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Exhibit 10.28(a)
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AGREEMENT AND PLAN OF AMALGAMATION
dated as of July 30, 1998
by and among
UNDERWRITERS REINSURANCE COMPANY,
UNDERWRITERS ACQUISITION COMPANY LTD.
and
VENTON HOLDINGS LTD.
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TABLE OF CONTENTS
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ARTICLE ONE
CERTAIN DEFINITIONS
Section 1.01. Certain Definitions.......................................................................... 2
Section 1.02. Terms Generally ............................................................................. 6
ARTICLE TWO
THE AMALGAMATION
Section 2.01. The Amalgamation............................................................................. 6
Section 2.02. Effective Time of the Amalgamation; Closing.................................................. 6
Section 2.03. Effect of the Amalgamation................................................................... 7
Section 2.04. Memorandum of Association and Bye-laws of the
Amalgamated Company; Registration
Number; Directors......................................................................... 7
Section 2.05. Consideration. .............................................................................. 7
Section 2.06. Surrender and Payment........................................................................ 8
Section 2.07. Dividends; Voting; Etc....................................................................... 8
Section 2.08. No Further Rights............................................................................ 9
Section 2.09. Cash-Out of Warrants......................................................................... 9
Section 2.10. Cash-Out of Options.......................................................................... 10
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01. Corporate Organization....................................................................... 10
Section 3.02. Authority, Execution, Enforceability......................................................... 11
Section 3.03. Capital Structure............................................................................ 12
Section 3.04. Financial Statements......................................................................... 13
Section 3.05. Absence of Certain Changes................................................................... 15
Section 3.06. No Conflicts ................................................................................ 15
Section 3.07. Consents .................................................................................... 15
Section 3.08. Compliance with Applicable Law; Permits...................................................... 16
Section 3.09. Tax Matters ................................................................................. 17
Section 3.10. Litigation .................................................................................. 18
Section 3.11. Employees ................................................................................... 19
Section 3.12. Takeover Statutes............................................................................ 20
Section 3.13. Certain Fees ................................................................................ 20
Section 3.14. Investment Company........................................................................... 20
Section 3.15. Insurance Matters............................................................................ 21
Section 3.16. Admitted Assets ............................................................................. 21
Section 3.17. Rights to Name .............................................................................. 21
Section 3.18. Letters of Credit............................................................................ 22
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Section 3.19. Capital Contribution Obligations............................................................. 22
Section 3.20. Investments ................................................................................. 22
Section 3.21. Year 2000 ................................................................................... 22
Section 3.22. Interests of Officers, Directors and Shareholders............................................ 23
Section 3.23. Material Contracts........................................................................... 23
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
Section 4.01. Corporate Organization....................................................................... 24
Section 4.02. Authority, Execution, Enforceability......................................................... 24
Section 4.03. No Conflicts ................................................................................ 25
Section 4.04. Consents .................................................................................... 25
Section 4.05. Compliance with Applicable Law............................................................... 25
Section 4.06. Sufficient Funds and Assets.................................................................. 26
ARTICLE FIVE
COVENANTS
Section 5.01. Reasonable Best Efforts...................................................................... 26
Section 5.02. Public Announcements......................................................................... 26
Section 5.03. Supplemental Information..................................................................... 26
Section 5.04. Shareholders' Meeting........................................................................ 27
Section 5.05. Indemnification ............................................................................. 27
Section 5.06. Release of Capital Contribution Obligations.................................................. 28
Section 5.07. Replacement of Obligation Owed to Lloyd's and Mellon Bank.................................... 28
Section 5.08. Takeover Statutes............................................................................ 28
Section 5.09. Conduct of Business of the Company........................................................... 28
Section 5.10. Acquisition Proposals........................................................................ 31
Section 5.11. Information, etc. ........................................................................... 32
Section 5.12. Lloyd's Auction. ............................................................................ 32
ARTICLE SIX
CONDITIONS TO THE AMALGAMATION
Section 6.01. Conditions to Each Party's Obligation
to Effect the Amalgamation................................................................ 32
Section 6.02. Additional Conditions to the Company's
Obligation to Effect the Amalgamation..................................................... 33
Section 6.03. Additional Conditions to Parent and
Acquisition's Obligation to Effect the
Amalgamation.............................................................................. 34
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ARTICLE SEVEN
TERMINATION AND ABANDONMENT
Section 7.01. Termination by the Company, Parent or Acquisition............................................ 35
Section 7.02. Effect of Termination........................................................................ 36
ARTICLE EIGHT
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment and Modification................................................................... 37
Section 8.02. Waiver of Compliance; Consents............................................................... 37
Section 8.03. Severability and Validity.................................................................... 37
Section 8.04. Expenses and Obligations..................................................................... 37
Section 8.05. Parties in Interest.......................................................................... 38
Section 8.06. Notices ..................................................................................... 38
Section 8.07. Governing Law ............................................................................... 39
Section 8.08. Counterparts ................................................................................ 40
Section 8.09. Headings .................................................................................... 40
Section 8.10. Entire Agreement; Assignment................................................................. 40
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AGREEMENT AND PLAN OF AMALGAMATION
This Agreement and Plan of Amalgamation, dated as of July 30, 1998 (this
"Agreement"), is made by and among UNDERWRITERS REINSURANCE COMPANY, a New
Hampshire insurance company ("Parent"), UNDERWRITERS ACQUISITION COMPANY LTD., a
Bermuda company and a Subsidiary of Parent ("Acquisition") and VENTON HOLDINGS
LTD., a Bermuda company (the "Company").
WHEREAS, prior to the date hereof, the Board of Directors of the Company
has determined that it is in the best interests of the shareholders of the
Company for Acquisition to be amalgamated with and into the Company (the
"Amalgamation") upon the terms and subject to the conditions set forth herein;
WHEREAS, prior to the date hereof, the Boards of Directors of Parent and
Acquisition have determined that it is in the best interests of their respective
shareholders for Acquisition to be amalgamated with and into the Company upon
the terms and subject to the conditions set forth herein;
WHEREAS, as a condition and inducement to Parent and Acquisition entering
into this Agreement and incurring the obligations set forth herein, on the date
hereof each of X.L. INSURANCE COMPANY, LTD., a Bermuda company ("Exel"), RISK
CAPITAL REINSURANCE COMPANY, a Nebraska corporation ("RCRe"), and TRYCO III
LTD., a Bermuda company ("Tryco III"), have granted to Parent an irrevocable
proxy to vote all Shares owned by each on the date hereof or hereafter acquired,
to attend all meetings of the shareholders of the Company and to represent and
otherwise to act for each in the same manner and with the same effect as if done
by each, with respect to the approval of the Amalgamation, when the same is
submitted to shareholders of the Company for approval.
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
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ARTICLE ONE
CERTAIN DEFINITIONS
Section 1.01. Certain Definitions. Certain capitalized terms used in
this Agreement shall have the meanings set forth below:
"Class A Shares" means Class A Common Shares, par value $1.00 per
share, of the Company.
"Class A Warrants" means warrants to purchase Class A Shares.
"Class B Shares" means Class B Common Shares, par value $1.00 per
share, of the Company.
"Class B Warrants" means warrants to purchase Class B Shares.
"Class C Shares" means Class C Common Shares, par value $1.00 per
share, of the Company.
"Class C Warrants" means warrants to purchase Class C Shares.
"Company Disclosure Letter" means the Disclosure Letter dated the date
hereof from the Company to Parent and Acquisition.
"Employee Benefit Plan" means each benefit plan maintained or
contributed to by the Company or any of its Subsidiaries or with respect to
which the Company or any of its Subsidiaries may have any liability which
provides (or is intended to provide) benefits to the employees of the Company or
any of its Subsidiaries (or other service providers to the 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.
"Expiration Date" has the meaning set forth in the Warrant Agreement.
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"GAAP" means generally accepted accounting principles as in effect in
the United States of America (as such principles may change from time to time).
"Governmental Authority" means any governmental, quasi-governmental,
judicial or regulatory agency or entity or subdivision thereof, including
without limitation Lloyd's, with jurisdiction over the Company, Parent or
Acquisition or any of their respective Subsidiaries or any of the transactions
contemplated by this Agreement.
"Instruments," with respect to any Person, means all material
agreements, mortgages, indentures, debentures, trusts, leases, licenses and
other instruments and obligations to or by which such Person or any of its
Subsidiaries or any of their respective properties is subject or bound.
"Liabilities" means liabilities, debts, claims or obligations of any
nature, whether accrued, absolute, direct or indirect, contingent or otherwise,
whether due or to become due, whether or not of a kind required by GAAP to be
set forth in a financial statement.
"Lien" means any mortgage, lien, security interest, pledge, lease or
other charge or encumbrance of any kind, including the lien or retained security
title of a purchase money creditor or conditional vendor, and any easement,
right of way or other encumbrance on title to real property, and any agreement
to give any of the foregoing.
"Material Adverse Effect" means, with respect to the Company or Parent
(as the case may be), any change, event, condition or development that is
materially adverse to the business, assets, liabilities, properties, results of
operations or financial or operating condition of such specified party and its
Subsidiaries, taken as a whole, except for any such change, event, condition or
development resulting from or arising in connection with (i) changes applicable
to participants in one or more of the businesses of the Company or Parent (as
the case may be) generally, (ii) changes in economic, regulatory or political
conditions generally (including without limitation changes in the financial
markets) or (iii) the transactions contemplated by this Agreement.
