If and whenever the Company is required to use its Best Efforts to
effect the registration of any Registrable Securities under the Securities Act
as provided in Section 2 hereof, the Company shall:
(i) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith
as may be necessary to comply with the provisions of the Securities Act
applicable to the Company with respect to the securities covered by such
registration statement;
(ii) furnish to the Selling Holder(s) and to any underwriter of such
Registrable Securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits) and such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the requirements
of the Securities Act, and such other documents, as the Selling Holder(s)
or such underwriter may reasonably request in order to facilitate the
public sale of the Registrable Securities, and a copy of any
- 4 -
and all transmittal letters or other correspondence to, or received from,
the SEC or any other governmental agency or self-regulatory body or other
body having jurisdiction (including any domestic or foreign securities
exchange) relating to such offering;
(iii) unless the exemption from state regulation of securities
offerings under Section 18 of the Securities Act applies, use its Best
Efforts to register or qualify all Registrable Securities covered by such
registration statement under the securities or blue sky laws of such
jurisdictions as the Selling Holders or any underwriter of such Registrable
Securities shall reasonably request; PROVIDED that the Company shall not be
required to (A) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this paragraph (iii),
(B) subject itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction;
(iv) promptly notify the Selling Holders in writing (x) at any time
when a prospectus relating to a registration pursuant to Section 2 hereof
is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (y) of any request by the
SEC or any other regulatory body or other body having jurisdiction for any
amendment of or supplement to any registration statement or other document
relating to such offering, and in either such case (x) or (y) at the
request of the Selling Holders, subject to Section 3 hereof, prepare and
furnish to the Selling Holders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
(v) use its Best Efforts to comply with all applicable rules and
regulations of the SEC and to make available to its securities holders, as
soon as reasonably practicable, an earnings statement covering the period
of at least twelve (12) months, but not more than eighteen (18) months,
beginning after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(vi) furnish unlegended certificates representing ownership of the
Registrable Securities being sold in such denominations as shall be
requested by the Selling Holders or the underwriters, with expenses
therewith to be paid in accordance with Section 3 hereof.
(b) The Holder(s) of Registrable Securities on whose behalf
Registrable Securities are to be distributed by one or more underwriters shall
be parties to any underwriting agreements relating to the distribution of such
Registrable Securities.
- 5 -
5. UNDERWRITING, DUE DILIGENCE.
(a) In the event that any registration pursuant to Section 2 shall
involve, in whole or in part, an underwritten offering, the Company may require
the Registrable Securities requested to be registered pursuant to Section 2 to
be included in such underwriting on the same terms and conditions as shall be
applicable to the other securities being sold through underwriters under such
registration. If requested by the underwriters for such underwritten offering,
the Holders on whose behalf the Registrable Securities are to be distributed
shall enter into an underwriting agreement with such underwriters, such
agreement to contain such representations and warranties by the Holders and such
other terms and provisions as are customarily contained in underwriting
agreements with respect to such distributions, including, without limitation,
indemnities and contribution substantially to the effect and to the extent
provided in Section 6 hereof. Such underwriting agreement shall also contain
such representations and warranties by the Company and such other person or
entity for whose account securities are being sold in such offering as are
customarily contained in underwriting agreements with respect to such
distributions.
