AGREEMENT AND PLAN
OF
AMALGAMATION
among
GCR HOLDINGS LIMITED
and
EXEL LIMITED
and
EXEL ACQUISITION LTD.
Dated as of May 8, 1997
TABLE OF CONTENTS
SECTION PAGE
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ARTICLE I.
THE OFFER
SECTION 1.1 The Offer............................................... 1
SECTION 1.2 Company Actions......................................... 3
SECTION 1.3 Directors; Section 14(f)................................ 4
ARTICLE II.
THE AMALGAMATION; DISPOSITION OF SHARES
SECTION 2.1 The Amalgamation........................................ 5
SECTION 2.2 Effect of the Amalgamation.............................. 5
SECTION 2.3 Memorandum of Association and Articles of
Association of the Amalgamated Company;
Registration Number............................................ 5
SECTION 2.4 Directors and Officers of the Amalgamated
Company........................................................ 5
SECTION 2.5 Further Assurances...................................... 6
SECTION 2.6 Effect on Shares of Newco and Company................... 6
SECTION 2.7 Company Option Plans and Agreements..................... 7
SECTION 2.8 Payment for Shares...................................... 7
SECTION 2.9 Transfers............................................... 8
SECTION 2.10 Special Meeting........................................ 8
SECTION 2.11 Compulsory Acquisition of Minority
Shares......................................................... 9
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF COMPANY
SECTION 3.1 Organization............................................ 10
SECTION 3.2 Capitalization.......................................... 11
SECTION 3.3 Authority............................................... 11
SECTION 3.4 Voting Requirements..................................... 11
SECTION 3.5 No Violations; Consents and Approvals................... 12
SECTION 3.6 SEC Documents; Financial Statements..................... 12
SECTION 3.7 Absence of Certain Changes.............................. 14
SECTION 3.8 Legal Proceedings....................................... 14
SECTION 3.9 Compliance with Laws and Agreements..................... 14
SECTION 3.10 Schedule 14D-9 and Disclosure Statement;
Other Information.............................................. 15
SECTION 3.11 State Antitakeover Statutes............................ 15
SECTION 3.12 Broker's Fees.......................................... 15
SECTION 3.13 Opinion of Financial Advisor........................... 16
SECTION 3.14 Taxes.................................................. 16
SECTION 3.15 Employees.............................................. 17
SECTION 3.16 Disclosure............................................. 18
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SECTION PAGE
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
SECTION 4.1 Organization............................................ 19
SECTION 4.2 Authority............................................... 19
SECTION 4.3 No Violations........................................... 19
SECTION 4.4 Offer Documents; Other Information...................... 20
SECTION 4.5 Financial Ability to Perform............................ 20
ARTICLE V.
COVENANTS
SECTION 5.1 Conduct of Business of Company.......................... 20
SECTION 5.2 Public Announcements.................................... 22
SECTION 5.3 Acquisition Proposals................................... 22
SECTION 5.4 Access to Information................................... 25
SECTION 5.5 Board Recommendation.................................... 25
SECTION 5.6 Reasonable Best Efforts; Other Actions.................. 25
SECTION 5.7 Notification of Certain Matters......................... 25
SECTION 5.8 Indemnification......................................... 26
SECTION 5.9 Termination of Share Plans.............................. 27
SECTION 5.10 Certain Change in Control Matters...................... 27
ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE AMALGAMATION
SECTION 6.1 Conditions to Each Party's Obligation to
Effect the Amalgamation............................... 27
ARTICLE VII.
CLOSING
SECTION 7.1 Time and Place.......................................... 28
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination............................................. 28
SECTION 8.2 Effect of Termination................................... 30
SECTION 8.3 Certain Payments; Expenses.............................. 30
ARTICLE IX.
DEFINITIONS
SECTION 9.1 Definitions............................................. 31
SECTION 9.2 Terms Defined in the Agreement.......................... 32
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ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Amendment and Modification............................. 33
SECTION 10.2 Waiver of Compliance; Consents......................... 34
SECTION 10.3 Survival............................................... 34
SECTION 10.4 Notices................................................ 34
SECTION 10.5 Assignment............................................. 35
SECTION 10.6 Governing Law.......................................... 35
SECTION 10.7 Counterparts........................................... 35
SECTION 10.8 Severability........................................... 35
SECTION 10.9 Interpretation......................................... 36
SECTION 10.10 Entire Agreement...................................... 36
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AGREEMENT AND PLAN OF AMALGAMATION
AGREEMENT AND PLAN OF AMALGAMATION, dated as of May 8, 1997 (the
"Agreement"), by and among GCR HOLDINGS LIMITED, a Cayman Islands limited
liability company ("Company"), EXEL LIMITED, a Cayman Islands limited liability
company ("Parent"), and EXEL ACQUISITION LTD., a Cayman Islands limited
liability company and a wholly owned subsidiary of Parent ("Newco"). Company and
Newco are hereinafter sometimes collectively referred to as the "Constituent
Companies," and Company, Parent and Newco are hereinafter sometimes collectively
referred to as the "Parties."
WHEREAS, the Board of Directors of Company (the "Board") has
unanimously determined that it is fair to, and in the best interests of, Company
and its shareholders for Parent to acquire Company upon the terms and subject to
the conditions hereinafter set forth, and recommends that shareholders of
Company accept the Offer and tender their Shares pursuant to the Offer and adopt
and approve the Amalgamation;
WHEREAS, in furtherance of such acquisition, it is proposed that
Parent shall cause Newco to make a tender offer (the "Offer") to acquire all the
issued and outstanding ordinary shares, par value $.10 per share, of Company
(the "Shares") for $27.00 in cash per Share, net to the seller (such amount, or
any higher amount as may be paid for Shares pursuant to the Offer, being
hereinafter referred to as the "Amalgamation Consideration"), upon the terms and
subject to the conditions of this Agreement and the Offer; and
WHEREAS, the Boards of Directors of each of Parent, Newco and
Company have approved the amalgamation of Newco with and into Company (the
"Amalgamation") following consummation of the Offer, upon the terms and subject
to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
Parties agree as follows:
ARTICLE I.
THE OFFER
SECTION 1.1 The Offer. (a) As promptly as practicable (but in no
event later than five business days after the date of the initial public
announcement of the execution and delivery of this Agreement), Newco shall, and
Parent shall cause Newco to, commence (within the meaning of Rule 14d-2 under
the United States Securities Exchange Act of 1934, as amended (collectively with
the rules and regulations promulgated thereunder, the "Exchange Act")), the
Offer and, subject to the conditions of the
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Offer, shall use commercially reasonable efforts to consummate the Offer as
promptly as permitted by law. The obligation of Parent and Newco to consummate
the Offer, to accept for payment and to pay for any Shares tendered pursuant to
the Offer (i) shall be subject to the condition that the number of Shares
validly tendered and not withdrawn prior to the expiration date of the Offer
(the "Expiration Date"), together with all Shares beneficially owned by Parent
or any of its subsidiaries on such date (the "Parent Owned Shares"), shall be
not less than 75% of the Shares then outstanding, calculated on a fully diluted
basis (the "Minimum Condition"), and (ii) shall be subject to the other
conditions set forth in Annex A.
(b) Parent and Newco expressly reserve the right to increase the
price per Share payable in the Offer or to make any other changes in the terms
and conditions of the Offer; provided, however, that neither Parent nor Newco
will, without the prior written consent of Company, decrease the consideration
payable in the Offer, reduce the number of Shares subject to the Offer, impose
any additional conditions to the Offer, change the form of consideration payable
in the Offer or amend or alter any other term of the Offer in any manner
materially adverse to the holders of Shares. Company agrees that no Shares held
by Company or any of its subsidiaries will be tendered pursuant to the Offer.
Notwithstanding any other provision of this Agreement, the conditions of the
Offer are for the sole benefit of Parent and Newco and may be asserted by Parent
and Newco regardless of the circumstances giving rise to any such conditions or
may be waived by Parent and Newco in whole at any time or in part from time to
time in their sole and absolute discretion (except that, without Company's
consent, Newco may not reduce the percentage amount of the Minimum Condition to
less than majority).
(c) As soon as practicable on the date of commencement of the Offer,
Parent and Newco shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer which will contain the offer to purchase and form of the related
letter of transmittal (together with any supplements or amendments thereto,
collectively referred to herein as the "Offer Documents"). Parent and Newco
shall give Company and its counsel a reasonable opportunity to review the Offer
Documents prior to their being filed with the SEC or disseminated to the
shareholders of Company. Parent and Newco will furnish Company and its counsel
in writing any comments that Parent, Newco or their counsel may receive from the
SEC or its staff with respect to the Offer Documents, promptly after receipt of
such comments, and the proposed responses thereto. Each of Parent and Newco (and
Company with respect to information supplied by it specifically for use in the
Offer Documents) agrees to promptly correct the Offer Documents if and to the
extent that they shall have become false or misleading in any material respect,
and Parent and Newco
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shall take all steps reasonably necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to Company's
shareholders, in each case as and to the extent required by applicable United
States federal securities laws.
(d) Parent shall provide or cause to be provided to Newco on a
timely basis the funds sufficient to accept for payment, and Parent shall cause
Newco to pay for, any and all Shares that Newco becomes obligated to accept for
payment pursuant to the Offer.
