AMENDED AND RESTATED OPTION
AGREEMENT
This AMENDED AND RESTATED OPTION AGREEMENT (this
“Agreement”), dated as of October 23, 2008, among
PLATINUM UNDERWRITERS HOLDINGS, LTD., a company organized under the
laws of the Islands of Bermuda (the “Company”),
RENAISSANCERE HOLDINGS LTD., a company organized under the laws of
the Islands of Bermuda (“RenRe”), and RENAISSANCE OTHER
INVESTMENTS HOLDINGS II LTD., a company organized under the laws of
the Islands of Bermuda and a wholly owned subsidiary of RenRe
(“Holdings”), amends and restates the AMENDED AND
RESTATED OPTION AGREEMENT, dated November 18, 2004, between
the Company and RenRe (the “2004
Agreement”).
WHEREAS, pursuant to Section 6(a) of the 2004
Agreement, RenRe desires to assign the Option (as defined below),
and certain of its rights and obligations under the 2004 Agreement,
to Holdings; and
WHEREAS, Section 6(a) of the 2004 Agreement
provides that in connection with such assignment Holdings shall
enter into an option agreement with the Company that is
substantially identical to the 2004 Agreement.
NOW, THEREFORE, in consideration of the mutual
promises, covenants and agreements set forth herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree that
the 2004 Agreement shall be amended and restated in its entirety as
follows:
THE OPTION (AS
DEFINED BELOW) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933. NEITHER THE OPTION, NOR ANY INTEREST
THEREIN, NOR ANY COMMON SHARES, PAR VALUE U.S. $0.01 PER SHARE, OF
THE COMPANY (“COMMON SHARES”) DELIVERABLE UPON EXERCISE
THEREOF MAY BE ASSIGNED OR OTHERWISE TRANSFERRED, DISPOSED OF OR
ENCUMBERED EXCEPT FOLLOWING RECEIPT BY THE COMPANY OF EVIDENCE
SATISFACTORY TO IT, WHICH MAY INCLUDE AN OPINION OF UNITED STATES
COUNSEL, THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION UNDER THE
SECURITIES ACT OR STATE SECURITIES LAWS AND UPON OBTAINMENT OF ANY
REQUIRED GOVERNMENT APPROVALS AND EXCEPT TO THE EXTENT PERMITTED
HEREIN. TRANSFER OF THE OPTION OR ANY INTEREST THEREIN,
OR ANY COMMON SHARES DELIVERABLE UPON EXERCISE THEREOF, MAY BE
DISAPPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY IF, IN ITS
REASONABLE JUDGMENT, IT HAS REASON TO BELIEVE THAT SUCH TRANSFER
MAY EXPOSE THE COMPANY, ANY SUBSIDIARY THEREOF, ANY SHAREHOLDER OR
ANY PERSON CEDING INSURANCE TO THE COMPANY OR ANY SUCH SUBSIDIARY
TO ADVERSE TAX OR REGULATORY TREATMENT IN ANY
JURISDICTION. COMMON SHARES OBTAINED UPON EXERCISE OF
THE OPTION ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER AS
SET FORTH IN SECTION 6 OF THIS AGREEMENT.
1. (a)
The Company grants Holdings an option (the “Option”) to
purchase up to 2,500,000 Common Shares (the “Option
Shares”) in accordance with the terms and conditions of this
Agreement.
(b) The Option is
exercisable, in whole or in part at any time prior to
November 1, 2012 (the “Exercise Period”), at an
exercise price per Common Share (the “Exercise Price”)
equal to $27.00 less the then par value of such Common Share, as
such Exercise Price is adjusted from time to time pursuant hereto,
which Exercise Price shall be paid by reducing the number of Common
Shares obtainable upon exercise of the Option as provided in
Section 1(d) hereof. As additional consideration, in
connection with any exercise of the Option, Holdings must pay the
applicable Cash Consideration to the Company in accordance with
Section 2 below.
(c) The Option may be
exercised on any day during the Exercise Period, other than a
Saturday, Sunday or other day on which banking institutions in New
York City or Bermuda are authorized or obligated by law or
executive order to close (a “Business
Day”). The Option may be exercised as provided
herein until 12:01 A.M., New York City time, on the first day
after the expiration of the Exercise Period.