"Options" means options to purchase Class C Shares granted under the
Rules of the Venton Holdings Ltd. 1997 Unapproved Executive Share Option Scheme
and similar grants.
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"Permitted Liens" means Liens that would, individually or in the
aggregate, not have a Material Adverse Effect on the Company.
"Person" shall mean an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization or other
entity.
"Shareholders' Meeting" means the meeting of the Company's shareholders
to approve this Agreement and the Amalgamation and the related transactions
contemplated hereby.
"Shares" means Class A Shares, Class B Shares and Class C Shares,
collectively.
"Subsidiary" means, with respect to any Person, each corporation,
partnership or other entity in which such Person owns or controls, directly or
indirectly through one or more intermediaries, a majority of the stock or other
interests having general voting power in the election of directors or Persons
performing similar functions or rights to a majority of any distributions (it
being understood that the Syndicates are not Subsidiaries).
"Taxes" means any federal, state, county, local or foreign taxes,
charges, fees, levies, or other assessments, including all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise, premium,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes and any expenses incurred
in connection with the determination, settlement or litigation of any tax
liability.
"Tax Return" means a report, return or other information which is
necessary or required for the conduct of its business to be supplied to a
governmental entity with respect to Taxes including, where permitted or
required, combined or consolidated returns for any group of entities that
includes the Company or any of its Subsidiaries.
"Voting Debt" of any Person means bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into or exercisable for
securities having the right to
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vote) on any matters on which shareholders of such Person may vote.
"VUG" means Venton Underwriting Group Ltd., an English company.
"Warrants" means Class A Warrants, Class B Warrants and Class C
Warrants, collectively.
In addition, each of the following terms has the meaning set forth in
the Section set forth opposite such term:
Term Section
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Acquisition........................................................ preamble
Advisors Act....................................................... 3.18
Agreement.......................................................... preamble
Amalgamated Company................................................ 2.01
Amalgamation....................................................... preamble
Closing............................................................ 2.02
Closing Date....................................................... 2.02
Companies Act...................................................... 2.01
Company............................................................ preamble
Company Actuarial Analyses......................................... 3.15(b)
Company Financial Statements....................................... 3.04(a)
Company Insurance Subsidiaries..................................... 3.01(b)
Company Options.................................................... 3.03(b)
Confidentiality Letter............................................. 5.11
Consent............................................................ 3.07
D&O Insurance...................................................... 5.05(b)
Effective Time..................................................... 2.02
Exchange Agent..................................................... 2.06(b)
Exchange Act....................................................... 3.14
Exel............................................................... preamble
Indemnified Parties................................................ 5.05(a)
Letter of Credit................................................... 5.07
Lloyd's............................................................ 3.07
Minister........................................................... 3.07
1940 Act........................................................... 3.14
New Shares......................................................... 2.05(b)
Parent............................................................. preamble
Permits............................................................ 3.08(b)
RCRe............................................................... preamble
Registrar.......................................................... 2.02
Stockholders Agreement............................................. 3.03(b)
Syndicates......................................................... 3.10
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Term Section
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Takeover Law....................................................... 3.12
Tryco III.......................................................... preamble
Unpaid Class C Shares.............................................. 2.05(a)
VUL................................................................ 3.09
Section 1.02. Terms Generally. (a) The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
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."
(b) Unless the context shall otherwise require, all references herein
to (i) Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules 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) agreements and other contractual instruments include
subsequent amendments, assignments, and other modifications thereto to the date
hereof, (iv) statutes and related regulations include any amendments of same and
any successor statutes and regulations, (v) time shall be deemed to be Bermuda
time and (vi) "$" shall be to United States Dollars.
ARTICLE TWO
THE AMALGAMATION
Section 2.01. The Amalgamation. At the Effective Time, and upon the
terms and subject to the conditions set forth herein, Acquisition shall be
amalgamated with and into the Company in accordance with the provisions of the
Companies Xxx 0000 of Bermuda (the "Companies Act"). At and after the Effective
Time, the Company and Acquisition shall continue in the form of the amalgamated
company and shall operate under the name "Venton Holdings Ltd." (the
"Amalgamated Company").
Section 2.02. Effective Time of the Amalgamation; Closing. As soon as
practicable after satisfaction or waiver of the conditions set forth in Article
Six, Parent and Acquisition will cause an application for the registration of an
amal-
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gamated company and such other documents as are required by the Companies Act in
connection with the Amalgamation to be duly filed with the Registrar of
Companies of Bermuda (the "Registrar"). The Amalgamation shall become effective
upon the issuance of the certificate of amalgamation by the Registrar (the time
of such issuance being the "Effective Time"). Prior to such filing, a closing
shall be held, at Xxxxxxx, Xxxx & Xxxxxxx at 9:00 a.m. or such other place
and/or time as the parties shall agree, for the purpose of confirming the
satisfaction or waiver of the conditions set forth in Article Six (the
"Closing"). The date upon which the Closing shall occur is referred to herein as
the "Closing Date."
Section 2.03. Effect of the Amalgamation. The Amalgamation shall have
the effects set forth in Section 109 of the Companies Act.
Section 2.04. Memorandum of Association and Bye-laws of the Amalgamated
Company; Registration Number; Directors. The memorandum of association of the
Company shall become the memorandum of association of the Amalgamated Company
and thereafter may be amended as provided therein and by law. The bye-laws of
the Company shall become the bye-laws of the Amalgamated Company and thereafter
may be amended as provided therein and by law. The registration number of the
Amalgamated Company in Bermuda after the Effective Time shall be the same
registration number as that of the Company immediately prior to the Effective
Time. The initial directors of the Amalgamated Company shall be: (i) Xxxxxx
Xxxxxx; (ii) Xxxxxx Xxxxxx; (iii) D. Xxxxxx Xxxxx; (iv) Xxxxxx X. Xxxxxx; (v)
Xxxxxxx X. Xxxx; and (vi) Xxxxxx X. Xxxx; and their addresses shall be in care
of the Company at the address set forth in Section 8.06.
Section 2.05. Consideration. (a) Except as otherwise provided in
Section 106 of the Companies Act, at the Effective Time, each Share that is
issued and outstanding immediately prior to the Effective Time shall be
canceled, and the holder thereof shall be entitled to receive, pursuant to the
procedures set forth in Section 2.06, $3,081.69 (except as provided in clause
(v)) per Share, without interest thereon, with such consideration to consist of:
(i) for each Class A Share $1,678.94 in cash and the cancellation of $1,402.75
in capital contribution obligations; (ii) for each Class B Share held by Exel
$1,679.11 in cash and the cancellation of $1,402.58 in capital contribution
obligations; (iii) for each Class B Share held by RCRe $1,673.42 in cash and the
cancellation of $1,408.27 in capital contribution obligations; (iv) for each
Class C Share (other than the 996 Class C Shares held by Alec
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Sharp on which no amount has been paid (the "Unpaid Class C Shares")) $3,081.69
in cash; and (v) for each Unpaid Class C Share $1,832.06 in cash.
(b) At the Effective Time, by virtue of the Amalgamation and without
any action on the part of Parent, Acquisition, the Company or the holder
thereof, each common share of Acquisition issued and outstanding immediately
prior to the Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable common share, par value $1.00 per share, of
the Amalgamated Company (the "New Shares").
(c) At the Effective Time, by virtue of the Amalgamation and without
any action on the Part of Parent, Acquisition, the Company or the holder
thereof, each Share which is issued and outstanding immediately prior to the
Effective Time and held by Parent immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and nonassessable
New Share.
Section 2.06. Surrender and Payment. (a) Parent shall enter into
arrangements so that all Shareholders who surrender certificates or other
satisfactory evidence representing Shares on or prior to the Effective Time will
be paid at the Effective Time directly by wire transfer to accounts designated
by such Shareholders.
(b) Prior to the Effective Time, Parent shall (i) appoint an agent (the
"Exchange Agent") for the purpose of exchanging certificates representing Shares
for the consideration specified in Section 2.05(a) and (ii) irrevocably instruct
and authorize such Exchange Agent to make immediately available funds sufficient
to make all payments in accordance with this Agreement to all Shareholders,
holders of Warrants and holders of Options who surrender certificates or other
satisfactory evidence representing such Shares, Warrants or Options to such
Exchange Agent after the Effective Time.
(c) Parent shall have the right to make rules, not inconsistent with
the terms of this Agreement, governing the payment of cash pursuant to this
Article Two.
Section 2.07. Dividends; Voting; Etc. (a) After the Effective Time,
there shall be no further registration of transfers of Shares. If, after the
Effective Time, certificates representing Shares are presented to the
Amalgamated Company or, subject to the provisions of Section 2.07(b), the
Exchange Agent, they shall be canceled and exchanged for the pay-
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ment of the consideration specified in Section 2.05(a) in accordance with the
procedures set forth in this Article Two.