SECTION 1.2 Company Actions. Company hereby consents to the Offer
and represents that (a) the Board (at a meeting duly called and held) has
unanimously (i) determined that the Offer and the Amalgamation are fair to, and
in the best interests of, Company and its shareholders, (ii) approved this
Agreement and the Offer and the transactions contemplated hereby, including the
Offer and the Amalgamation, and (iii) resolved to recommend acceptance of the
Offer and approval of the Amalgamation by Company's shareholders, and (b)
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. have advised, and delivered their written opinion to, the
Board that as of the date hereof, the cash consideration to be received by
Company's shareholders in the Offer and the Amalgamation is, based upon and
subject to the matters set forth therein, fair to such shareholders. Company
hereby agrees to file with the SEC contemporaneously with the commencement of
the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") containing such recommendations in favor of the Offer and the
Amalgamation. Company (and Newco and Parent, with respect to information
supplied by either of them specifically for use in the Schedule 14D-9) agrees
promptly to correct the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect, and Company shall take all
steps reasonably necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to Company's shareholders, in each
case as and to the extent required by applicable United States federal
securities laws. Company hereby consents to the inclusion in the Offer Documents
of the representation in the first sentence of this paragraph. In connection
with the Offer, Company will promptly furnish Newco with mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of Shares as of a recent date, and
shall furnish Newco with such information and assistance as Newco or its agents
may reasonably request in communicating the Offer to Company's shareholders,
such information to be subject, to the extent applicable, to the Confidentiality
Agreement.
SECTION 1.3 Directors; Section 14(f). (a) Promptly upon the purchase
by Parent or Newco of such number of Shares that, together with the number of
Parent Owned Shares, represents
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at least a majority of the outstanding Shares, and from time to time thereafter
prior to the Effective Time, (i) Parent shall be entitled to designate such
number of directors, rounded up to the next whole number but in no event more
than one less than the total number of directors, on the Board as will give
Parent, subject to compliance with Section 14(f) of the Exchange Act and Rule
14f-1 thereunder, representation on the Board equal to the product of the number
of directors on the Board and the percentage that such number of purchased
Shares and Parent Owned Shares bears to the number of Shares outstanding, and
(ii) Company shall, upon request by Parent, promptly (x) increase the size of
the Board to the extent permitted by its Organization Documents and/or (y)
exercise its best efforts to secure the resignations of such number of directors
as is necessary to enable Parent's designees to be elected to the Board and
cause Parent's designees to be so elected; provided, however, that until the
Effective Time (or termination of this Agreement) the Board will have at least
two Independent Directors, each of whom shall resign at the Effective Time or
such termination. At the request of Parent, Company shall take, at its expense,
all action necessary to effect any such election, including mailing to its
shareholders the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder. Parent and Newco will supply to Company in writing and
shall be solely responsible for any information with respect to any of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. At any time Parent's designees constitute a majority of
the Board, Parent shall be entitled to designate all of the members of the board
of directors of each subsidiary of Parent, subject to any applicable
restrictions under the Insurance ▇▇▇ ▇▇▇▇ of Bermuda (the "Insurance Act") and
any rules and regulations of the Bermuda Minister of Finance (the "Minister")
thereunder. The provisions of this Section 1.3 are in addition to and shall not
limit any rights that Newco, Parent or any of their affiliates may have as a
holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
"Independent Director" means (x) the two members of the Board not
otherwise affiliated with Parent or Newco and not employees of Company or any of
its subsidiaries, who shall be designated by Company, Newco and Parent, or (y)
any successor of either of them reasonably satisfactory to Parent and Newco
designated by the Independent Directors then in office; provided, however, that
if a successor is not so designated after an Independent Director resigns or
otherwise leaves office, Parent shall be entitled to designate a successor who
meets the requirements of clause (x).
(b) Following the election or appointment of Parent's designees
pursuant to this Section 1.3 and prior to the Effective Time (or termination of
this Agreement), (i) any amendment to
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this Agreement, (ii) any termination of this Agreement by Company, (iii) any
extension by Company of the time for the performance of any of the obligations
or other acts of Parent or Newco and (iv) any waiver of any of Company's rights
under this Agreement will require the concurrence of the Independent Directors
then in office.
ARTICLE II.
THE AMALGAMATION; DISPOSITION OF SHARES
SECTION 2.1 The Amalgamation. In accordance with the provisions of
this Agreement and the Companies Law (1995 Revision) of the Cayman Islands (the
"Companies Law"), at the Effective Time, Newco and Company shall be amalgamated.
At and after the Effective Time, Company shall continue in the form of the
amalgamated company and shall operate under the name "GCR Holdings Limited" (the
"Amalgamated Company").
SECTION 2.2 Effect of the Amalgamation. The Amalgamation shall have
the effects set forth in Sections 85 and 86 of the Companies Law.
SECTION 2.3 Memorandum of Association and Articles of Association of
the Amalgamated Company; Registration Number. The memorandum of association of
Company shall become the memorandum of association of the Amalgamated Company
and thereafter may be amended as provided therein and by law. The articles of
association of Company shall become the articles of association of the
Amalgamated Company and thereafter may be amended as provided therein and by
law. The registration number of the Amalgamated Company in the Cayman Islands
after the Effective Time shall be the same registration number as that of
Company immediately prior to the Effective Time.
SECTION 2.4 Directors and Officers of the Amalgamated Company. At
the Effective Time, the then current directors of Newco and any additional
individuals designated by Parent shall be the initial directors of the
Amalgamated Company, each of such directors to hold office in accordance with
the applicable provisions of the memorandum and articles of association of the
Amalgamated Company and until their successors shall be elected or appointed and
shall duly qualify. Except as may be designated by Parent, immediately prior to
the Effective Time, the current directors of Company shall cease to be directors
of Company and shall not be directors of the Amalgamated Company. After giving
effect to the Amalgamation, the officers of the Amalgamated Company shall be the
individuals then designated by Parent, each to hold office in accordance with
the applicable provisions of the memorandum and articles of association of the
Amalgamated Company and until their respective successors are duly elected or
appointed and qualified.
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SECTION 2.5 Further Assurances. If, at any time after the Effective
Time, the Amalgamated Company shall consider or be advised that any deeds, bills
of sale, assignments, assurances, or any other actions or things (including an
order of the court under Section 86 of the Companies Law) are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Amalgamated
Company its right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Companies acquired or to be
acquired by the Amalgamated Company as a result of, or in connection with, the
Amalgamation or otherwise to carry out this Agreement, the officers and
directors of the Amalgamated Company shall be authorized to execute and deliver,
in the name and on behalf of each of the Constituent Companies or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of the Constituent Companies or otherwise, all such
other actions and things as may be necessary or desirable (including an
application to the court under Section 86 of the Companies Law) to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Amalgamated Company or otherwise to carry out this
Agreement and the transactions contemplated hereby.
SECTION 2.6 Effect on Shares of Newco and Company. As of the
Effective Time, by virtue of the Amalgamation and without any action on the part
of the holders thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (except for Shares owned by Company or any of its
subsidiaries) shall be canceled, and the holder thereof shall be entitled
to receive in cash the Amalgamation Consideration.
(b) Each Company Option outstanding immediately prior to the
Effective Time shall be canceled, and the holder thereof shall be entitled
to receive an amount in cash equal to (x) the product of the number of
Shares covered by such Company Option multiplied by the Amalgamation
Consideration minus (y) the option exercise price payable upon exercise of
such option.
(c) All ordinary shares, par value $.01 per share, of Newco issued
and outstanding immediately prior to the Effective Time shall, by virtue
of the Amalgamation and without any action on the part of the holder
thereof, be converted into and become at the Effective Time ordinary
shares of the Amalgamated Company.
(d) Each Share owned by Company or any of its subsid-
iaries shall be canceled.
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(e) At and after the Effective Time, each certificate representing
Shares shall represent only the right to receive the Amalgamation
Consideration payable in exchange for such Shares upon the surrender of
such certificate for payment in accordance with Section 2.8. At and after
the Effective Time, each holder of a certificate or certificates that
represented issued and outstanding Shares immediately prior to the
Effective Time ("Certificates") shall cease to have any rights as a
shareholder of Company.
SECTION 2.7 Company Options. The Company will use its best efforts
(including, to the extent possible, by way of amendment to the Company Plans) so
that, upon consummation of the Offer, each outstanding Company Option shall be
canceled in exchange for an amount of cash equal to (x) the product of the
number of Shares covered by such Company Option multiplied by the Amalgamation
Consideration minus (y) the option exercise price payable upon exercise of such
option.
SECTION 2.8 Payment for Shares. (a) Prior to the Effective Time,
Parent shall designate a bank or trust company reasonably satisfactory to
Company to act as paying agent in the Amalgamation (the "Paying Agent"). At or
prior to the Effective Time, Parent will take all steps necessary to enable and
cause the Amalgamated Company to provide the Paying Agent funds necessary to
make the payments contemplated by Sections 2.6 and 2.7. Any funds remaining with
the Paying Agent three months after the Effective Time shall be released and
repaid by the Paying Agent to the Amalgamated Company, after which time persons
entitled thereto may look, subject to applicable escheat and other similar laws,
only to the Amalgamated Company for payment thereof.
(b) As soon as practicable after the Effective Time, Parent shall
cause the Paying Agent to mail to each record holder of Certificates, as of the
Effective Time, a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificates for payment
therefor. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor an amount equal to the product of
the number of Shares represented by such Certificate and the Amalgamation
Consideration, and such Certificate shall forthwith be canceled. No interest
will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other
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Taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction of the
Amalgamated Company that such Tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.8, each
Certificate (other than Certificates representing Shares held by Company or any
subsidiary of Company) shall represent for all purposes the right to receive the
Amalgamation Consideration in cash multiplied by the number of Shares evidenced
by such Certificate, without any interest thereon.