(b) In connection with the preparation and filing of each registration
statement registering Registrable Securities under the Securities Act, the
Company shall give the Selling Holders and the underwriters, if any, and their
respective counsel and accountants, such reasonable and customary access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified the
Company's financial statements as shall be necessary, in the opinion of such
Selling Holders and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) In the case of any registration of any Registrable Securities
under the Securities Act pursuant to Sections 2 of this Agreement, the Company
agrees to indemnify and hold harmless each Selling Holder, its officers and
directors, each underwriter of Registrable Securities so offered and each
person, if any, who controls any of the foregoing persons within the meaning of
the Securities Act, from and against any and all losses, claims, damages,
expenses, judgments or liabilities, joint or several, to which they or any of
them may become subject, under the Securities Act or otherwise, including any
amount paid in settlement of any litigation commenced or threatened, and shall
promptly reimburse them, as and when incurred, for any reasonable legal or other
expenses incurred by them in connection with investigating any claims and
defending any actions, insofar as such losses, claims, damages, expenses,
judgments or liabilities shall arise out of, or shall be based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement on the effective date thereof (including any prospectus
filed under Rule 424 of the Securities Act) or any amendment thereof or
supplement thereto, or in any document incorporated by reference therein, or any
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 shall not be liable to the Selling Holders
in any such case to the extent that any such loss, claim, damage, expense,
judgment or liability arises out of, or is based upon, any untrue statement or
alleged untrue statement, or any omission, if such statement or omission shall
have been made in reliance upon and in conformity with information
- 6 -
relating to the Selling Holder(s) furnished to the Company in writing by or on
behalf of any Selling Holder specifically for use in the preparation of the
registration statement (including any prospectus filed under Rule 424 of the
Securities Act) or any amendment thereof or supplement thereto. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of a Selling Holder and shall survive the transfer of such securities.
The foregoing indemnity agreement is in addition to any liability which the
Company may otherwise have to each Selling Holder, its officers and directors,
underwriters of the Registrable Securities or any controlling person of the
foregoing.
(b) In the case of any registration of any Registrable Securities
under the Securities Act pursuant to Section 2 of this Agreement, each Selling
Holder agrees to indemnify and hold harmless the Company, its officers and
directors and each person, if any, who controls any of the foregoing within the
meaning of the Securities Act (and if requested by the underwriters, each
underwriter who participates in the offering and each person, if any, who
controls any such underwriter within the meaning of the Securities Act), from
and against any and all losses, claims, damages, expenses, judgments or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act or otherwise, including any amount paid in settlement
of any litigation commenced or threatened, and shall promptly reimburse them, as
and when incurred, for any legal or other expenses incurred by them in
connection with investigating any claims and defending any actions, insofar as
any such losses, claims, damages, expenses, judgments or liabilities shall arise
out of, or shall be based upon, any untrue statement or alleged untrue statement
of a material fact relating to such Selling Holder contained in the registration
statement on the effective date thereof (including any prospectus filed under
Rule 424 of the Securities Act) or any amendment thereof or supplement thereto,
or any omission or alleged omission to state therein a material fact relating to
such Selling Holder required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission
relating to such Selling Holder was made in reliance upon information relating
to such Selling Holder furnished to the Company in writing by or on behalf of
such Selling Holder specifically for use in the preparation of such registration
statement (including any prospectus filed under Rule 424 of the Securities Act);
PROVIDED, HOWEVER, that in no event shall any Selling Holder be liable for any
amount in excess of the net proceeds received from the sale of the Registrable
Securities by such Selling Holder in the subject offering. The foregoing
indemnity is in addition to any liability which any Selling Holder may otherwise
have to the Company, or any of its directors, offices or controlling persons.
(c) PROCEDURE FOR INDEMNIFICATION. Each party indemnified under
paragraph (a) or (b) of this Section 6 shall, promptly after receipt of notice
of any claim or the commencement of any action against such indemnified party in
respect of which indemnity may be sought, notify the indemnifying party in
writing of the claim or the commencement thereof; PROVIDED that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party on account of the indemnity agreement contained
in paragraph (a) or (b) of this Section 6, except to the extent the indemnifying
party was prejudiced by such failure, and in no event shall relieve the
indemnifying party from any other liability which it may have to such
indemnified party. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly
- 7 -
notified indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; PROVIDED that each
indemnified party, its officers and directors, if any, and each person, if any,
who controls such indemnified party within the meaning of the Securities Act,
shall have the right to employ separate counsel reasonably approved by the
indemnifying party to represent them if the named parties to any action
(including any impleaded parties) include both such indemnified party and an
indemnifying party or an affiliate of an indemnifying party, and such
indemnified party shall have been advised by counsel either (i) that there may
be one or more legal defenses available to such indemnified party that are
different from or additional to those available to such indemnifying party or
such affiliate or (ii) a conflict may exist between such indemnified party and
such indemnifying party or such affiliate, and in that event the fees and
expenses of one such separate counsel for all such indemnified parties shall be
paid by the indemnifying party. An indemnified party will not enter into any
settlement agreement which is not approved by the indemnifying party, such
approval not to be unreasonably withheld. The indemnifying party may not agree
to any settlement of any such claim or action which provides for any remedy or
relief other than monetary damages for which the indemnifying party shall be
responsible hereunder, without the prior written consent of the indemnified
party, which consent shall not be unreasonably withheld. In any action hereunder
as to which the indemnifying party has assumed the defense thereof with counsel
reasonably satisfactory to the indemnified party, the indemnified party shall
continue to be entitled to participate in the defense thereof, with counsel of
its own choice, but, except as set forth above, the indemnifying party shall not
be obligated hereunder to reimburse the indemnified party for the costs thereof.