(b) Any portion of the consideration deposited with the Exchange Agent
pursuant to Section 2.06(a) that remains unclaimed by the holders of Shares
twelve months after the Effective Time shall be returned to Parent or an
affiliate designated by Parent, upon demand, and any such holder who has not
exchanged his Shares for the consideration specified in Section 2.05(a) in
accordance with this Article Two prior to that time shall thereafter look only
to Parent for his claim for the Amalgamation Consideration. Notwithstanding the
foregoing, Parent shall not be liable to any holder of Shares for any amount
paid to a public official pursuant to applicable abandoned property laws. Any
amounts remaining unclaimed by holders of Shares immediately prior to such time
as such amounts would otherwise escheat to or become property of any
Governmental Authority shall, to the extent permitted by applicable law, become
the property of Parent, free and clear of any claim or interest of any Person
previously entitled thereto.
Section 2.08. No Further Rights. 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 shall cease to have any rights as
a shareholder of the Company, except for the right to receive the consideration
specified in Section 2.05(a) upon surrender of its certificate or certificates.
Section 2.09. Cash-Out of Warrants. At the Effective Time, by virtue of
the Amalgamation and without any action on the part of any holder thereof, the
Company shall pay (with the proceeds of the capital contribution required by the
last sentence of this Section 2.09) for each Warrant that is outstanding
immediately prior to the Effective Time, to the holder thereof, an amount in
cash equal to the difference between (a) the consideration per Class A Share,
Class B Share or Class C Share specified in Section 2.05(a) multiplied by the
number of Class A Shares, Class B Shares or Class C Shares subject to such
Warrant and (b) the exercise price of such Warrant. Upon such payment therefor,
such Warrant will no longer be outstanding, and neither the Company nor any
other Person shall have any obligation with respect thereto. At the Effective
Time, Parent shall make a capital contribution to the Company in an amount equal
to $11,419,229.98, which the parties hereto agree is sufficient to make all
payments pursuant to this Section 2.09.
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Section 2.10. Cash-Out of Options. At the Effective Time, by virtue of
the Amalgamation and without any action on the part of any holder thereof, the
Company shall pay (with the proceeds of the capital contribution required by the
last sentence of this Section 2.10), for each Option that is outstanding
immediately prior to the Effective Time, to the holder thereof, an amount in
cash equal to the difference between (a) the consideration per Class C Share
specified in Section 2.05(a) multiplied by the number of Class C Shares subject
to such Option (or by the number of Class C Shares subject to the Class C
Warrant subject to such Option) and (b) the exercise price of such Option. Upon
such payment therefor, such Option will no longer be outstanding, and neither
the Company nor any other Person shall have any obligation with respect thereto.
At the Effective Time, Parent shall make a capital contribution to the Company
in an amount equal to $6,649,427.97, which the parties hereto agree is
sufficient to make all payments pursuant to this Section 2.10.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition
that except as set forth in the Company Disclosure Letter:
Section 3.01. Corporate Organization. (a) Each of the Company and its
Subsidiaries is a company duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of the
Company and its Subsidiaries (i) is qualified, licensed or domesticated as a
foreign corporation in all jurisdictions where such qualification, license or
domestication is required to own and operate its properties and conduct its
businesses in the manner and at the places presently conducted; (ii) holds all
franchises, grants, licenses, certificates, permits, consents and orders, all of
which are valid and in full force and effect, from all applicable Bermuda and
foreign Governmental Authorities necessary to own and operate its properties and
to conduct its businesses in the manner and at the places presently conducted;
and (iii) has full power and authority (corporate and other) to own, lease and
operate its properties and to carry on its businesses as presently conducted and
as proposed to be conducted, except where the failure to be so qualified,
licensed or domesticated, or to hold such franchises, grants, licenses,
certifi-
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xxxxx, permits, consents and orders and have such power and authority could not,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
is required to be authorized, qualified, licensed or domesticated as a foreign
corporation under any federal, state or local law in the United States. The
Company has furnished to Parent and Acquisition complete and correct copies of
the memorandum of association and bye-laws of the Company and each of its
Subsidiaries as in effect on the date hereof. Such memoranda of association and
bye-laws are in full force and effect and no other organizational documents are
applicable to or binding upon the Company or any of its Subsidiaries.
(b) The Company conducts its operations through the Subsidiaries set
forth in the Company Disclosure Letter (collectively, the "Company
Subsidiaries"). Each of the Company Subsidiaries and VUG is (i) duly licensed or
authorized to conduct the business it now conducts in its jurisdiction of
incorporation and (ii) duly licensed or authorized in each other jurisdiction
where it is required to be so licensed or authorized except, in any such case,
where the failure to be so licensed or authorized, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect on the
Company. The Company and its Subsidiaries and VUG have made all filings required
by Governmental Authorities except where the failure to file, individually or in
the aggregate, is not reasonably likely to have a Material Adverse Effect on the
Company.
Section 3.02. Authority, Execution, Enforceability. The Company has all
requisite corporate power and authority to enter into this Agreement and,
subject to the shareholder approval described below, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company, the performance by the Company of its obligations hereunder and
the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company (including approval by the necessary vote of all members of its Board of
Directors, which approval includes a resolution recommending that this Agreement
and the transactions contemplated hereby be approved by the shareholders of the
Company), subject only to the approval of the provisions of this Agreement
(which are the terms and means of effecting the Amalgamation) by the affirmative
vote of Persons holding or representing by
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proxy not less than three-fourths of the Shares voting at the Shareholders'
Meeting at which two or more Persons holding or representing by proxy more than
one-third of the issued and outstanding Shares shall constitute a quorum. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject with respect to enforceability to
the effect of bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereafter affecting the enforcement of creditors' rights generally and to
the availability of equitable remedies.
Section 3.03. Capital Structure. (a) As of the date hereof and as of
the Closing, the authorized share capital of the Company is $120,000 comprised
of 120,000 ordinary shares with a par value of $1.00 per share. As of the date
hereof and, except to the extent Options or Warrants are exercised, as of the
Closing, (i) 58,180 Class A Shares were issued and outstanding, (ii) 29,408
Class B Shares were issued and outstanding and (iii) 6,205 Class C Shares were
issued and outstanding. There is no Voting Debt of the Company issued and
outstanding. All of the issued and outstanding securities of the Company have
been duly authorized and validly issued, are fully paid and non-assessable, and
were issued in compliance with all applicable Bermuda, United States federal,
state and other foreign laws regulating the offer, sale or issuance of such
securities.
(b) There are no options, warrants, calls, rights, commitments and
agreements of any character to which the Company is a party or by which it is
bound obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or any Voting Debt of the
Company or obligating the Company to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement (collectively, "Company
Options"), except, as of the date hereof and, except to the extent Options or
Warrants are exercised, as of the Closing, for (i) Class A Warrants to purchase
an aggregate of 5,086 Class A Shares, (ii) Class B Warrants to purchase an
aggregate of 643 Class B Shares, (iii) Class C Warrants to purchase an aggregate
of 504 Class C Shares and (iv) Options to purchase (x) an aggregate of 3,359
Class C Shares and (y) Class C Warrants to purchase an aggregate 328 Class C
Shares. The Company is not subject to any obligation (contingent or otherwise)
to purchase, redeem or otherwise acquire or retire any of its securities, except
as set forth in the Second Amended and Restated Stockholders Agreement dated May
21, 1997, among the Trident Partnership, L.P., Tryco III, RCRe, Exel, the
Management Investors signatory thereto and the Company (the "Stockholders
Agreement"). The Company has
17
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delivered a true and correct copy of the Stockholders Agreement to Parent and
Acquisition. The Stockholders Agreement shall, if necessary, be amended at or
prior to the Effective Time so that the Company shall have no obligations
thereunder and so that the Syndicate 1207 Option (as defined therein) shall not
be in effect without having been exercised.
(c) Since December 31, 1997, the Company has not (i) made or agreed to
make any stock split or stock dividend, or issued or permitted to be issued any
shares of capital stock, or securities exercisable for or convertible into
shares of capital stock, of the Company other than pursuant to and as required
by the terms of any Company Option outstanding as of the date hereof; (ii)
repurchased, redeemed or otherwise acquired any shares of capital stock of the
Company; or (iii) declared, set aside, made or paid to the shareholders of the
Company dividends or other distributions on the outstanding shares of capital
stock of the Company.
(d) The Company Disclosure Letter lists each Subsidiary of the Company
and, except for the capital stock of such Subsidiaries and the other ownership
interests listed in the Company Disclosure Letter, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity. All the outstanding
shares of capital stock of each Subsidiary of the Company have been validly
issued and are fully paid and nonassessable and are owned by the Company, by one
or more Subsidiaries of the Company or by the Company and one or more such
Subsidiaries, free and clear of all Liens. Except as set forth above, there are
no securities, options, warrants, rights, commitments or agreements of any kind
to which the Company or any Subsidiary is a party or by which any of them is
bound obligating any of them to issue, sell or deliver, or repurchase, redeem or
otherwise acquire, shares of capital stock or other equity or voting securities
of any Subsidiary, or obligating any of them to issue, sell, deliver, grant,
extend or enter into any such security, option, warrant, right, commitment or
agreement.
Section 3.04. Financial Statements. (a) The Company has delivered or
made available to Parent a true and complete copy of the audited Consolidated
Balance Sheets of the Company and its Subsidiaries as of December 31, 1995, 1996
and 1997 and the related audited Consolidated Statements of Operations,
Statements of Shareholders' Equity and Statements of Cash Flows of the Company
and its Subsidiaries for the twelve
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month periods ended December 31, 1995, 1996 and 1997 (collectively, the "Company
Financial Statements").