(c) The Amalgamated Company shall pay all charges and expenses,
including those of the Paying Agent, in connection with the exchange of cash for
Shares.
SECTION 2.9 Transfers. From and after the Effective Time, there
shall be no transfers of Shares of Company or the Amalgamated Company. If, after
the Effective Time, Certificates are presented to the Amalgamated Company, they
shall be canceled and exchanged as provided in this Article II.
SECTION 2.10 Special Meeting. (a) If required by applicable law in
order to consummate the Amalgamation, Company, acting through the Board, shall,
upon consummation of the Offer, in accordance with applicable law and subject to
the applicable provisions of this Agreement:
(i) duly call, give notice of, convene and hold a special meeting
(the "Special Meeting") of its shareholders as soon as practicable
following the consummation of the Offer for the purpose of considering and
taking action with respect to the Amalgamation; and
(ii) if required, file with the SEC under the Exchange Act, a
Disclosure Statement and use its best efforts to obtain and furnish the
information required to be included by it in the Disclosure Statement and,
after consultation with Parent, to respond promptly to any comments made
by the SEC with respect to the Disclosure Statement and any preliminary
version thereof and cause the Disclosure Statement to be mailed to its
shareholders at the earliest practicable time following the consummation
of the Offer or at such other time as Parent shall direct following
consultation with Company.
(b) Parent will provide Company with the information regarding
Parent and Newco required to be included in the Disclosure Statement. Parent
further agrees that, at the Special Meeting, all of the Shares then owned by
Parent and Newco will be voted in favor of the Amalgamation.
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(c) The Disclosure Statement shall state that the Board unanimously
(i) has approved the Offer and the Amalgamation, (ii) has determined that the
Offer and the Amalgamation taken together are fair and in the best interests of
the Company and its shareholders, and (iii) recommends that shareholders of
Company both accept the Offer and tender their Shares pursuant to the Offer and
adopt and approve the Amalgamation. Company shall give Parent, Newco and their
counsel a reasonable opportunity to review the Disclosure Statement prior to
their being filed with the SEC or disseminated to the shareholders of Company.
Company will furnish Parent, Newco and its counsel any comments that Company or
its counsel may receive from the SEC or its staff with respect to the Disclosure
Statement, promptly after receipt of such comments, and the proposed responses
thereto.
"Disclosure Statement" means the letter to shareholders, notice of
meeting, proxy statement and form of proxy, or the information statement, as the
case may be, to be distributed to shareholders in connection with the
Amalgamation, including any schedules required to be filed with the SEC in
connection therewith.
SECTION 2.11 Compulsory Acquisition of Minority Shares. In the event
that, following the purchase of Shares pursuant to the Offer, Parent, Newco and
any other subsidiary of Parent shall own an aggregate of at least 90% of the
outstanding Shares, the Parties agree, at the request of Parent or Newco, to
take all necessary and appropriate action to effect the compulsory acquisition
of those outstanding Shares not owned by Parent, Newco or any other subsidiary
of Parent in accordance with Section 87 of the Companies Law.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Newco that, except as
specifically disclosed in the Disclosure Schedule, dated the date hereof, being
delivered confidentially by Company to Parent and Newco concurrently herewith
(the "Disclosure Schedule"):
SECTION 3.1 Organization. Company and each of its subsidiaries is a
company duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Company and each of its subsidiaries is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned,
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leased or operated by it or the nature of the business conducted by it makes
such qualification, license or good standing necessary, except where the failure
to be so duly qualified or licensed or be in good standing would not,
individually or in the aggregate, (x) have a material adverse effect on the
business, operations, assets, condition (financial or other), prospects or
results of operations of Company and its subsidiaries taken as a whole or (y)
prevent or materially delay the consummation of the Offer or the Amalgamation on
the terms contemplated hereby (each, a "Material Adverse Effect"). Except as and
to the extent set forth in the SEC Documents, Company owns directly or
indirectly all of the outstanding capital stock of each of its subsidiaries.
Neither Company nor any of its subsidiaries is required to be authorized,
qualified, licensed or domesticated under any federal, state or local law in the
United States. Company has furnished to Parent and Newco complete and correct
copies of the Organizational Documents of Company and each of its subsidiaries
as in effect on the date hereof. Such Organizational Documents are in full force
and effect and no other Organizational Documents are applicable to or binding
upon Company or any of its subsidiaries.
"Organizational Documents" means, with respect to any person, the
articles of association, memorandum of association, bye-laws and similar
documents (including any shareholders and similar agreement) of such person.
SECTION 3.2 Capitalization. Company's authorized capital consists of
50,000,000 Shares (of which 1,040,283 Shares have been repurchased by Company
and retired) and 25,000,000 other shares, par value $.10 per share ("Other
Shares"). As of the date hereof and after giving effect to the Second Quarter
Dividend, there are 24,766,255 Shares issued and outstanding, 26,278 restricted
Shares (all of which shall vest upon consummation of the Offer) and no Other
Shares issued and outstanding. Neither Company nor any of its subsidiaries holds
any Shares. As of the date hereof, there were reserved under the share option
plans of Company (the "Company Plans"), all of which are described in the SEC
Documents, 997,925 Shares for issuance upon exercise of outstanding options to
acquire Shares ("Company Options"). Except for the options to acquired such
Shares under Company Plans, the restricted Shares described above and for the
5,283 Shares to be issued as a dividend on certain Shares in connection with the
Second Quarter Dividend, there are not now, and at the Effective Time there will
not be, any existing options, warrants, calls, subscriptions, or other rights,
agreements or commitments obligating Company or any of its subsidiaries to
issue, transfer or sell any share capital of Company or any of its subsidiaries
or any other securities convertible into or evidencing the right to subscribe
for any such share capital. All issued and outstanding Shares are duly
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authorized and validly issued, fully paid and non-assessable and free of
preemptive rights with respect thereto.
SECTION 3.3 Authority. Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject, in the case of the Amalgamation, to
approval of Company's shareholders (if required by applicable law) as described
in Section 3.4. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by its Board of Directors, and no corporate proceedings
on the part of the Company are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby, subject, in the case of
the Amalgamation, to approval of Company's shareholders (if required by
applicable law) as described in Section 3.4. This Agreement has been duly and
validly executed and delivered by Company and (assuming this Agreement
constitutes a valid and legally binding agreement of Parent and Newco)
constitutes a valid and legally binding agreement of Company, enforceable
against Company in accordance with its terms.
SECTION 3.4 Voting Requirements. The requisite shareholder vote
under Sections 85 and 86 of the Companies Law approving the Amalgamation is the
only vote of the holders of any securities of Company necessary in connection
with the Amalgamation.
SECTION 3.5 No Violations; Consents and Approvals. (a) Neither the
execution and delivery of this Agreement nor the consummation by Company of the
transactions contemplated hereby nor compliance by Company with any of the
provisions hereof will (i) be subject, in the case of the Amalgamation, to
obtaining the approval of its shareholders as described in Section 3.4 and, if
required under applicable law, to approval by a court of competent jurisdiction,
violate any provision of its Organization Documents, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default, or give rise to any right of termination, cancellation or
acceleration or any right which becomes effective upon the occurrence of a
merger, consolidation or change in control, under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture or other instrument of, or
document governing, indebtedness for money borrowed or any license, franchise or
permit or any other agreement to which Company or any of its subsidiaries is a
party, or by which Company or any of its subsidiaries or any of their respective
properties is bound, or (iii) violate any statute, rule, regulation, order or
decree of any public body or authority by which Company or any of its
subsidiaries or any of its respective properties is bound, except in the case of
clause (ii) or (iii), such as would not, individually or in the aggregate, have
a Material Adverse Effect.
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(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required by
Company or any of its subsidiaries in connection with the execution and delivery
of this Agreement or the consummation by Company of the transactions
contemplated hereby, except (i) the approval of the Minister under the Insurance
Act, (ii) in connection, or in compliance, with the provisions of the Exchange
Act or any other foreign or state securities or "blue sky" laws, (iii) the
registration of the Amalgamated Company with the Registrar and (iv) filings with
the Nasdaq National Market System and the SEC with respect to the deregistration
of Shares.
SECTION 3.6 SEC Documents; Financial Statements. (a) Company has
provided to Parent and Newco a list of each registration statement, report,
proxy statement or information statement, including all exhibits and schedules
thereto, heretofore filed by it with the SEC (the "SEC Documents"). As of their
respective dates, the SEC Documents complied as to form in all material respects
with the applicable requirements of the United States Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, as the case may be. None
of the SEC Documents contained any untrue statement of material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Board consists of the directors identified in
Company's proxy statement for the annual general meeting of shareholders held on
December 19, 1996 (the "1996 Proxy Statement"). Company agrees that all SEC
Documents, other than those specifically identified in writing by Company as
excluded documents, are deemed to have been provided to Parent and Newco by
Company specifically for use in the Offer Documents.