(d) Upon any exercise
of the Option, the Exercise Price shall be paid by reducing the
number of Option Shares obtainable upon such exercise so as to
yield a number of Option Shares issuable upon such exercise equal
to the product of (x) the number of Option Shares issuable as of
the Notice Date (if payment of the Exercise Price were being made
in cash) and (y) the Exchange Ratio. For purposes
hereof, (i) “Exchange Ratio” means a fraction, the
numerator of which is the excess of the Market Price per Common
Share over the Exercise Price per share as of the Notice Date and
the denominator of which is the Market Price per Common Share; (ii)
“Market Price” means the average of the daily Closing
Price per Common Share for each of the five consecutive Trading
Days ending on the Notice Date (the “Pre-Notice
Average”) plus the average of the daily Closing Price per
Common Share for each of the five consecutive Trading Days
immediately following the Notice Date (the “Post-Notice
Average”) divided by two; provided , however ,
that the Post-Notice Average shall not exceed the Pre-Notice
Average multiplied by 1.025 nor be less than the Pre-Notice Average
multiplied by 0.975; (iii) “Trading Day” means each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day
on which the Common Shares are not traded on the applicable
securities exchange or on the applicable securities market; (iv)
“Closing Price” means the reported last sale price
regular way or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange or, if
the Common Shares are not listed or admitted to trading on such
Exchange, on the principal national securities exchange on which
the Common Shares are listed or admitted to trading or, if the
Common Shares are not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm reasonably selected from time to time by
the Board of Directors of the Company for that purpose; and (v)
“Notice Date” means the date upon which the Company
receives written notice (which shall be signed on behalf of
Holdings and delivered or sent to the Company in accordance with
Section 9 hereof) from Holdings of Holdings’ exercise of the
Option, provided that the Company shall receive such notice no
later than 11:59 p.m. Bermuda time on such date.
(e) No fractional
Common Share shall be issued upon any exercise of the
Option. In lieu of a fractional Common Share, Holdings
shall be entitled to receive cash for the value of the fractional
Common Share, which cash payment shall be equal to the product of
(i) the fraction represented by the fractional Common Share that
would have been issued absent this Section 1(e) and (ii) the Market
Price.
(f) In connection with
any exercise of the Option, the Market Price, the Exercise Price,
and the number of Option Shares to be issued (after giving effect
to the payment of the Exercise Price as provided in
Section 1(d) hereof) will be determined by the Company within
three Business Days after the last Trading Day included in the
Post-Notice Average (the “Determination
Date”).
(g) Notwithstanding
anything to the contrary in this Agreement, RenRe’s
beneficial ownership interest in the Common Shares may not at any
time and under any circumstances exceed 19.9% of the then
outstanding Common Shares or such higher limit as the Company may
approve in writing. It is agreed and understood that,
prior to any exercise of the Option, RenRe shall, if necessary,
dispose (or cause Holdings or any other subsidiary of RenRe to
dispose, as applicable) of such number of Common Shares so that,
immediately after any exercise of the Option, except with the prior
written approval of the Company, RenRe will not beneficially own
more than 19.9% of the then outstanding Common Shares.
(h) The Option Shares
upon issue will rank equally in all respects with the other Common
Shares of the Company, but in no case will any Option Shares carry
any option or other right to subscribe for further additional
shares.
(i) Neither RenRe nor
Holdings is, solely by virtue hereof, entitled to any rights of a
shareholder in the Company either at law or in equity.
(j) Upon any merger,
amalgamation, consolidation, scheme of arrangement or similar
transaction involving the Company and any third party that is not a
subsidiary of the Company, or any sale of all or substantially all
the assets of the Company to any third party that is not a
subsidiary of the Company (each, a “Transaction”) in
which all holders of Common Shares become entitled to receive, in
respect of such shares, any capital stock, rights to acquire
capital stock or other securities of the Company or of any other
person, any cash or any other property, or any combination of the
foregoing (collectively, “Transaction Consideration”),
the Option shall entitle Holdings, upon exercise thereof and
payment by Holdings of the Cash Consideration, to receive all
Transaction Consideration that Holdings would have been entitled to
if it had exercised the Option in full immediately prior to the
Transaction (without regard to the limitations in Section 1(g)
hereof). In determining the kind and amount of
Transaction Consideration that Holdings would be entitled to
receive in respect of any Transaction pursuant to this Section
1(j), Holdings shall be entitled to exercise any rights of election
as to the kinds and amounts of consideration receivable in such
Transaction that are provided to holders of Common Shares in such
Transaction. Any adjustment in respect of a Transaction
pursuant to this Section 1(j) shall become effective immediately
after the effective time of such Transaction, retroactive to any
record date therefor. The Company shall take such action
as is necessary to ensure that Holdings shall be entitled to
receive Transaction Consideration upon the terms and conditions
provided in this Section 1(j). Notwithstanding the
foregoing, if an adjustment is made pursuant to this Section 1(j)
in respect of a Transaction that involves a Change of Control (as
defined below), Holdings shall be entitled to exercise the Option
pursuant to this Section 1(j) without regard to Section 1(g)
hereof. A Transaction is deemed to have involved a
“Change of Control” if the beneficial owners of the
outstanding Common Shares immediately prior to the effective time
of such Transaction are not the beneficial owners of a majority of
the total voting power of the surviving or acquiring entity in the
Transaction, as the case may be, immediately after such effective
time.