(b) As of their respective dates and for the periods indicated, the
Company Financial Statements (i) complied as to form in all material respects
with applicable accounting requirements, (ii) are in accordance, in all material
respects, with the books and records of the Company, which are complete and
accurate in all material respects and which have been maintained in accordance
with good business practices, and (iii) present fairly the consolidated
financial position of the Company and its Subsidiaries and the related results
of operations, changes in shareholders' equity and cash flows as of the dates
and for the periods indicated in accordance with GAAP applied on a consistent
basis throughout the periods indicated, except as may otherwise be specifically
indicated therein.
(c) The Company has delivered or prior to the Closing will deliver to
Parent true and complete copies of the Consolidated Balance Sheet of the Company
and its Subsidiaries as of March 31, 1998 and the related Consolidated Statement
of Operations, Statement of Shareholders' Equity and Statement of Cash Flows of
the Company and its Subsidiaries for the three months then ended, and true and
complete copies of the Consolidated Balance Sheet of the Company and its
Subsidiaries as of June 30, 1998 and the related Consolidated Statement of
Operations, Statement of Shareholders' Equity and Statement of Cash Flows of the
Company and its Subsidiaries for the six months then ended (collectively, the
"Company Interim Financial Statements").
(d) As of their respective dates and for the periods indicated, the
Company Interim Financial Statements present fairly the consolidated financial
position of the Company and its Subsidiaries and the related results of
operations, changes in shareholders' equity and cash flows as of the dates and
for the periods indicated in accordance with generally accepted accounting
principles applied on a basis consistent with the Company Financial Statements.
(e) The Company has delivered or prior to the Closing will deliver to
Parent true and complete copies of the audited Balance Sheets of each of
Yachtsure Ltd. and Venton Risk Services Ltd. as of December 31, 1997 and the
related audited Statements of Operations, Statements of Shareholder's Equity and
Statements of Cash Flows of each of Yachtsure Ltd. and Venton Risk Services Ltd.
for the twelve months then ended.
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(f) The Company has delivered or prior to the Closing will deliver to
Parent true and complete copies of the audited Annual Reports and Accounts of
each of the Syndicates as of December 31, 1995, 1996 and 1997 and for the twelve
month periods then ended.
Section 3.05. Absence of Certain Changes. (a) Except as set forth in
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
has any liabilities of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, other than: (i) liabilities
provided for in the Company Financial Statements; (ii) liabilities incurred
since the date of the Company Financial Statements in the ordinary course of
business, in amounts and on terms consistent with past practice; (iii)
liabilities disclosed in the Company Disclosure Letter; and (iv) other
undisclosed liabilities which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on the Company.
(b) Since December 31, 1997 there has been no event or circumstance
that has had a Material Adverse Effect on the Company.
Section 3.06. No Conflicts. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in any violation of or be in conflict with or constitute a breach
or default (with or without notice or lapse of time or both) or loss of material
benefit or acceleration under the memorandum of association, bye-laws or any
other Instrument of the Company or any of its Subsidiaries, except for any such
violation, conflict, breach or default, loss or acceleration, which,
individually on in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company, or (ii) result in the creation of any
Lien other than Permitted Liens.
Section 3.07. Consents. (a) Except for the filing of the application to
register the Amalgamation pursuant to the Companies Act and the consent of the
Minister of Finance of Bermuda (the "Minister") to the Amalgamation and the
approval by The Corporation and Society of Lloyd's ("Lloyd's") to the
Amalgamation and the transactions contemplated by this Agreement, no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any Governmental Authority ("Consent")
is required on the part of the Company, any of its Subsidiaries, or any of the
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shareholders of the Company (including in respect of the Syndicates) in
connection with the transactions contemplated by this Agreement, except where
failure to obtain such Consent could not reasonably be expected to have a
Material Adverse Effect on the Company.
(b) The Company (including all entities it controls) does not hold
assets located in the United States of America having an aggregate book value of
$15.0 million or more, other than investment assets, voting securities and
non-voting securities. For the purpose of this representation, investment assets
means cash, deposits in financial institutions, other money market instruments
and instruments evidencing government obligations. The Company is not
incorporated in the United States, is not organized under the laws of the United
States, and does not have its principal offices within the United States. Other
than as described in this paragraph, the Company (including all entities it
controls) did not in its most recent fiscal year make aggregate sales in or into
the United States of $25 million or more. Through its wholly owned subsidiary,
New Street Holdings, Ltd., the Company provides management services under
contract with Syndicates 376, 1183 and 1207 which accept insurance risk placed
by London brokers, some of which risk is that of policyholders located in the
United States. The Company controls a corporate member of Lloyd's, VUL, which is
the sole corporate member of Syndicate 1207. In their most recent fiscal years,
none of the Syndicates, the Company, VUL nor any entity controlled by the
Syndicates, the Company or VUL, transacted business in the United States or
directly with any policyholders or insurance brokers located in the United
States. For the purposes of this Section 3.07(b), "United States" shall include
all of the States, the territories, possessions and commonwealths of the United
States and the District of Columbia.
Section 3.08. Compliance with Applicable Law; Permits. (a) Subject to
obtaining the Consents referred to in Section 3.07, the execution, delivery and
performance of this Agreement and the taking of the other actions contemplated
by this Agreement to be performed by the Company will not result in any default
or violation of any judgment, decree, order, law, statute, rule or regulation of
any Governmental Authority applicable to the Company or any of its Subsidiaries,
except for such defaults or violations as are not reasonably likely to have a
Material Adverse Effect on the Company.
(b) Each of the Company, its Subsidiaries, VUG and the Syndicates is in
compliance with all judgments, decrees,
21
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orders, statutes, laws, ordinances, rules, regulations and, to the Company's
best knowledge, policies of all Governmental Authorities, including, without
limitation, those that govern insurance matters, to which it or any of its
properties or assets is subject except where such failure to comply is not
reasonably likely to have a Material Adverse Effect on the Company. Each of the
Company, its Subsidiaries, VUG and the Syndicates has all permits, licenses,
orders, certificates, authorizations and approvals of any Governmental Authority
(collectively, "Permits") that are material to the conduct of its business as
presently conducted and as proposed to be conducted; all such Permits are in
full force and effect, and each of the Company, its Subsidiaries, VUG and the
Syndicates has fulfilled and performed all obligations necessary to maintain
such Permits; except, in each case, for such failures to obtain, to maintain in
full force and effect and to fulfill and perform which would not have a Material
Adverse Effect on the Company. Venton Underwriting Agencies Limited (and any
other Subsidiary to which the Lloyd's solvency tests apply) exceeds as of the
date hereof and as of the Effective Time the then applicable minimum standards
of solvency established by the Lloyd's solvency tests. There are no defaults
under any Instrument of the Company or any of its Subsidiaries, except for such
defaults that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on the Company.
Section 3.09. Tax Matters. (a) Filing of Timely Tax Returns. The
Company and each of its Subsidiaries have filed all Tax Returns required to be
filed by each of them under applicable law. All Tax Returns were in all material
respects (and, as to Tax Returns not filed as of the date hereof, will be) true,
complete and correct and filed on a timely basis. The Company has made available
to Parent a true and correct copy of each income Tax Return of the Company and
each of its Subsidiaries for all taxable periods for which the period for
assessment or collection of income Tax remains open, and no agreement, waiver or
consent to extend the period for the assessment or collection of any Tax is
currently in effect.
(b) The Company and each of its Subsidiaries have, within the time and
in the manner prescribed by law, withheld or paid (and until the Closing Date
will withhold or pay within the time and in the manner prescribed by law) all
Taxes that are currently due and payable or required to be withheld except for
those contested in good faith and for which adequate reserves have been taken.
To the knowledge of the Company, there
22
-18-
are no investigations or audits with regard to the Company or any of its
Subsidiaries with respect to Taxes.
(c) The Company and its Subsidiaries have established (and until the
Closing Date will maintain) on their books and records reserves adequate to pay
all Taxes and reserves for deferred income taxes in accordance with GAAP.
(d) There are no Tax liens upon the assets of the Company or any of its
Subsidiaries except liens for Taxes not yet due.
(e) Neither the Company nor any of its Subsidiaries has any liability,
direct or indirect, absolute or contingent, for the Taxes of any other Person.
Except for Subsidiaries which are Eligible Corporate Underwriters, within the
meaning of the Closing Agreement between the Council of Lloyds and the Internal
Revenue Service, dated March 2, 1994 (the "Closing Agreement"), neither the
Company nor any of its Subsidiaries in the last ten years has been engaged in
trade or business in the United States (within the meaning of Section 864(b) of
the Internal Revenue Code of 1986, as amended ("Code")), and in the case of the
Subsidiaries which are Non-U.S. Corporate Underwriters (as defined in the
Closing Agreement), the only income which is effectively connected with that
trade or business in the United States (within the meaning of Section 864(c) of
the Code) is its taxable USCI or USCL (as such terms are used in the Closing
Agreement). Venton Underwriting Ltd., a Bermuda company and a wholly owned
subsidiary of the Company ("VUL"), at all times has been fiscally resident in
Bermuda other than its U.K. branch.