(b) The consolidated financial statements included in Company's SEC
Documents complied, as of their respective dates, in all material respects with
then applicable accounting requirements and the rules and regulations of the SEC
with respect thereto, were prepared in accordance with United States generally
accepted accounting principles ("GAAP"), applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present, in all material respects, the consolidated
financial position, results of operations, cash flows and changes in
shareholders' equity of Company and its subsidiaries at the dates and for the
periods presented (subject, in the case of unaudited statements, to the lack of
footnotes thereto, to normal year-end audit adjustments (consisting only of
normal recurring accruals) and to any other adjustments described therein).
(c) Company has provided to Parent and Newco copies of each annual
statutory financial return filed by Global Capital Reinsurance Limited with the
Bermuda Registrar of Companies (the
- 13 -
"Bermuda Registrar") for the years ended September 30, 1995 and 1996. The
statutory financial statements included in such returns were prepared in
accordance with statutory accounting practices prescribed by the Insurance Act
and the rules and regulations of the Bermuda Registrar thereunder and fairly
present the admitted assets, liabilities, capital and surplus and results of
operations and cash flows of Global Capital Reinsurance Limited at the dates and
for the periods presented.
(d) Neither Company nor any of its subsidiaries, nor any of their
respective assets, businesses or operations, is as of the date of this Agreement
a party to, or is bound or affected by, or receives benefits under any contract
or agreement or amendment thereto, that in each case would be required to be
filed as an exhibit to a Form 10-K as of the date of this Agreement that has not
been filed as an exhibit to an SEC Document filed prior to the date hereof.
(e) The SEC Documents include (i) consolidated balance sheets of
Company as of September 30, 1996 and March 31, 1997 and (ii) consolidated
statements of income of Company for the years ended September 30, 1995 and 1996
and the six months ended March 31, 1996 and 1997. The foregoing consolidated
audited balance sheet as of September 30, 1996 is sometimes herein referred to
as the "Balance Sheet." The foregoing consolidated unaudited balance sheet as of
March 31, 1997 is sometimes herein referred to as the "Interim Balance Sheet."
(f) There are no liabilities or obligations of Company or any of its
subsidiaries accrued, absolute, or contingent and whether due or to become due,
other than liabilities or obligations (i) reflected, or adequately reserved
against, in the Interim Balance Sheet or (ii) that, individually or in the
aggregate, would not have a Material Adverse Effect.
(g) No dividends have been declared or paid on any Shares since
March 31, 1997 except for the Second Quarter Dividend.
SECTION 3.7 Absence of Certain Changes. Since the date of the
Interim Balance Sheet, Company has not (a) suffered any event, condition or
occurrence, that individually or in the aggregate, would have a Material Adverse
Effect or (b) implemented any change in accounting methods, principles or
practices except as required by GAAP.
SECTION 3.8 Legal Proceedings. Except as specifically disclosed in
the SEC Documents filed prior to the date hereof, there is no (i) claim, action,
suit or proceeding pending or, to Company's best knowledge, threatened, against
or relating to it or any of its subsidiaries or any of their respective assets
before any court or governmental or regulatory authority or body
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or arbitration tribunal or (ii) outstanding judgment, order, writ, injunction or
decree, or application, request or motion therefor, of any court governmental
agency or arbitration tribunal in a proceeding to which Company or any of its
subsidiaries is a party, except any such claim, action, suit or proceeding or
judgment, order, writ, injunction, decree, application, request or motion which
if adversely determined, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 3.9 Compliance with Laws and Agreements. Neither Company nor
any of its subsidiaries is (i) in violation of or noncompliance with any
statute, law, ordinance, regulation, rule or order of any foreign, federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to its business or operations
or (ii) in violation, breach or default (with or without due notice or lapse of
time or both) under any of the terms, conditions or provisions of any agreement
to which it is a party, or by which any of its properties is bound, except where
any such violations or failures to comply or breaches or defaults would not,
individually or in the aggregate, have a Material Adverse Effect. Company and
its subsidiaries have all permits, licenses and franchises from governmental
agencies required to conduct their businesses as now being conducted, except for
such permits, licenses and franchises the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.10 Schedule 14D-9 and Disclosure Statement; Other
Information. The Schedule 14D-9 and, if a Disclosure Statement is required for
the consummation of the Amalgamation under applicable law, the Disclosure
Statement will each comply as to form in all material respects with the
requirements of the Exchange Act. The Schedule 14D-9 will not, at the time it is
filed with the SEC or is first published, sent or given to Company's
shareholders, and any such Disclosure Statement will not, at the time it is
filed with the SEC, is first published, sent or given to Company's shareholders,
or at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of circumstances under
which they were made, not misleading; provided, however, that the foregoing
shall not apply to the extent that any such untrue statement or omission was
made by Company in reliance upon and in conformity with information furnished to
Company by Parent or Newco specifically for use in the Schedule 14D-9 and
Disclosure Statement, as the case may be. The information supplied or to be
supplied by Company specifically for use in the Offer Documents will not, at the
time they are filed with the SEC or are first published, sent or given to
Company's shareholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements
- 15 -
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 3.11 State Antitakeover Statutes. No "business combination,"
"moratorium," "control share" or other anti-takeover statute or regulation (x)
prohibits or restricts Company's ability to perform its obligations under this
Agreement or its ability to consummate the transactions contemplated hereby, (y)
would have the effect of invalidating or voiding this Agreement, or any material
provision hereof, or (z) would subject Parent or Newco to any material
impediment or condition in connection with the exercise of any of their
respective rights under this Agreement or with respect to Company or the
Amalgamated Company.
SECTION 3.12 Broker's Fees. Except for the engagement of ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. by Company, neither Company nor any of its subsidiaries nor any of
their respective directors or officers has employed any broker, finder or
financial advisor or incurred any liability for any broker's fees, commissions,
or financial advisory or finder's fees in connection with any of the
transactions contemplated by this Agreement. Company has provided to Parent
copies of Company's engagement letter with ▇▇▇▇▇▇▇, Sachs & Co. in connection
with this Agreement and the transactions contemplated hereby.
SECTION 3.13 Opinion of Financial Advisor. Company has received the
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., dated the date hereof, to the effect that, as
of such date, the consideration to be received in the Offer and the Amalgamation
by the shareholders of Company is fair to such shareholders, a copy of which
opinion has been delivered to Parent.
SECTION 3.14 Taxes. (a) Neither Company nor any of its subsidiaries
has, or has had, any income which is, or has been, subject to the United States
federal income tax as income effectively connected with the conduct of a trade
or business within the United States, within the meaning of Sections 842 or
882(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"). Global
Capital Reinsurance Limited is and has been predominantly engaged in the active
conduct of an insurance business within the meaning of Section 1296(b) of the
Code. Company and its subsidiaries have prepared and timely filed or will timely
file with the appropriate governmental agencies all Tax (as hereinafter defined)
returns, information returns and reports (collectively, "Tax Returns") required
to be filed for any period on or prior to the Effective Time, taking into
account any extension of time to file granted to or obtained on behalf of
Company and/or its subsidiaries which, if not filed, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, and
all such Tax Returns as filed are or will be accurate and complete in all
material respects; all Taxes
- 16 -
of Company and its subsidiaries (including taxes withheld from employees'
salaries and other withholding taxes and obligations) shown to be due on such
Tax Returns have been paid in full to the proper authorities or fully accrued
for with respect to fiscal periods for which there are publicly available
financial statements in such statements and otherwise on the books of Company,
other than such Taxes as are being contested in good faith by appropriate
proceedings and are adequately reserved for in accordance with GAAP. All
material written assessments of Taxes due and payable by or on behalf of Company
or any of its subsidiaries have either been paid or adequately reserved for in
accordance with GAAP.
(b) Company has not for any taxable year (or portion thereof) ended
on or prior to September 30, 1996, reported to its shareholders that the Company
or any of its subsidiaries had incurred, in such taxable year (or portion
thereof), and does not expect to have for the period commencing October 1, 1996
and ending on the date hereof (treating such period as if it were a taxable
year), "related person insurance income" within the meaning of Section 953(c)(2)
of the Code in excess of the amount determined under Section 953(c)(3)(B) of the
Code.
(c) There are no deficiencies that have been asserted in writing by
a tax authority for Taxes that, individually or in the aggregate, would have a
Material Adverse Effect. Neither Company nor any of its subsidiaries has any
liability for any material ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ federal, state, local, foreign or other Taxes of any corporation or
entity other than Company and its subsidiaries. There is no action, suit,
proceeding, investigation, audit or claim now pending or, to the knowledge of
Company or its subsidiaries, threatened in writing by any authority regarding
any Taxes relating to Company or any of its subsidiaries that, individually or
in the aggregate, would have a Material Adverse Effect.
(d) There are no liens or security interests on any of the assets of
Company or any of its subsidiaries that arose in connection with any failure (or
alleged failure) to pay any Taxes that, individually or in the aggregate, would
have a Material Adverse Effect.
"Tax" or "Taxes" shall mean all ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ federal, state, local and foreign taxes, duties,
levies, charges and assessments of any nature, including social security
payments and deductibles relating to wages, salaries and benefits and payments
to subcontractors (to the extent required under applicable Tax law), and also
including all interest, penalties and additions imposed with respect to such
amounts.