2. (a)
To exercise the Option in accordance with Section 1 hereof,
Holdings shall provide written notice to the Company of its
intention to exercise all or a portion of the
Option. Such notice must indicate the number of the
Option Shares Holdings intends to purchase upon exercise of the
Option (prior to giving effect to the payment of the Exercise Price
pursuant to Section 1(d) hereof).
(b) On the
Determination Date, the Company shall deliver written notice to
Holdings of the number of Option Shares to which Holdings is
entitled as a result of the exercise of the Option. Upon
payment by Holdings to the Company of the Cash Consideration (which
may be made by check, cash or wire transfer), the Company shall
promptly (but in no event later than the third Business Day after
receipt of such payment from Holdings) deliver to Holdings the
Option Shares, and shall pay to Holdings the cash in lieu of any
fractional Common Share, which may be paid by check, cash or wire
transfer. The “Cash Consideration” means an
amount equal to the product of (i) the number of Option Shares to
which Holdings is entitled as a result of the exercise of the
Option (after giving effect to the payment of the Exercise Price
pursuant to Section 1(d) hereof) and (ii) the then per
share par value of a Common Share. Any increase in the
par value of the Common Shares from $0.01 per Common Share which
would have the effect of increasing the Cash Consideration, other
than in the case of any of the actions described in Sections
3(a)(B) and 3(a)(C) hereof which includes a proportionate
adjustment in the par value, shall be subject to the prior written
consent of Holdings.
(c) Notwithstanding
anything to the contrary in this Agreement, the Option may not be
exercised under this Agreement unless the required regulatory
approvals set forth in Section 5 shall have been
obtained.
3. (a)
In case the Company:
(A) declares or pays a
dividend or makes any other distribution with respect to its
capital stock in Common Shares such that the number of Common
Shares outstanding is increased,
(B) subdivides or
splits-up its outstanding Common Shares, such that the number of
Common Shares outstanding is increased,
(C) combines its
outstanding Common Shares into a smaller number of Common Shares
or
(D) effects any
reclassification of the Common Shares other than a change in par
value (including any such reclassification in connection with an
amalgamation or merger in which the Company is the surviving entity
or a reincorporation of the Company),
the number of
Option Shares issuable upon exercise of the Option shall be
proportionately adjusted so that Holdings will be entitled to
receive the kind and number of Common Shares or other securities of
the Company which it would have been entitled to receive after the
happening of any of the events described above if the Option had
been exercised immediately prior to the happening of such event or
any record date with respect thereto. An adjustment made
pursuant to this Section 3(a) shall become effective immediately
after the effective date of such event retroactive to the record
date, if any, for such event.
(b) In case the
Company issues rights, options or warrants to all holders of its
outstanding Common Shares entitling them to subscribe for or
purchase Common Shares at a price per Common Share which is lower
at the record date mentioned below than the then Current Market
Value (as defined in Section 3(d)), the number of Option Shares
that Holdings may purchase thereafter upon the exercise of the
Option (prior to giving effect to the payment of the Exercise Price
pursuant to Section 1(d) hereof) will be determined by
multiplying the number of Option Shares theretofore purchasable
upon exercise of the Option by a fraction, of which the numerator
is the sum of (A) the number of Common Shares outstanding on the
record date for determining shareholders entitled to receive such
rights, options or warrants plus (B) the number of additional
Common Shares offered for subscription or purchase, and of which
the denominator shall be the sum of (A) the number of Common Shares
outstanding on the record date for determining shareholders
entitled to receive such rights, options or warrants plus (B) the
number of shares which the aggregate offering price of the total
number of Common Shares so offered would purchase at the Current
Market Value (as defined below in Section 3(d)) per Common Share at
such record date. Such adjustment shall be made whenever
such rights, options or warrants are issued, and shall become
effective immediately after the record date for the determination
of shareholders entitled to receive such rights, options or
warrants.
(c) In the event the
Company distributes to all holders of its Common Shares any of the
capital stock of any of its subsidiaries (each, a
“Subsidiary”), the Option will upon such distribution
be deemed to be an option to acquire the kind and number of shares
of the capital stock of the Subsidiary which Holdings would have
been entitled to receive after such distribution had the Option
been exercised immediately prior to such distribution or any record
date with respect thereto. The roll-over of the Option
into an option to acquire shares of capital stock of the applicable
Subsidiary pursuant to this Section 3(c) will become effective
immediately after the effective date of the distribution of shares
of the capital stock of the applicable Subsidiary to shareholders
of the Company described above.
(d) For the purpose of
any computation under Section 3(b), the “Current Market
Value” of such Common Shares on a specified date is deemed to
be the average daily Closing Price per Common Share for each of the
ten consecutive Trading Days ending on the day before
the