Section 3.10. Litigation. There are no actions, suits, claims,
proceedings or investigations pending against, or, to the knowledge of the
Company, threatened against or affecting, the Company, any of its Subsidiaries,
VUG or any Syndicate at Lloyd's managed by a Subsidiary ("Syndicates") or any of
their respective properties before any Governmental Authority or otherwise other
than in the ordinary course of business which (a) individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect on the
Company; or (b) in any manner challenges or seeks to prevent, enjoin, alter or
delay the transactions contemplated hereby. As of the date hereof, to the
knowledge of the Company, there are no actions, suits, claims, proceedings or
investigations pending or threatened against the Company, any of its
Subsidiaries, VUG or any Syndicate or any of their respective properties before
any Governmental Authority or otherwise, whether or not in the ordi-
23
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nary course of business, which individually or in the aggregate are reasonably
likely to have a Material Adverse Effect on the Company. As of the date hereof,
neither the Company nor any of its Subsidiaries nor any of their respective
properties is subject to any order, writ, judgment, injunction, decree,
determination or award having, or reasonably likely to have, a Material Adverse
Effect on the Company or which would prevent, enjoin, alter or delay the
consummation of the transactions contemplated hereby.
Section 3.11. Employees. (a) The Company Disclosure Letter lists all
employment contracts and similar arrangements between the Company or any of its
Subsidiaries and its employees, and all plans and arrangements pursuant to which
the Company or any of its Subsidiaries is 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 the Company or any of
its Subsidiaries, including 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 the Company (including termination of
employment). As of the date hereof, the Company is not aware that any officer,
director, executive or key employee of the Company or any of its Subsidiaries or
any group of employees of the Company or any of its Subsidiaries has any plans
to terminate his, her or its employment. (i) The 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 is not reasonably likely to
have a Material Adverse Effect on the Company, (ii) no labor dispute with
employees of the Company or any Subsidiary exists or, to the knowledge of the
Company, is threatened, except as are not reasonably likely to have a Material
Adverse Effect on the Company, (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 the Company or any Subsidiary with respect to any
Employee Benefit Plan except regular periodic contributions to such plans and
full payment has been made of all amounts that the Company or any Subsidiary is
required to have paid as contributions to each Employee Benefit Plan, (iv) the
current value of accrued benefits of each Employee Benefit Plan does not exceed
the current value of such plan's assets, (v) the 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, (vi) all Employee Benefit
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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 (vii) adequate accruals for
all obligations under the Employee Benefit Plans are reflected in the financial
statements of the Company.
(b) There are no pending or, to the knowledge of the Company,
threatened claims for indemnification by the Company or any of its Subsidiaries
in favor of directors, officers, employees and agents of the Company or any of
its Subsidiaries which, individually or in the aggregate, are reasonably likely
to have a Material Adverse Effect on the Company.
Section 3.12. Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover or change of control
statute or regulation enacted under any law (a "Takeover Law") is applicable to
the Amalgamation or the other transactions contemplated hereby. The Company has
taken all steps necessary to irrevocably exempt the transactions contemplated by
this Agreement from any applicable provisions of the Company's or any
Subsidiary's memorandum of association or bye-laws.
Section 3.13. Certain Fees. No finder, broker, agent, financial advisor
or other intermediary has acted on behalf of the Company in connection with this
Agreement or the transactions contemplated hereby, where such finder, broker,
agent, financial advisor or other intermediary would be entitled to any payment
by the Company in connection herewith or therewith, other than obligations owing
to Xxxxxxx Xxxxx & Co. referred to in the Company Disclosure Letter. In
addition, the Company and its Subsidiaries will not be liable for any fees and
expenses incurred in connection with the transactions contemplated hereby in
excess of $3,176,633 in the aggregate.
Section 3.14. Investment Company. Neither the Company nor any of its
Subsidiaries conducts activities of or is otherwise deemed under applicable law
to control an "investment advisor" as such term is defined in Section 2(a)(20)
of the Investment Company Act of 1940, as amended (the "1940 Act"), whether or
not registered under the Investment Advisors Act of 1940, as amended (the
"Advisors Act"). Neither the Company nor any of its Subsidiaries is an
"investment company" as defined under the 1940 Act, and neither the Company nor
any of its Subsidiaries sponsors any Person that is such an investment company
nor required to be registered or licensed as a broker-
25
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dealer under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
Section 3.15. Insurance Matters. (a) All reinsurance and coinsurance
treaties or agreements, including retrocessional agreements, to which the
Company or any of its Subsidiaries or any Syndicate is a party or under which
the Company or any of its Subsidiaries or any Syndicate has any existing rights,
obligations or liabilities are in full force and effect, except for such
treaties or agreements the failure to be in full force and effect of which is
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect on the Company.
(b) Prior to the date hereof, the Company has delivered or made
available to Parent a true and complete copy of any actuarial reports prepared
by actuaries, independent or otherwise, with respect to the Company, any of its
Subsidiaries or any Syndicate since October 31, 1996, and all attachments,
addenda, supplements and modifications thereto (the "Company Actuarial
Analyses"). The information and data furnished by the Company or any Company
Subsidiary or any Syndicate to its independent actuaries in connection with the
preparation of the Company Actuarial Analyses were accurate in all material
respects.
(c) The reserves carried on the audited financial statements of the
Company and its Subsidiaries for future insurance policy benefits, losses,
claims and similar purposes were, as of the respective dates of such financial
statement, in compliance with the requirements for reserves established by the
relevant insurance departments or Lloyd's, are consistent with reserves
determined in accordance with generally accepted actuarial standards and
principles consistently applied, and were fairly stated in accordance with sound
actuarial and statutory accounting principles.
Section 3.16. Admitted Assets. The admitted assets of each Subsidiary
of the Company, each Syndicate and VUG as determined under applicable laws or
under the Lloyd's regulations as presently in effect are in an amount at least
equal to the minimum amounts required by applicable laws or regulations.
Section 3.17. Rights to Name. One or more of the Company and the
Subsidiaries is the owner of all rights, title and interest in and to the trade
name "Venton" as used in connection with the business heretofore or currently
conducted by the Company and its Subsidiaries free and clear of all Liens.
26
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All such rights are valid, subsisting and in full force and effect without
infringement or interference by any other Person.
Section 3.18. Letters of Credit. The only letters of credit outstanding
at the date hereof which support the underwriting activities of the Subsidiaries
are (a) irrevocable standby letters of credit on deposit with Lloyd's in the
aggregate amount of U.S. $122,913,000 issued by Mellon Bank, London Branch for
the benefit of and supporting the underwriting activities of VUL at Lloyd's and
(b) a U.S. $10,000,000 letter of credit issued by Mellon Bank, London Branch in
favor of Citibank N.A. Trustee for Syndicate 376 Surplus Lines Trust Fund. The
Company is not aware of any pending or proposed material increases in the
amounts of these letters of credit, or any proposals to require cash in lieu of
or in addition to letters of credit or to change the capital requirements of
Lloyd's in any material respect.
Section 3.19. Capital Contribution Obligations. The only contractual
obligations of the shareholders of the Company to make capital contributions to
the Company and its Subsidiaries are pursuant to (a) the Fourth Amended and
Restated Capital Contribution Agreement dated as of December 29, 1997 between
Tryco III and the Company, (b) the Amended and Restated Capital Contribution
Agreement dated as of December 29, 1997 between Exel and the Company and (c) the
Second Amended and Restated Capital Contribution Agreement dated as of December
29, 1997 between RCRe and the Company.
Section 3.20. Investments. The bonds, stocks and other securities
("Investments") owned by the Company and its Subsidiaries comply in all material
respects with applicable insurance laws and regulations. All Investments are
admitted assets under applicable insurance laws and regulations and statutory
accounting practices, except to the extent that failure to be admitted assets,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect on the Company.
Section 3.21. Year 2000. To the knowledge of the Company at the date
hereof, except to the extent interfaces with third parties are dependent on
information, services or software provided by third parties, all information
technology presently expected to be used by the Company, its Subsidiaries and
the Syndicates following December 31, 1999 in their administration and business
operations accurately processes or will process date and time data (including,
but not limited to calculating, comparing and sequencing) from, into and between
the
27
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years 1999 and 2000 and the twentieth century and the twenty-first century,
including leap year calculations, and neither performance nor functionality of
such technology will be affected by dates prior to, during or after the year
2000. The Company, its Subsidiaries and the Syndicates have no express
contractual obligations under warranty, service or similar agreements (excluding
insurance policies) that specifically refer to and require the remedy of any
information technology defect relating to the year 2000.
Section 3.22. Interests of Officers, Directors and Shareholders. Except
as set forth in the Company Disclosure Letter and other than in respect of
salaries, incentive awards and bonuses or amounts due in respect of ordinary
travel and business expenses and Employee Benefit Plans, no present officer,
director, employee, agent or shareholder of the Company, any of its Subsidiaries
or VUG nor any immediate family member or affiliate thereof has any agreement,
loan or other obligation outstanding with, to or from the Company or any of its
Subsidiaries or for which the Company or any of its Subsidiaries may be liable,
or has any material interest in any firm, person or entity with which the
Company or any of its Subsidiaries or VUG does business. From and after the
Effective Time the Company will not have any material obligations under (i) the
Share Purchase Agreement dated as of March 1, 1996 between the Company and the
Management Investors, (ii) the Venton Holdings Ltd. Amended and Restated
Stockholders Agreement dated as of April 4, 1996 or (iii) the Purchase Agreement
dated as of May 21, 1997 among The Trident Partnership, L.P., the Company and
Exel.