- 17 -
SECTION 3.15 Employees. (a) Section 3.15 of the Disclosure Schedule
lists (i) all Employee Benefit Plans, (ii) all employment contracts and similar
arrangements between Company or any of its subsidiaries and its employees, and
(iii) all plans and arrangements pursuant to which Company or any of its
subsidiaries is, or may be or become, obligated to make any payment to confer
any benefit upon or accelerate the vesting or exercisability of any benefit for
any officer, director, employee or agent of Company as a result of or in
connection with any of the transactions contemplated by this Agreement or any
transaction or transactions resulting in a change of control of Company. Company
is not aware that any officer, director, executive or key employee of Company or
any of its subsidiaries or any group of employees of Company or any of its
subsidiaries has any plans to terminate his, her or its employment. (i) Company
and its subsidiaries have complied with all laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal opportunity,
and collective bargaining except where the failure so to comply could not
reasonably be expected to have a Company Material Adverse Effect, (ii) no labor
dispute with employees of Company exists or, to the knowledge of Company, is
threatened, except as could not reasonably be expected to have a Company
Material Adverse Effect, (iii) each Employee Benefit Plan conforms in all
material respects to, and its administration is in conformity in all material
respects with, all applicable laws, no material liability has been or is
expected to be incurred by Company with respect to any Employee Benefit Plan
except for benefits payable or contributions due under the terms of such plans,
and full payment has been made of all amounts that Company is required to have
paid as contributions to each Employee Benefit Plan, (iv) Company has provided
Parent with a true and correct copy of each of the Employee Benefit Plans and
all contracts relating thereto, or to the funding thereof, (v) all Employee
Benefit Plans intended to satisfy applicable tax qualification requirements or
other requirements necessary to secure favorable tax or other legal treatment
comply in all material respects with such requirements, and (vi) adequate
accruals for all obligations under the Employee Benefit Plans are reflected in
the financial statements of Company. Neither Company nor any of its subsidiaries
nor any of their ERISA Affiliates has incurred or expect to incur any liability
under Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Neither Company nor any of its subsidiaries has ever
maintained, contributed to or had any liability with respect to an employee
benefit plan subject to Title IV of ERISA. All contributions to employee benefit
plans required to be made by Company, its subsidiaries or any of their ERISA
Affiliates in accordance with the terms of the plans, any applicable collective
bargaining agreement and, when applicable, Section 302 of ERISA or Section 412
of the Code, have been timely made.
- 18 -
"Employee Benefit Plan" shall mean each benefit plan maintained or
contributed to by Company or any of its subsidiaries or with respect to which
Company or any of its subsidiaries may have any liability which provides (or is
intended to provide) benefits to the employees of Company or any of its
subsidiaries (or other service providers to Company or any of its subsidiaries),
including each pension, retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan, vacation pay,
severance pay, bonus or benefit arrangement, insurance, medical or
hospitalization program, sickness, accident, disability or death benefit program
or any other fringe benefit.
"ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) that is or has been a member of any group of persons described in
Section 414(b), (c), (m) or (o) of the Code, including Company or one of its
subsidiaries.
(b) There are no pending or, to the knowledge of Company, threatened
claims for indemnification by Company or any of its subsidiaries in favor of
directors, officers, employees and agents of Company or any of its subsidiaries.
SECTION 3.16 Disclosure. No representation or warranty by Company
and no statement or information relating to Company or any of its subsidiaries
contained herein, or in any certificate furnished by or on behalf of Company to
Parent or Newco in connection herewith, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco hereby jointly and severally represent and warrant
to Company as follows:
SECTION 4.1 Organization. Each of Parent and Newco is a company duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Parent and Newco is duly qualified or
licensed to conduct business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification, license or good standing necessary,
except where the failure to be so duly qualified or licensed or be in good
- 19 -
standing would not have a material adverse effect on Parent's or Newco's ability
to consummate the transactions contemplated hereby. Newco is a wholly owned
subsidiary of Parent.
SECTION 4.2 Authority. Each of Parent and Newco has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized and approved by the respective Boards of Directors of Parent
and Newco and by Parent as the sole shareholder of Newco, and no other corporate
proceedings on the part of Parent or Newco are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent and
Newco and (assuming this Agreement constitutes a valid and legally binding
agreement of Company) constitutes a valid and legally binding agreement of
Parent and Newco, enforceable against each of them in accordance with its terms.
SECTION 4.3 No Violations. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby nor
compliance by Parent and Newco with any of the provisions hereof will violate
any provision of their respective memorandum and articles of association.
SECTION 4.4 Offer Documents; Other Information. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act. The Offer Documents will not, at the time they are filed with the
SEC or first published, sent or given to Company's shareholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement or omission was made by Parent or Newco in reliance upon
and in conformity with information furnished to Parent or Newco by Company
specifically for use in the Offer Documents. The information supplied or to be
supplied by Parent or Newco specifically for use in the Schedule 14D-9 or in the
Disclosure Statement will not, at the time the Schedule 14D-9 or the Disclosure
Statement, as the case may be, is filed with the SEC or is first published, sent
or given to Company's shareholders or, in the case of the Disclosure Statement,
at the time of the Special Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
- 20 -
SECTION 4.5 Financial Ability to Perform. Parent and Newco presently
have, and at all times up to and including the Expiration Date and the Effective
Time will have, the financial resources necessary on the part of Parent and
Newco to consummate the transactions contemplated by this Agreement.
ARTICLE V.
COVENANTS
SECTION 5.1 Conduct of Business of Company. Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, Company will, and will cause its subsidiaries
to, conduct their operations according to their ordinary course of business
consistent with past practice, and will use all reasonable best efforts to
preserve intact their business organization, to keep available the services of
their officers and employees, to maintain all permits, licenses and franchises
from governmental entities required to conduct their businesses as now being
conducted and to maintain satisfactory relationships with producers, brokers,
insureds, suppliers, distributors, customers and others having business
relationships with it and will take no action which would materially adversely
affect the ability of the Parties to consummate the transactions contemplated by
this Agreement (it being understood that Company will discuss with Parent the
implementation of the joint venture with Capital Re Corporation and the writing
of any insurance thereby or thereunder). Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, prior
to the Effective Time, Company will not, and will not permit any of its
subsidiaries to, without the prior written consent of Parent, directly or
indirectly:
(a) amend the Organizational Documents of Company or any of its
subsidiaries;
(b) authorize for issuance, issue, sell, deliver, grant any options
for, or otherwise agree or commit to issue, sell or deliver any securities
of Company or any of its subsidiaries, except pursuant to and in
accordance with the terms of any Company Options outstanding on the date
hereof;
(c) split, combine or reclassify any shares of Company or any of its
subsidiaries, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of any such shares or purchase, redeem or otherwise acquire any such
shares, except that the Company may pay the dividend of $0.62 per Share
declared on April 25, 1997 payable on
- 21 -
May 27, 1997 to shareholders of record on May 14, 1997 (the "Second
Quarter Dividend");
(d) (i) create, incur, assume, maintain or permit to exist any
long-term debt or any short-term debt for borrowed money, except pursuant
to Company's existing credit agreements in the ordinary course of the
property catastrophe business to the extent required to pay properly
documented claims, (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for
the obligations of any person except in the ordinary course of its
reinsurance business, consistent with past practices (except customary
letters of credit issued in the ordinary course of business consistent
with past practices), or (iii) make any loans, advances or capital
contributions to, or investments in, any person;
(e) (i) increase in any manner the compensation (including bonuses)
of any director, officer or other employee of Company or any of its
subsidiaries; (ii) pay or agree to pay any pension, retirement allowance
or other employee benefit not required, or enter into or agree to enter
into any agreement or arrangement with any such director, officer or
employee, whether past or present relating to any such pension, retirement
allowance or other employee benefit; (iii) grant any severance or
termination pay to, or enter into any employment or severance agreement
with, any such director, officer or other employee; or (iv) become
obligated under any new pension plan, welfare plan, multi-employer plan,
employee benefit plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, including any
bonus, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right, group insurance, severance pay, retirement or
other benefit plan, agreement or arrangement, or employment or consulting
agreement with or for the benefit of any person, or amend any of such
plans or any of such agreements in existence on the date hereof;
(f) except as required by this Agreement, authorize, recommend,
propose or announce an intention to authorize, recommend or propose, or
enter into, any agreement in principle or any agreement with respect to
any plan of liquidation or dissolution, any acquisition of a material
amount of assets or securities, any sale, transfer, lease, license,
pledge, mortgage, or other disposition or encumbrance of any assets or
securities or any change in the capitalization of Company or any of its
subsidiaries (other than upon exercise of Company Options outstanding on
the date hereof), or, except for reinsurance agreements entered into in
the ordinary course of business, consistent with past practice, (i) any
other material agreements, commitments or contracts,
- 22 -
(ii) any amendment or modification thereof or (iii) any release or
relinquishment of any material rights thereunder;
(g) knowingly undertake any act, or suffer to exist any condition,
causing any insurance policy naming it as a beneficiary or a loss payee to
be canceled or terminated;
(h) enter into any hedging, option, derivative or other similar
transaction, except in the ordinary course of business consistent with
past practices and following written notice to Parent; or
(i) agree to do any of the foregoing.
SECTION 5.2 Public Announcements. No party hereto shall issue any
press release or otherwise make any public statements with respect to this
Agreement or the transactions contemplated hereby without the approval of the
other party (which shall not be unreasonably withheld or delayed) as to the
wording, timing and media for such press release or statement.