In all instances, the indemnified party shall cooperate fully with the
indemnifying party or its counsel in the defense of each claim or action.
If the indemnification provided for in this Section 6 shall for any
reason be unavailable to an indemnified party in respect of any loss, claim,
damage, expense, judgment or liability, or any action in respect thereof,
referred to herein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage, expense, judgment or
liability in respect thereof, or action in respect thereof, in such proportion
as shall be appropriate to reflect the relative fault of the indemnifying party
on the one hand and the indemnified party on the other with respect to the
statements or omissions which resulted in such loss, claim, damage, expense,
judgment or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party on the one hand or the indemnified party on
the other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission,
but not by reference to any indemnified party's stock ownership in the Company.
In no event, however, shall a Selling Holder be required to contribute in excess
of the amount of the net proceeds received by such Selling Holder in connection
with the sale of Registrable Securities in the offering which is the subject of
such loss, claim, damage or liability. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage, expense, judgment or
liability, or action in respect thereof, referred to above in
- 8 -
this paragraph shall be deemed to include, for purposes of this paragraph, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claims. 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.
7. RULE 144. The Company shall take such measures and file such
information, documents and reports to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC thereunder
and will take such further action as any Holder of Registrable Securities may
reasonably request, all to the extent necessary or desirable from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144.
Upon the request of any Holder of Registrable Securities, the Company will
deliver to such Holder a written statement, certified by an authorized executive
officer of the Company, as to whether the Company has complied with such
requirements. The Company shall have no obligation to effect a registration of
Registrable Securities pursuant to Section 2 hereof if such Registrable
Securities may be sold without registration under the Securities Act within the
limitation of the exemption provided by Rule 144(k).
8. HOLDBACK. Each of the Company and the Selling Holders agrees, if so
required in writing by the managing underwriter, not to sell, make any short
sale of, loan, grant any option for the purchase of (other than pursuant to
employee benefit plans), effect any public sale or distribution of or otherwise
dispose of the Company's equity securities or securities convertible into or
exchangeable or exercisable for any such securities, during the 30 days prior to
and the 90 days after any underwritten registration pursuant to Section 2 hereof
(in which such Selling Holder is offering Registrable Securities) has become
effective, except as part of such underwritten registration and except, in the
case of the Company, pursuant to registrations on Form S-4 or S-8 or any
successor form thereto.
9. TRANSFER OF REGISTRATION RIGHTS.
(a) A Holder may transfer all or any portion of its rights under this
Agreement only to a Permitted Transferee. The Holder making such transfer shall
promptly notify the Company in writing stating the name and address of any
Permitted Transferee and identifying the amount of Registrable Securities with
respect to which the rights under this Agreement are being transferred and the
nature of the rights so transferred. In connection with any such transfer, the
term "Holder" as used in this Agreement shall, where appropriate to assign the
rights and obligations of a Holder hereunder to such Permitted Transferee, be
deemed to refer to the Permitted Transferee, as holder of such Registrable
Securities.
(b) After any such transfer, the Holder making such transfer shall
retain its rights under this Agreement with respect to all other Registrable
Securities still owned by such Holder.