Section 3.23. Material Contracts. (a) Neither the Company nor any of
its Subsidiaries is party to any agreement containing any provision or covenant
expressly limiting in any material respect the ability of the Company or any of
its Subsidiaries (or the Amalgamated Company) to compete and (b) neither the
Company nor any of its Subsidiaries is a party to or bound by any contract,
agreement or arrangement which would cause the rights or obligations of any
party thereto to change in the event of the Amalgamation, except in each case
for any such contract, agreement or arrangement which, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on the
Company.
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ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the
Company as follows (it being understood that representations and warranties with
respect to Subsidiaries of Parent relate to such Subsidiaries without giving
effect to the Amalgamation):
Section 4.01. Corporate Organization. Each of Parent and
Acquisition is a company duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Acquisition is not
required to be authorized, qualified, licensed or domesticated as a foreign
corporation under any federal, state or local law in the United States. Parent
has furnished to the Company complete and correct copies of the charter and
bylaws, or the memorandum of association and bye-laws, as the case may be, of
each of Parent and Acquisition as in effect on the date hereof. Such documents
are in full force and effect and no other organizational documents are
applicable to or binding upon the Parent or Acquisition.
Section 4.02. Authority, Execution, Enforceability. Each of
Parent and Acquisition has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by each of Parent and Acquisition, the
performance by Parent and Acquisition of their obligations hereunder and the
consummation by Parent and Acquisition of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent and Acquisition (including the approval by Parent, as sole shareholder of
Acquisition, and by the necessary vote of all members of their respective Boards
of Directors). This Agreement has been duly executed and delivered by Parent and
Acquisition and constitutes a legal, valid and binding obligation of Parent and
Acquisition, enforceable against Parent and Acquisition in accordance with its
terms, subject with respect to enforceability to the effect of bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter
affecting the enforcement of creditors' rights generally and to the availability
of equitable remedies.
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Section 4.03. No Conflicts. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in any violation of or be in conflict with or constitute a breach
or default (with or without notice or lapse of time or both) under the
memorandum of association, bye-laws or any other Instrument of Parent or
Acquisition, which violation, conflict, breach or default is reasonably likely
to have a Material Adverse Effect on Parent, or (ii) result in the creation of
any Lien other than Permitted Liens upon any of the material properties or
assets of Parent or Acquisition.
Section 4.04. Consents. (a) Except for the filing of the application to
register the Amalgamation pursuant to the Companies Act and the consent of the
Minister to the Amalgamation, the Consent of Lloyd's to the Amalgamation and the
transactions contemplated by this Agreement, and the approval of the
Commissioner of Insurance for the State of New Hampshire, no Consent is required
on the part of Parent or Acquisition in connection with the transactions
contemplated by this Agreement, except where failure to obtain such Consent is
not reasonably likely to have a Material Adverse Effect on Parent.
(b) Parent and Acquisition have reviewed the requirements for approval
of the Amalgamation and the transactions contemplated by this Agreement by
Lloyd's which appear in the section entitled "Acquiring Control of a Managing
Agent" in Guidance Notes for Applicants published by Lloyd's Regulatory Division
and hereby confirm that they can satisfy all requirements set forth therein
without the need for any waiver or any other form of relief, and they are not
aware of the need for any waiver or any other form of relief with respect to
Parent or Acquisition in order to satisfy any other requirements of Lloyd's.
Section 4.05. Compliance with Applicable Law. Subject to obtaining the
Consents referred to in Section 4.04, the execution, delivery, and performance
of this Agreement and the taking of the other actions contemplated by this
Agreement to be performed by Parent and Acquisition prior to the date or dates
as of which the representations and warranties herein are made or deemed made,
will not result in any default or violation of any judgment, decree, order, law,
statute, rule or regulation of any Governmental Authority, except for such
defaults or violations as are not reasonably likely to have a Material Adverse
Effect on Parent.
30
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Section 4.06. Sufficient Funds and Assets. Parent and Acquisition have
sufficient liquid funds available to pay all cash amounts required to be paid
pursuant to this Agreement, and have sufficient funds and other assets available
to satisfy Sections 5.06 and 5.07.
ARTICLE FIVE
COVENANTS
Section 5.01. Reasonable Best Efforts. Each of the Company, Parent and
Acquisition will use its reasonable best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, as soon as practicable after the date hereof, and shall use its
reasonable best efforts to obtain all waivers, Permits, Consents and approvals
and to effect all registrations, filings and notices with or to third parties or
Governmental Authorities which are necessary or desirable in connection with the
transactions contemplated by this Agreement, and shall vote all Shares directly
or indirectly owned by it in favor of the Amalgamation.
Section 5.02. Public Announcements. No party hereto shall issue any
press release or otherwise make any public statements with respect to the
Amalgamation or this Agreement without the prior written approval of the other
party (which shall not be unreasonably withheld) as to the wording, timing and
media for such press release or statement, except for any press release or
statement as may be required by law in the opinion of counsel for such party
which press release or statement shall not be made without prior consultation to
the extent practicable with the other party.
Section 5.03. Supplemental Information. Except where prohibited by
applicable statutes and regulations, each party shall promptly provide the other
(or its counsel) with copies of all filings, material notices or material
communications made by such party with any Governmental Authority in connection
with this Agreement or the transactions contemplated hereby. No information
provided to a party pursuant to this Section 5.03 shall be deemed to cure any
breach of any representation of or warranty made in this Agreement unless the
party receiving such information specifically agrees thereto in writing.
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Section 5.04. Shareholders' Meeting. The Company shall cause the
Shareholders' Meeting to be duly called and will give notice of, convene and
hold such meeting as soon as practicable. In connection with the Shareholders'
Meeting, the Company shall cause any required information to be mailed to its
shareholders. The Board of Directors of the Company shall submit for approval
and adoption by its shareholders the matters to be voted upon at the
Shareholders' Meeting, and shall recommend that the shareholders vote in favor
of the approval of the provisions of this Agreement which are the terms and
means of effecting the Amalgamation and the Company shall use its best efforts
to secure such approval and adoption. Parent shall vote all proxies obtained by
Parent in favor of such approval.
Section 5.05. Indemnification. (a) From and after the Effective Time,
the Amalgamated Company shall indemnify, defend and hold harmless the officers
and directors of the Company (the "Indemnified Parties") against all losses,
expenses, claims, damages and liabilities arising out of the transactions
contemplated by this Agreement to the fullest extent permitted or required under
applicable law (including, without limitation, reasonable attorneys' fees).
Subject to any limitations imposed by Bermuda law and public policy, to the
extent applicable, the Amalgamated Company agrees that all rights to
indemnification existing in favor of the directors and officers of the Company
or any Subsidiary of the Company as provided in the Company's or any such
Subsidiary's memorandum of association or existing indemnification agreements,
as in effect as of the date hereof, with respect to matters occurring through
the Effective Time, shall survive the Amalgamation and shall continue in full
force and effect, and the Amalgamated Company shall guaranty the obligations of
the Company in respect thereof; provided, however, that this shall not limit the
ability of Parent to effect any corporate restructuring of its Subsidiaries.
(b) Parent shall cause to be maintained for a period of not less than
six years from the Effective Time the Company's current directors' and officers'
insurance and indemnification policy to the extent that it provides coverage for
events occurring prior to the Effective Time (the "D&O Insurance") for any of
the Indemnified Parties; provided, however, that Parent may, in lieu of
maintaining such existing D&O Insurance as provided above, cause comparable
coverage to be provided under any policy maintained for the benefit of the
directors and officers of Parent or any of its Subsidiaries, so long as (i) the
issuer thereof has an A.M. Best Company rating of A
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or better and (ii) the material terms thereof are no less advantageous to the
Indemnified Parties than the existing D&O Insurance. If the existing D&O
Insurance expires, is terminated or canceled during such six-year period, Parent
shall cause to be obtained, to the extent commercially available, replacement
D&O Insurance on terms and conditions no less advantageous to the Indemnified
Parties than the existing D&O Insurance.
Section 5.06. Release of Capital Contribution Obligations. At and after
the Effective Time, the Company hereby releases all obligations (including any
obligations arising prior to the Effective Time) of the shareholders of the
Company under (i) the Fourth Amended and Restated Capital Contribution Agreement
dated as of December 29, 1997 between Tryco III and the Company, (ii) the
Amended and Restated Capital Contribution Agreement dated as of December 29,
1997 between Exel and the Company and (iii) the Second Amended and Restated
Capital Contribution Agreement dated as of December 29, 1997 between RCRe and
the Company.
Section 5.07. Replacement of Obligation Owed to Lloyd's and Mellon
Bank. At or prior to the Effective Time, Parent shall (a) cause to be issued
(and deposited with Lloyd's) an irrevocable standby letter of credit (the
"Letter of Credit"), or cash, in the amount of U.S. $122,913,000 (or such
greater amount as shall then be required by Lloyd's), which in the case of a
Letter of Credit shall (i) have an effective date as of the Closing Date and
(ii) otherwise be satisfactory to Lloyd's, to support the underwriting
activities of VUL at Lloyd's and (b) deliver to Mellon Bank a guarantee
satisfactory to Mellon Bank of a U.S. $10,000,000 letter of credit issued by
Mellon Bank, London Branch, in favor of Citibank N.A. Trustee for Syndicate 376
Surplus Lines Trust Fund or a substitute for or replacement of such letter of
credit satisfactory to such Trustee.