SECTION 5.3 Acquisition Proposals. (a) Company represents and
warrants to, and covenants and agrees with, Parent and Newco that neither
Company nor any of its subsidiaries has any agreement, arrangement or
understanding with any potential acquiror that, directly or indirectly, would be
violated, or require any payments, by reason of the execution, delivery and/or
consummation of this Agreement. Company shall, and shall cause its subsidiaries
and use its best efforts to cause its and their officers, directors, employees,
investment bankers, attorneys and other agents and representatives to,
immediately cease any existing discussions or negotiations with any person
(including a "person" as defined in Section 13(d)(3) of the Exchange Act) other
than Parent or Newco (a "Third Party") heretofore conducted with respect to any
Acquisition Transaction. Company shall not, and shall cause its subsidiaries and
use its best efforts to cause its and their officers, directors, employees,
investment bankers, attorneys and other agents and representatives not to,
directly or indirectly, (x) solicit, initiate, continue, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any
inquiries, proposals or offers with respect to, or that could reasonably be
expected to lead to, any acquisition or purchase of a material portion of the
assets or business of, or any significant equity interest in (including by way
of a tender offer), or any amalgamation, merger, consolidation or business
combination with, or any recapitalization or restructuring, or any similar
transaction involving, Company or any of its subsidiaries (the foregoing being
referred to collectively as an "Acquisition Transaction"), or (y) negotiate,
explore or otherwise communicate in any way with any Third Party with respect to
any Acquisition Transaction or enter into, approve or recommend any agreement,
arrangement or
- 23 -
understanding requiring Company to abandon, terminate or fail to consummate the
Offer and/or the Amalgamation or any other transaction contemplated hereby.
Notwithstanding anything to the contrary in the foregoing, Company may, prior to
the purchase of Shares pursuant to the Offer, in response to an unsolicited
written proposal with respect to an Acquisition Transaction involving the
acquisition of all of the Shares (or all or substantially all of the assets of
Company and its subsidiaries) from a Third Party (which proposal (I) is not
subject to a financing condition and is from a person that ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
or another nationally recognized investment bank advises in writing is
financially capable of consummating such proposal or (II) is subject to
financing, but is from a person that ▇▇▇▇▇▇▇, Sachs & Co. or another nationally
recognized investment bank advises in writing is financially capable of
achieving such financing to consummate such proposal, (i) furnish or disclose
non-public information to such Third Party and (ii) negotiate, explore or
otherwise communicate with such Third Party, in each case only if and to the
extent that (a) the Board determines reasonably and in good faith by a majority
vote (after receipt of written advice of Company's outside legal counsel that
failing to take such action would, in all likelihood, constitute a breach of the
fiduciary duties of the Board to Company's shareholders under applicable law),
that taking such action would, in all likelihood, lead to an Acquisition
Transaction that, based upon the written advice of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., is more
favorable to Company's shareholders than the Offer and the Amalgamation and that
failing to take such action would, in all likelihood, constitute a breach of the
fiduciary duties of the Board to Company's shareholders under applicable law
(the proposal with respect to an Acquisition Transaction meeting the
requirements of the parenthetical clause immediately preceding clause (i) and
this clause (a), a "Superior Proposal"), (b) prior to furnishing or disclosing
any non-public information to, or entering into discussions or negotiations
with, such Third Party, Company receives from such Third Party an executed
confidentiality agreement with terms no less favorable to Company than those
contained in the Confidentiality Agreement, but which confidentiality agreement
shall not provide for any exclusive right to negotiate with Company or any
payments and (c) Company advises Parent of all such non-public information
delivered to such Third Party concurrently with such delivery; provided,
however, that Company shall not, and shall cause its affiliates not to, enter
into a definitive agreement with respect to a Superior Proposal unless (x)
Company concurrently terminates this Agreement in accordance with the terms
hereof and pays any amounts required under Article VIII and (y) such agreement
permits Company to terminate it if it receives a Superior Proposal, such
termination and related provisions to be on terms no less favorable to Company,
including as to fees and reimbursement of expenses, as those contained herein.
- 24 -
(b) Company shall promptly (but in any event within one day of
Company becoming aware of same) advise Parent of the receipt by Company, any of
its subsidiaries or any of Company's or any subsidiary's officers, directors,
employees, investment bankers, attorneys or other agents or representatives of
any inquiries or proposals relating to an Acquisition Transaction and any
actions taken pursuant to Section 5.3(a). Company shall promptly provide Parent
with a copy of any such inquiry or proposal in writing and a written statement
with respect to any such inquiries or proposals not in writing, which statement
shall include the identity of the parties making such inquiries or proposal and
the terms thereof. Company shall, from time to time, promptly inform Parent of
the status and content of any discussions regarding any Acquisition Transaction
with a Third Party. For the avoidance of doubt, Company agrees that it will not
enter into any agreement with respect to a Superior Proposal unless and until
Parent has been given at least five business days prior to the entering into
such agreement to match the terms of such agreement.
(c) Company has obtained the agreement of each member of the Board
and the board of directors of each of its subsidiaries and of its executive
officers and investment bankers that each such person will comply with the
provisions of this Section 5.3 as if it were a party hereto (to the extent that
it would be otherwise applicable thereto).
SECTION 5.4 Access to Information. (a) From the date of this
Agreement until the Effective Time, Company will (x) give Parent and its
authorized representatives (including counsel, consultants, financial advisors,
accountants and auditors) reasonable access during normal business hours to all
facilities, personnel and operations and to all books and records of it and its
subsidiaries, (y) permit Parent to make such inspections as it may reasonably
require and (z) cause its officers and those of its subsidiaries to furnish
Parent with such financial and operating data and other information with respect
to its business and properties as Parent may from time to time reasonably
request.
(b) Each of the Parties will hold and will use its best efforts to
cause all of the employees and representatives of such Party and its
subsidiaries to hold in strict confidence pursuant to the Confidentiality
Agreement dated as of April 28, 1997 between Parent and Company (the
"Confidentiality Agreement") all documents and information furnished to the
other in connection with the transactions contemplated by this Agreement as if
each such employee or representative were a party thereto.
SECTION 5.5 Board Recommendation. Company shall, through the Board,
recommend, and continue to recommend, to its shareholders that they tender all
of their Shares in the Offer
- 25 -
and approve the Amalgamation; provided, however, that the taking of a position
by Company pursuant to Rule 14e-2(a)(2) or (3) solely in respect of any proposal
with respect to an Acquisition Transaction shall not be deemed a withdrawal,
modification, or a proposal to do either, of its position with respect to the
Offer or the Amalgamation for purposes hereof; provided, however, that the Board
may withdraw, modify or change its recommendations to Company's shareholders
only in the event that this Agreement has been terminated in accordance with its
terms and any payments required under Article VIII have been made.
SECTION 5.6 Reasonable Best Efforts; Other Actions. Subject to the
terms and conditions herein provided and applicable law, the Parties shall use
reasonable best efforts promptly to take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
appropriate (including obtaining all material consents and making all material
filings) under applicable laws and regulations or otherwise to consummate and
make effective the transactions contemplated by this Agreement.
SECTION 5.7 Notification of Certain Matters. Each of Company and
Parent shall give prompt notice to the other of (i) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, (ii) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (iii) any failure of Company, Parent or Newco, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.07 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 5.8 Indemnification. (a) Parent shall cause the Amalgamated
Company to indemnify, defend and hold harmless the present and former officers,
directors, employees and agents (collectively, "Indemnified Parties") of Company
and its subsidiaries from and against all losses, obligations, claims, damages,
expenses or liabilities arising out of actions or omissions or alleged actions
or omissions occurring at or prior to the Effective Time (including, without
limitation, in connection with the transactions contemplated by this Agreement)
to the same extent and on the same terms and conditions provided for in
Company's Organizational Documents in effect at the date hereof, to the extent
permitted under applicable law (which terms and conditions shall not be amended
in any manner which adversely affects any Indemnified Party for a period of six
years, including provisions relating to advances of expenses incurred in
- 26 -
the defense of any action or suit; provided that in the event any claim or
claims are asserted or made within such six-year period, all rights to
indemnification (and to advancement of expenses) in respect of each such claim
shall continue until final disposition of such claim).
(b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by Company (provided that Parent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect to
claims arising from facts or events which occurred before the Effective Time;
provided, however, that nothing contained herein shall require Parent or the
Amalgamated Company to incur any annual premium in excess of 200% of the last
annual aggregate premium paid prior to the date of this Agreement for all
current directors' and officers' liability insurance policies maintained by
Company, which Company represents and warrants to be $604,000 (the "Current
Premium"). If such premiums for such insurance would at any time exceed 200% of
the Current Premium, then the Amalgamated Company shall cause to be maintained
policies of insurance which, in the Amalgamated Company's good faith
determination, provide the maximum coverage available at an annual premium equal
to 200% of the Current Premium.
(c) This Section 5.8 is intended for the benefit of the Indemnified
Parties and each of the Indemnified Parties shall be entitled to enforce the
covenants contained herein.
(d) If the Amalgamated Company or any of their respective successors
or assigns (i) reorganizes or consolidates with or merges into any other person
and is not the resulting, continuing or surviving corporation or entity of such
reorganization, consolidation or merger, or (ii) liquidates, dissolves or
transfers all or substantially all of its properties and assets to any person or
persons, then, and in such case, proper provision will be made so that the
successors and assigns of the Amalgamated Company assumes all of the obligations
of the Amalgamated Company, as the case may be, set forth in this Section 5.8.
SECTION 5.9 Termination of Share Plans. Prior to the consummation of
the Offer, the Board (or, if appropriate, any committee thereof) shall adopt
such resolutions or take such other actions as are required to ensure that,
following the Effective Time, no participant in any share, share option, share
appreciation or other benefit plan of Company or any of its subsidiaries or any
holder of any Company Option shall have any right thereunder to acquire any
shares of the Amalgamated Company or any subsidiary thereof.