(c) Upon the request of the Holder making such transfer, the Company
shall execute a Registration Rights Agreement with such Permitted Transferee or
a proposed Permitted Transferee substantially similar to this Agreement.
- 9 -
10. MISCELLANEOUS.
(a) INJUNCTIONS. Each party acknowledges and agrees that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
Therefore, each party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court having jurisdiction, such remedy
being in addition to any other remedy to which such party may be entitled at law
or in equity.
(b) SEVERABILITY. If any term or provision of this Agreement shall be
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms and provisions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
each of the parties shall use its Best Efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term or provision.
(c) FURTHER ASSURANCES. Subject to the specific terms of this
Agreement, each of the parties hereto shall make, execute, acknowledge and
deliver such other instruments and documents, and take all such other actions,
as may be reasonably required in order to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.
(d) WAIVERS, ETC. No failure or delay on the part of either party (or
the intended third-party beneficiaries referred to herein) in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power preclude any other or
further exercise thereof or the exercise of any other right or power. No
modification or waiver of any provision of this Agreement nor consent to any
departure therefrom shall in any event be effective unless the same shall be in
writing and signed by an authorized officer of each of the parties, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
(e) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties with respect to its subject matter. This Agreement supersedes all
prior agreements and understandings between the parties, whether written or
oral, with respect to the subject matter hereof. The paragraph headings
contained in this Agreement are for reference purposes only, and shall not
affect in any manner the meaning or interpretation of this Agreement.
(f) COUNTERPARTS. For the convenience of the parties, this Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original but all of which together shall be one and the same instrument.
(g) AMENDMENT. This Agreement may be amended only by a written
instrument duly executed by an authorized officer of the Company and an
authorized officer of each Holder.
(h) NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given
- 10 -
when received if delivered personally, on the next business day if sent by
overnight courier for next business day delivery (providing proof of delivery),
when confirmation is received, if sent by facsimile or in five business days if
sent by U.S. registered or certified mail, postage prepaid (return receipt
requested) to the other parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to the Company, to:
White Mountains Insurance Group, Ltd.
28 Gates Street
White River Junction, NH 05001
Attention: Corporate Secretary
Facsimile: (802) 295-4550
(ii) if to the Purchasers, at the address set forth below each
Purchaser's name on the signature pages hereto.
(i) GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
(j) TERM. This Agreement shall remain in full force and effect until
there are no Registrable Securities outstanding or until terminated by the
mutual agreement of the parties hereto.
(k) ASSIGNMENT. Except as provided herein, the parties may not assign
their rights under this Agreement. This Agreement shall be binding upon and
inure to the benefit of successors to the parties hereto.
(l) PRIORITY OF RIGHTS. The Purchasers agree that the rights granted
hereunder are expressly made subject to the rights of the "Holders" under the
Registration Rights Agreement dated as of May 30, 2001 between the Company and
Berkshire Hathaway Inc. in a manner consistent with such agreement.
- 11 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representative as of the date first above
written.
WHITE MOUNTAINS INSURANCE GROUP, LTD.
by:
------------------------------
Name: Dennis Beaulieu
Title: Corporate Secretary
- 12 -
HIGHFIELDS CAPITAL I LP
By: HIGHFIELDS ASSOCIATES LLC, its General Partner
by:
------------------------------
Name: Richard Grubman
Title: Senior Managing Member
HIGHFIELDS CAPITAL II LP
By: HIGHFIELDS ASSOCIATES LLC, its General Partner
by:
------------------------------
Name: Richard Grubman
Title: Senior Managing Member
HIGHFIELDS CAPITAL LTD.
By: HIGHFIELDS CAPITAL MANAGEMENT LP, its
Investment Manager
by:
------------------------------
Name: Richard Grubman
Title: Managing Member of Highfields GP LLC,
General Partner of the Investment Manager
Address: 200 Clarendon Street
Boston, MA 02116
Attention: Joseph F. Mazzella
Facsimile: (617) 850-7620
- 13 -