Section 5.08. Takeover Statutes. The parties shall use their reasonable
best efforts to exempt the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, and otherwise act to eliminate or minimize the effects of any applicable
Takeover Law.
Section 5.09. Conduct of Business of the Company. Except as expressly
contemplated by this Agreement or set forth in the Company Disclosure Letter or
as consented to in writing by Parent, during the period from the date of this
Agreement to the Effective Time, the Company and its Subsidiaries will, and
33
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will cause VUG and the Syndicates to, conduct their operations only in, and
neither the Company nor any of its Subsidiaries shall, or will permit VUG or the
Syndicates to, take any action except in, the ordinary and usual course of
business and consistent with past practice, and the Company and its Subsidiaries
will, and will cause VUG and the Syndicates to, use their reasonable best
efforts to preserve intact their business organization, to keep available the
services of their officers and employees and to maintain advantageous
relationships with customers, business partners and others having business
relationships with the Company, its Subsidiaries or VUG or the Syndicates, as
the case may be. Without limiting the generality of the foregoing, prior to the
Effective Time, neither the Company nor any of its Subsidiaries will, or will
permit VUG or the Syndicates to, except as expressly contemplated by this
Agreement or set forth in the Company Disclosure Letter, without the prior
written consent of Parent:
(a) split, combine or reclassify any shares, declare, pay or
set aside for payment any dividend or other distribution payable in
cash, shares, property or otherwise in respect of its shares, or
directly or indirectly redeem, purchase or otherwise acquire any
shares, or other securities;
(b) authorize for issuance, issue, sell, pledge, dispose of or
encumber, deliver or agree or commit to issue, sell, pledge or deliver
(whether through the issue or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any shares
of any class of the Company or any securities convertible into or
exercisable or exchangeable for shares of any class of the Company, or
amend any of the terms of any such securities or agreements outstanding
as of the date hereof;
(c) (i) incur any debt for borrowed money, or assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any debt for borrowed money of
any other Person, in excess of $10,000,000, (ii) make any loans or
advances to any Person other than loans or advances of reasonable
out-of-pocket expenses incurred in connection with the business of the
Company or its Subsidiaries, or make any capital contributions to, or
investments in, any other Person, (iii) pledge or otherwise encumber
shares of the Company or its Subsidiaries, or (iv) mortgage or pledge
any of its material assets, tangible or intangible, or create any Lien
thereupon other than Permitted Liens;
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(d) except as may be required by law or as contemplated by
this Agreement, enter into, adopt, or amend or terminate any bonus,
profit sharing, compensation, severance, termination, stock option,
share appreciation right, restricted shares, performance unit, share
equivalent, share purchase agreement, pension, retirement, deferred
compensation, employment, severance or other Employee Benefit Plan; or
enter into or amend any employment or severance agreement with,
increase in any manner the salary, wages, bonus, commission, or other
compensation or benefits of any director or officer (at the level of
Vice President or above) of the Company or any of its Subsidiaries; or
increase in any manner the salary, wages, bonus, commission, or other
compensation or benefits of any director, officer, employee or agent of
the Company or any of its Subsidiaries, except for increases in the
ordinary course of business and consistent with past practice (which,
in the case of directors and officers at the level of Vice
President/Managing Director or above, shall only be made after
consultation with Parent); or hire employees at the level of Vice
President/Managing Director or above except after consultation with
Parent; or pay any benefit not required by any plan and arrangement as
in effect as of the date hereof (including, without limitation, the
granting of stock options, share appreciation rights or performance
units);
(e) acquire (by merger, amalgamation, consolidation or
acquisition of shares or assets) any corporation, partnership or other
business organization or division thereof or make any material
investment either by purchase of shares or securities, contributions to
capital, property transfer, or acquisition (including by lease) of any
material amount of properties or assets of any other individual or
entity, except for the purchase of investment shares or securities in
the ordinary course of business consistent with past practice and in
compliance with the requirements of Governmental Authorities except for
any non-compliance that, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect on the Company;
(f) propose to amend the memorandum of association or bye-laws
or any similar document of the Company or any of its Subsidiaries;
(g) propose to adopt a plan of complete or partial liquidation
or resolutions providing for the complete or
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partial liquidation, dissolution, amalgamation, consolidation,
restructuring, recapitalization or other reorganization of the Company
or any of its Subsidiaries;
(h) sell (whether by amalgamation, consolidation or
otherwise), lease, encumber, transfer, dispose of any material assets
or waive any right of substantial value (including without limitation,
rights of renewal) outside the ordinary course of business consistent
with past practice, or enter into any material commitment or
transaction outside the ordinary course of business consistent with
past practice and in each case in compliance with the requirements of
Governmental Authorities except for any non-compliance that,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on the Company;
(i) except as may be required as a result of a change in law,
rule or regulation or in GAAP, change any of the accounting principles
or practices used by it;
(j) enter into any agreement providing for the acceleration or
payment or performance or other consequence as a result of a change in
control of the Company or any of its Subsidiaries;
(k) resolve, commit or agree to take any of the foregoing
actions or take any action which would make any representation or
warranty in Article THREE hereof materially untrue or incorrect; or
(l) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) against the
Company or any of its Subsidiaries except in the ordinary course of
business consistent with past practice or where to do so is not
reasonably likely to have a Material Adverse Effect on the Company.
The provisions of this Section 5.09 insofar as they apply to Syndicates are
subject to Lloyd's policy with respect to the management of syndicates.
Section 5.10. Acquisition Proposals. Without the prior written consent
of Parent, the Company shall not, and shall cause its Subsidiaries and their
respective officers, directors, agents, advisors and affiliates not to, solicit
or encourage inquiries or proposals with respect to, or engage in any
negotiations concerning, or provide any confidential infor-
36
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mation to, or have any discussions with, any such Person relating to, any tender
offer or exchange offer for, or any proposal for the acquisition of a
substantial equity interest in, or a substantial portion of the assets of, or
any amalgamation, merger or consolidation with, the Company or any of its
Subsidiaries and any such inquiries, proposals or discussions shall be
immediately terminated.
Section 5.11. Information, etc. Between the date of this Agreement and
the Effective Time, the Company shall (and shall cause its Subsidiaries to)
afford to authorized representatives (including, without limitation, attorneys,
auditors, financial advisors and actuaries) of Parent reasonable access during
normal business hours to all of the Company's personnel, offices and other
facilities and to its books and records and will permit such party and its
authorized representatives to make such inspections of its financial and
operating data and other information with respect to its business and properties
as such party and its authorized representatives may from time to time
reasonably request. No information or knowledge obtained in any investigation
pursuant to this Section 5.11 shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the Amalgamation. The confidentiality
of all such documents and information furnished in connection with the
transactions contemplated by this Agreement shall be governed by the terms of
the Confidentiality Letter dated June 9, 1998 from Parent to the Company (the
"Confidentiality Letter").
Section 5.12. Lloyd's Auction. The Company and Parent shall consult in
good faith with respect to participation in the Lloyd's auction process and if
the Company participates therein it will keep Parent reasonably informed as to
the status and results thereof.
ARTICLE SIX
CONDITIONS TO THE AMALGAMATION
Section 6.01. Conditions to Each Party's Obligation to Effect the
Amalgamation. The respective obligations of each party to this Agreement to
consummate the Amalgamation shall be subject to the following conditions:
37
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(a) This Agreement, the Amalgamation and the other
transactions contemplated hereby shall have been approved and adopted
by the affirmative vote or consent of the Company's shareholders as
required by the Companies Act and the Company's bye-laws.
(b) No order, decree or injunction of any court or agency of
competent jurisdiction shall be in effect, and no law, statute or
regulation shall have been enacted or adopted, that enjoins, prohibits
or makes illegal consummation of any of the transactions contemplated
hereby; provided, however, that each of Parent and the Company shall
have used its reasonable best efforts to prevent any such rule,
regulation, injunction, decree or other order, and to appeal as
promptly as possible any injunction, decree or other order that may be
entered.
(c) Those regulatory and other approvals required to
consummate the Amalgamation and the other transactions contemplated
hereby that are specified in Sections 3.07 and 4.04 shall have been
obtained.
Section 6.02. Additional Conditions to the Company's Obligation to
Effect the Amalgamation. The obligation of the Company to consummate the
Amalgamation shall be further subject to the following conditions unless waived
in accordance with Section 8.02:
(a) Parent shall have performed in all material respects the
obligations and covenants to be performed by it on or prior to the
Effective Time except for any such failure or failures to perform,
individually or in the aggregate, as are not reasonably likely to have
a Material Adverse Effect on the Company.
(b) The representations and warranties of Parent contained in
this Agreement that are qualified as to materiality shall be true and
correct in all respects, and the representations and warranties of
Parent contained in this Agreement that are not so qualified shall be
true and correct in all material respects, in each case as of the date
of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date and except for changes permitted
by this Agreement) as of the Closing Date as though made as of and on
the Closing Date, except for such failure or failures to be true and
correct (or true and correct in all material respects), individu-
38
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ally or in the aggregate, as are not reasonably likely to have a
Material Adverse Effect on Parent.
(c) There shall have been returned to the issuer thereof the
irrevocable letters of credit totaling $122,913,000 issued by Mellon
Bank, N.A., on behalf of Exel (which are currently on deposit with
Lloyd's for the benefit of VUL).