- 27 -
SECTION 5.10 Certain Change in Control Matters. Company shall use
best efforts to exempt the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable takeover
or change in control law, and otherwise act to eliminate or minimize the effects
of any applicable takeover or change in control law. Company will not revoke, or
attempt to revoke, any approvals, exemptions and agreements described in Section
3.11.
ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE AMALGAMATION
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Amalgamation. The respective obligation of each Party to effect the Amalgamation
is subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Newco shall have purchased all Shares duly tendered and not
withdrawn, pursuant to the terms of the Offer and subject to the terms
thereof;
(b) the Amalgamation shall have been approved by the affirmative
vote of Company's shareholders by the requisite vote in accordance with
the Companies Law and pursuant to the appropriate order of the court on
the application of Company;
(c) the Amalgamation shall have been sanctioned by the court in
accordance with the Companies Law on the petition of the court by Company;
(d) any required approval of the Minister under the Insurance Act
and of the Registrar under the Companies Law shall have been obtained;
(e) there shall not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting the
Amalgamation, which order, decree, ruling or action shall have been issued
or taken by any court of competent jurisdiction or other governmental body
located or having jurisdiction within the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇; and
(f) a copy of the order of the court sanctioning the Amalgamation
shall have been delivered to the Registrar for registration in accordance
with the Companies Law.
- 28 -
ARTICLE VII.
CLOSING
SECTION 7.1 Time and Place. Subject to the provisions of Article VI,
the closing of the Amalgamation (the "Closing") shall take place at a mutually
agreeable location, as soon as practicable but in no event later than 9:00 a.m.,
on the date that is two business days after the later of (x) the day of the
Special Meeting, if required by law, or (y) the day on which the last of the
conditions set forth in Article VI shall have been satisfied or waived by the
Parties, or at such other place, at such other time or on such other date as
Parent and Company may mutually agree. The date on which the Closing actually
occurs is herein referred to as the "Closing Date" and the time thereof is
herein referred to as the "Effective Time."
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Offer and the Amalgamation may be abandoned at any time prior to the Effective
Time:
(a) by mutual written consent of Parent, Newco and Company;
(b) by Parent and Newco or Company (x) if any court of competent
jurisdiction in the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ or other
Cayman Islands, Bermuda or United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining, not approving or otherwise prohibiting the Offer or the
Amalgamation and such order, decree, ruling or other action is or shall
have become final and nonappealable; provided, however, that the Party
seeking to terminate this Agreement under this paragraph (b) shall have
used reasonable best efforts to remove or lift such order, decree or
ruling or (y) if the conditions to consummation of the Amalgamation are
not satisfied by March 31, 1998;
(c) by Parent and Newco if Newco shall have (x) failed to commence
the Offer within five business days following the date of the initial
public announcement of the Offer, (y) terminated the Offer or (z) failed
to pay for Shares pursuant to the Offer by December 31, 1997 (unless, in
any such case, such failure or termination results from a breach of any
representation, warranty, covenant or agreement of Parent or Newco);
- 29 -
(d) by Company if (i) Newco shall have (x) failed to commence the
Offer within five business days following the date of the initial public
announcement of the Offer, (y) terminated the Offer or (z) failed to pay
for Shares pursuant to the Offer by December 31, 1997 (unless, in any such
case, such failure or termination results from a breach of any
representation, warranty, covenant or agreement of Company) or (ii) prior
to the purchase of Shares pursuant to the Offer, Company shall, in
compliance with Section 5.3(a) (including the last proviso thereof),
concurrently be entering into a definitive agreement with respect to a
Superior Proposal;
(e) by Parent and Newco prior to the purchase of Shares pursuant to
the Offer, if (i) there shall have been a breach of any representation or
warranty (without giving effect to any materiality or similar
qualifications contained therein) on the part of Company having a Material
Adverse Effect, (ii) there shall have been a breach of any covenant or
agreement on the part of Company resulting in a Material Adverse Effect,
which breach shall not have been cured within 10 days following written
notice to Company of such breach, (iii) Company shall engage in
negotiations (in violation of this Agreement) with any Third Party that
has proposed an Acquisition Transaction, (iv) the Board shall have
withdrawn or modified (including by amendment of the Schedule 14D-9) in a
manner adverse to Parent or Newco its approval or recommendation of the
Offer, this Agreement or the Amalgamation, or shall have recommended a
proposal with respect to an Acquisition Transaction, or shall have adopted
any resolution to effect any of the foregoing or (v) the Minimum Condition
shall not have been satisfied by the Expiration Date and a Third Party
shall have made and not withdrawn a proposal (information concerning which
has been or is made publicly available) with respect to an Acquisition
Transaction; or
(f) by Company if (i) there shall have been a breach of any
representation or warranty (without giving effect to any materiality or
similar qualifications contained therein) on the part of Parent or Newco
having a material adverse effect on the ability of Parent or Newco to
consummate the Offer or the Amalgamation or (ii) there shall have been a
breach of any covenant or agreement on the part of Parent or Newco
resulting in a material adverse effect on the ability of Parent or Newco
to consummate the Offer or the Amalgamation, which breach shall not have
been cured within 10 days following written notice to Parent and Newco of
such breach.
SECTION 8.2 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to
- 30 -
Section 8.1, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any Party or its affiliates, directors,
officers or shareholders, other than the provisions of this Section 8.2 and
Sections 8.3 and 5.4(b). Nothing contained in this Section 8.2 or Section 8.3
shall relieve any party from liability for any breach of this Agreement.
SECTION 8.3 Certain Payments; Expenses. (a) Upon the termination of
this Agreement for any reason prior to the purchase of Shares by Newco pursuant
to the Offer (other than pursuant to Section 8.1(a), 8.1(b) or 8.1(f)), Company
shall reimburse Parent, Newco and their affiliates (not later than one business
day after request therefor) for all out-of-pocket fees and expenses (subject to
a maximum amount of $2,000,000) reasonably incurred by any of them or on their
behalf in connection with the Offer and the Amalgamation and the consummation of
all other transactions contemplated by this Agreement (including fees payable to
financing sources, investment bankers, counsel to any of the foregoing and
accountants).
(b) If
(i) this Agreement is terminated for any reason (other than pursuant
to Section 8.1(a), 8.1(b) or 8.1(f)) and, not later than the first
anniversary of such termination, Company enters into an agreement with
respect to an Acquisition Transaction, or an Acquisition Transaction
occurs, involving any Third Party (or any affiliate thereof) (x) with whom
Company (or any of its agents or representatives) had communications with
a view to an Acquisition Transaction, (y) to whom the Company (or any of
its agents or representatives) furnished information with a view to an
Acquisition Transaction or (z) who had submitted a proposal or expressed
an interest in an Acquisition Transaction, in any such case, prior to such
termination; or
(ii) Company terminates this Agreement pursuant to 8.1(d)(ii),
Company shall pay to Parent and Newco, upon such entry into or such occurrence
of an Acquisition Transaction in the case of clause (i) and immediately upon any
such termination in the case of clause (ii), a fee of $7,500,000 in cash,
however, that Company in no event shall be obligated to pay more than one such
$7,500,000 fee with respect to all such agreements and occurrences and such
termination.
(c) Except as specifically provided in this Section 8.3, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby, includ-
- 31 -
ing the preparation, execution and performance of this Agreement and the
transactions contemplated hereby, and all fees and expenses of their respective
investment bankers, finders, brokers, agents, representatives, counsel and
accountants.
(d) Company acknowledges that the agreements contained in this
Section 8.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and Newco would not enter
into this Agreement.
ARTICLE IX.
DEFINITIONS
SECTION 9.1 Definitions. As used in this Agreement, the following
terms have the meanings set forth below:
(i) "affiliate" of a person shall mean a person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned person.
(ii) "business day" shall mean any day other than a Saturday,
Sunday, United States federal holiday or a holiday in the Cayman Islands
or Bermuda.
(iii) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of
interests, as trustee or executor, by contract or credit arrangement or
otherwise.
(iv) "person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(v) "subsidiary" of any specified person shall mean any person of
which a majority of the outstanding securities having ordinary voting
power to elect a majority of the board of directors are, directly or
indirectly, owned by such specified person or any other person of which a
majority of the equity interests therein are directly or indirectly, owned
by such specified person.
SECTION 9.2 Terms Defined in the Agreement. The following
capitalized terms used herein shall have the meanings ascribed in the indicated
sections.
- 32 -
Acquisition Transaction.............................. 5.3
Agreement............................................ Preamble
Amalgamated Company.................................. 2.1
Amalgamation......................................... Recitals
Amalgamation Consideration........................... Recitals
Balance Sheet........................................ 3.6
Bermuda Registrar.................................... 3.6
Board................................................ Recitals
Certificates......................................... 2.6
Closing.............................................. 7.1
Closing Date......................................... 7.1
Code................................................. 3.14
Companies Law........................................ 2.1
Company.............................................. Preamble
Company Options...................................... 3.2
Company Plans........................................ 3.2
Confidentiality Agreement............................ 5.4
Constituent Companies................................ Preamble
Current Premium...................................... 5.8
Disclosure Schedule.................................. 3.0
Disclosure Statement................................. 2.10
Effective Time....................................... 7.1
Employee Benefit Plan................................ 3.15
ERISA................................................ 3.15
ERISA Affiliate...................................... 3.15
ERISA Benefit Plan................................... 3.15
Exchange Act......................................... 1.1
Expiration Date...................................... 1.1
GAAP................................................. 3.6
Indemnified Parties.................................. 5.8
Independent Director................................. 1.3
Insurance Act........................................ 1.3
Interim Balance Sheet................................ 3.6
Material Adverse Effect.............................. 3.1
Newco................................................ Preamble
Minimum Condition.................................... 1.1
Minister............................................. 1.3
October Options...................................... 2.7
Offer................................................ Recitals
Offer Documents...................................... 1.1
Organizational Documents............................. 3.1
Other Shares......................................... 3.2
Parent............................................... Preamble
Parent Options....................................... 2.7
Parent Owned Shares.................................. 1.1
Parties.............................................. Preamble
Paying Agent......................................... 2.8
1996 Proxy Statement................................. 3.6
Schedule 14D-9....................................... 1.2
SEC.................................................. 1.1
SEC Documents........................................ 3.6
Second Quarter Dividend.............................. 5.1
- 33 -
Securities Act....................................... 3.6
Shares............................................... Recitals
Special Meeting...................................... 2.10
Superior Proposal.................................... 5.3
Tax.................................................. 3.14
Tax Returns.......................................... 3.14
Third Party.......................................... 5.3
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by written agreement of the Parties at
any time prior to the Effective Time with respect to any of the terms contained
herein; provided, however, that, after the Amalgamation is approved by the
shareholders of Company, no such amendment or modification shall reduce the
amount or change the form of the Amalgamation Consideration or in any way
adversely affect the rights of the holders of Shares without the further
approval of such holders; provided, further, that from and after the date that
Parent's designees to the Board constitute a majority of the Board and prior to
the consummation of the Amalgamation, any amendment or modification of this
Agreement and any material deviation in the performance of this Agreement shall
require the approval of the Independent Directors.
SECTION 10.2 Waiver of Compliance; Consents. Any failure of Parent
and Newco or Company to comply with any obligation, covenant, agreement or
condition herein may be waived only by a written instrument signed by the Party
granting such waiver, but such waiver or failure to insist upon compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 10.02.
SECTION 10.3 Survival. The respective representations and warranties
of the Parties contained herein or in any certificates or other documents
delivered prior to or at the Closing shall not be deemed waived or otherwise
affected by any investigation made by any party hereto and shall not survive the
Closing. The covenants and agreements herein shall survive in accordance with
their respective terms.
SECTION 10.4 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally, by express courier or
mailed by registered or certi-
- 34 -
fied mail (return receipt requested), first class postage pre-paid, or
telecopied with confirmation of receipt, to the Parties at the addresses
specified below (or at such other address for a Party as shall be specified by
like notice; provided, however, that notices of a change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecopied, one day after delivery to a
courier for next-day delivery, or three days after mailing, if deposited in the
mail, first class postage prepaid.
(a) if to Company, to
GCR Holdings Limited
Sofia House
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Secretary
with a copy to:
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) if to Parent or Newco, to
EXEL Limited
Cumberland House
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇ Bermuda
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
- 35 -
SECTION 10.5 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the Parties without the prior written consent of the other Parties, nor is this
Agreement intended to confer any rights or remedies hereunder upon any other
person except the parties hereto and, with respect to Section 5.08, the
officers, directors and employees of Company.
SECTION 10.6 Governing Law. Except as the laws of the Cayman Islands
are by their terms applicable, this Agreement shall be governed by the laws of
the State of New York (regardless of the laws that might otherwise govern under
applicable New York principles of conflicts of law) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
SECTION 10.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 10.8 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a Party, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such Party in the specific jurisdiction where such judgment shall be
made.
SECTION 10.9 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not in any way affect the meaning
or interpretation of this Agreement. This Agreement has been negotiated by the
Parties and is their mutual product; accordingly, no rule of strict construction
against Parent or Newco shall be applied in the interpretation of this
Agreement. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." Unless the context shall otherwise require, all references herein
to (i) Articles, Sections, Annexes and Exhibits shall be deemed references to
Articles and Sections of, and Annexes and Exhibits to, this Agreement, (ii)
persons include their respective permitted successors and assigns or, in the
case of governmental persons, persons succeeding to the relevant functions of
such persons, (iii) statutes and related regulations include any
- 36 -
amendments of same and any successor statutes and regulations, and (v) time
shall be deemed to be to New York City time.
SECTION 10.10 Entire Agreement. This Agreement, including the
schedules and exhibits hereto and the documents and instruments referred to
herein and therein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements and the understandings between the parties with respect to
such subject matter, except for the Confidentiality Agreement, which shall
remain in full force and effect. There are no representations, promises,
warranties, covenants, or undertakings, other than those expressly set forth or
referred to herein and therein.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be signed by a duly authorized officer as of the date first above written.
EXEL LIMITED
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇'▇▇▇▇
EXEL ACQUISITION LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
GCR HOLDINGS LIMITED
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
ANNEX A
to Agreement
and Plan of
Amalgamation
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer and in addition to
(and not in limitation of) Newco's rights to extend and amend the Offer at any
time in its sole discretion, and in addition to the Minimum Condition, Newco
shall not be required to accept for payment or pay for any tendered Shares, and
may postpone the acceptance for payment of or payment for tendered Shares and
may terminate or amend the Offer if, at or before the acceptance of such Shares
for payment or the payment therefor pursuant to the Offer, or, in Newco's
judgment, any of the following shall exist or occur:
(a) (x) there shall be instituted or pending any action or
proceeding, or any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, promulgated, entered,
enforced, amended or made applicable to Newco or Parent or any of their
affiliates or to the Offer or the Amalgamation by or before any ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ or other government or governmental,
regulatory or administrative authority or agency or by or before any court
or tribunal, (i) challenging or restricting the acquisition by Newco or
any affiliate of Newco, in whole or in part, of the Shares, seeking,
directly or indirectly, to restrain, materially delay or prohibit the
making or consummation of the Offer or seeking to obtain any material
damages or otherwise, directly or indirectly, relating to the transactions
contemplated by the Offer or the Amalgamation, (ii) seeking to prohibit,
restrict or limit the ownership or operation by Newco or Parent or any of
their affiliates of all or any material portion of its or Company's
business or assets, or to compel Newco or Parent or any of their
affiliates to dispose of or hold separate all or any material portion of
its or Company's business or assets as a result of the Offer or the
Amalgamation, (iii) making the purchase of, or payment for, some or all of
the Shares illegal, (iv) seeking to impose limitations on the ability of
Newco or Parent or any of their affiliates effectively to acquire, hold or
exercise rights of ownership of any Shares now owned or hereafter
purchased or to be purchased, including the right to vote with respect to,
such Shares on any matter properly presented to the shareholders of
Company, (v) imposing any material limitations on the ability of Newco or
Parent or any of their affiliates effectively to acquire, operate or hold,
or require Parent, Newco or Company or any of the respective subsidiaries
to dispose of or hold separate, in any material respect the business and
operations of Company, or (vi) restricting any material future business
activity by Parent, Newco or Company or any of their respective
subsidiaries or (y) any necessary approvals by any government or
governmental, regulatory or administrative authority or agency necessary
to consummate the Offer shall not have been obtained;
(b) any fact or circumstance exists or will have occurred that has a
material adverse effect on the business, operations, assets, condition
(financial or other), prospects or results of operations of Company and
its subsidiaries taken as a whole;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange, or on NASDAQ or otherwise in the over-the-counter market, (ii)
the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any material limitation
(whether or not mandatory) by any governmental authority or agency, or any
other event which would significantly affect the extension of credit by
banks or other lending institutions in the United States, (v) any
imposition of currency controls in the United States or a material change
in exchange rates or a suspension of, or material limitation on, the
markets therefor, or (vi) in the case of any of the foregoing existing at
the time of commencement of the Offer, any material worsening or
acceleration thereof;
(d) it shall have been publicly disclosed after the date of the
Agreement or Parent or Newco shall have learned or become aware that any
person (including Company or any of its subsidiaries or affiliates) or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have
acquired (including by the formation of any groups) 5.0% or more of any
class or series of shares of Company (including the Shares) or its
subsidiaries or shall have been granted any option or right to acquire
5.0% or more of any class or series of shares of Company (including the
Shares) or its subsidiaries, other than acquisitions of Shares for bona
fide arbitrage positions, and such person or group shall not have tendered
(and not withdrawn) all of the Shares owned beneficially or of record by
it at or prior to the Expiration Date; or
(e) the representations and warranties (without giving effect to any
materiality or similar qualifications contained therein) made by Company
in the Agreement shall have failed to be true and correct on the date of
the Amalgamation Agreement or on the Expiration Date as though such
representations and warranties had been made at and on such dates (other
than representations and warranties expressly made as of a specific other
date), except for such failures which, individually or in the aggregate,
would not
have a material adverse effect on the business, operations, assets,
condition (financial or other), prospects or results of operations of
Company and its subsidiaries taken as a whole; or
(f) the Agreement shall be terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Parent and
Newco and may be asserted by Parent or Newco or any of their affiliates or may
be waived by any of them in whole or in part at any time or from time to time in
their sole discretion. The failure to exercise any of the foregoing rights shall
not be deemed a waiver of any right, and each right shall be deemed a continuing
right which may be asserted at any time and from time to time for so long as
such right exists.