(d) Exel shall have been released by Mellon Bank from Exel's
obligations with respect to the $10,000,000 letter of credit issued by
Mellon Bank in favor of Citibank N.A. Trustee for Syndicate 376 Surplus
Lines Trust Fund.
(e) The Company shall receive customary closing documents in
form and substance reasonably satisfactory to it, including a
certificate of an executive officer of Parent certifying compliance
with the conditions set forth in Sections 6.02(a) and (b).
Section 6.03. Additional Conditions to Parent and Acquisition's
Obligation to Effect the Amalgamation. The obligation of the Parent and
Acquisition to consummate the Amalgamation shall be further subject to the
following conditions unless waived in accordance with Section 8.02:
(a) The Company shall have performed in all material respects
the obligations and covenants to be performed by it on or prior to the
Effective Time except for any such failure or failures to perform,
individually or in the aggregate, as are not reasonably likely to have
a Material Adverse Effect on the Company.
(b) The representations and warranties of the Company
contained in this Agreement that are qualified as to materiality shall
be true and correct in all respects, and the representations and
warranties of the Company contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each
case as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date and except
for changes permitted by this Agreement) as of the Closing Date, as
though made as of and on the Closing Date, except for such failure or
failures to be true and correct (or true and correct in all material
respects), individually or in the aggregate, as are not rea-
39
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sonably likely to have a Material Adverse Effect on the Company.
(c) Parent shall receive customary closing documents in form
and substance reasonably satisfactory to it, including a certificate of
an executive officer of the Company certifying compliance with the
conditions set forth in Sections 6.03(a) and (b).
(d) Holders of the outstanding capital stock of the Company
and Company Options (which shall include Exel, RCRe and Tryco III and
may include other such holders) shall have confirmed to Parent the
representations and warranties set forth in Section 3.03(a), (b) and
(c) provided that the liability of each such holder with respect to
such representations and warranties shall be several and shall be
allocated among such holders in the same proportion as the
consideration to be received by each such holder pursuant to Sections
2.05, 2.09 and 2.10 bears to the aggregate consideration to be received
by all such holders and such representation shall survive until the
first anniversary of the Effective Time.
ARTICLE SEVEN
TERMINATION AND ABANDONMENT
Section 7.01. Termination by the Company, Parent or Acquisition. This
Agreement may be terminated and the Amalgamation contemplated hereby may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the Amalgamation by the shareholders of the Company or the
shareholders of Acquisition:
(a) by mutual written consent of Parent and the Company;
(b) by the Company at any time after the later of (i) the
earlier of (x) November 15, 1998 and (y) the date that is three months
after the submission to Lloyd's of an application for the Consent of
Lloyd's referred to in Section 4.04(a) and (ii) the date that is four
weeks after the delivery to Parent of the Company Interim Financial
Statements (or such later date as shall have been agreed to in writing
by Parent and the Company) if any of the
40
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conditions set forth in Section 6.01 or 6.02 hereof have not been met
or waived in writing by the Company; or
(c) by Parent at any time after the later of (i) the earlier
of (x) November 15, 1998 and (y) the date that is three months after
the submission to Lloyd's of an application for the Consent of Lloyd's
referred to in Section 4.04(a) and (ii) the date that is four weeks
after the delivery to Parent of the Company Interim Financial
Statements (or such later date as shall have been agreed to in writing
by Parent and the Company) if any of the conditions set forth in
Section 6.01 or 6.03 have not been met or waived in writing by Parent.
Any party that breaches this Agreement the result of which
breach is the failure of a condition specified in (b) or (c) of this Section
7.01 to be met by the date specified may not terminate this Agreement on the
basis of such failure.
Section 7.02. Effect of Termination. (a) No termination hereof
shall relieve any party from liability for any prior breach of this Agreement.
The parties hereto agree that irreparable damage would occur to a party in the
event any provision of this Agreement was not performed by the other party in
accordance with the terms hereof, or was breached by such other party, and that
the parties shall be entitled to specific performance of the terms hereof,
(which, in the case of such non-performance or breach by Parent or Acquisition
shall mean, in consideration for all of the ownership interests in the Company,
payment of all amounts on or with respect to the securities of the Company to
its securityholders as set forth in Sections 2.05, 2.09 and 2.10, the assumption
of the obligations referred to in Section 5.06, and the delivery of the Letter
of Credit (or cash) and guarantee referred to in Section 5.07 to Lloyd's and
Mellon Bank, respectively) in addition to any other remedy at law or equity
(including without limitation the payment of all expenses incurred by the
Company referred to in Section 8.04). The parties acknowledge that "time is of
the essence."
(b) Sections 5.02 (Public Announcements), 8.04 (Expenses) and
8.07 (Governing Law) shall survive any termination and remain in full force and
effect notwithstanding any termination.
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ARTICLE EIGHT
MISCELLANEOUS PROVISIONS
Section 8.01. Amendment and Modification. Subject to
applicable law, this Agreement may be amended, modified or supplemented only by
written agreement signed on behalf of each of the parties hereto at any time
prior to the Effective Time with respect to any of the terms contained herein
except that after the Shareholders' Meeting, the Amalgamation Consideration to
be paid pursuant to this Agreement to the holders of Shares shall in no event be
decreased and the form of consideration to be received by the holders of such
Shares in the Amalgamation shall in no event be altered without the approval of
such holders.
Section 8.02. Waiver of Compliance; Consents. Any failure of
Parent or Acquisition, on the one hand, or the Company, on the other hand, to
comply with any obligation, covenant, agreement or condition herein may be
waived in writing by the Company or Parent, respectively, but such waiver or
failure to insist upon strict 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 a manner consistent with the requirements for a waiver of compliance as set
forth in this Section 8.02.
Section 8.03. Severability and Validity. The provisions set
forth in this Agreement are severable. If any provision of this Agreement is
held invalid or unenforceable in any jurisdiction, the remainder of this
Agreement, and the application of such provision to other Persons or
circumstances, shall not be affected thereby and shall remain valid and
enforceable in such jurisdiction, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
Section 8.04. Expenses and Obligations. Each of the parties
hereto shall pay its own expenses incurred in connection with the negotiation
and preparation of this Agreement, the performance of the covenants herein, and
the effectuation of the transactions contemplated hereby, including all fees and
disbursements of its respective legal counsel, advisors, and accountants.
42
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Section 8.05. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason of
this Agreement except as specifically set forth in Sections 5.06 and 7.02.
Section 8.06. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to Parent or Acquisition, to:
Underwriters Reinsurance Company
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy to:
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
and to:
Alleghany Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
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(ii) if to the Company, to:
Venton Holdings Ltd.
Xxxxxxxx Xxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxx
with a copy to:
Venton Underwriting Agencies Limited
Gracechurch House
00 Xxxxxxxxxxx Xxxxxx
Xxxxxx XX0X OJP
Telephone: (000) 000-0000
Facsimile: (171) 550-3555
Attention: D. Xxxxxx Xxxxx
and to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxx, Esq.
and to:
Xxxxxxx, Xxxx & Xxxxxxx
Xxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxxxx XX XX, Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
Section 8.07. Governing Law. (a) The Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to the conflicts of laws rules thereof, except that provisions
relating to the Amalgamation shall be governed by the laws of Bermuda, and
provisions relating to the validity of corporate action shall be governed by the
laws of the jurisdiction of incorporation or organization of the relevant
corporation.
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(b) In addition, each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of New York state court or the
federal courts of the Southern District of New York or the courts of Bermuda in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (ii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a federal or state court sitting in the State of New York (or, in the case of a
claim arising solely out of the Amalgamation, the courts of Bermuda). Each of
Parent and Acquisition hereby irrevocably designates The Corporation Trust
Company in New York and the Company hereby irrevocably designates The
Corporation Trust Company in New York and Xxxxxxx Xxxx and Xxxxxxx in Bermuda,
as their respective authorized agents, to accept and acknowledge on its behalf
service of any process which may be served in any suit, action or proceeding in
New York or Bermuda. Each of Parent and Acquisition and the Company hereby
irrevocably (i) consents and agrees to process being served in any suit, action
or proceeding brought in the federal court located in the State of New York or
any New York state court or any court in Bermuda by serving a copy thereof upon
the agent designated in the preceding sentence and to them and their respective
counsel at the addresses set forth in Section 8.06, and (ii) agrees that such
service of process shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding and shall, to the fullest extent
permitted by law, be taken and be held to be valid personal service upon and
personal delivery to Parent and Acquisition or the Company, as the case may be.
Section 8.08. 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 agreement.
Section 8.09. Headings. 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 affect in any way the meaning
or interpretation of this Agreement.
Section 8.10. Entire Agreement; Assignment. This Agreement,
including the Company Disclosure Letter, and the Confidentiality Letter, embody
the entire agreement and understanding of the parties hereto in respect of the
subject matter
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contained herein. There are no agreements, restrictions, promises,
representations, warranties, covenants, or undertakings, other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings with respect to such subject matter. This
Agreement shall not be assigned by operation of law or otherwise, except with
the prior written consent of each other party hereto. This Agreement is not
intended to confer upon any other Person except the parties hereto any rights or
remedies hereunder, except as provided in Section 8.05 of this Agreement.
46
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed on its behalf, all as of the day and year first above
written.
UNDERWRITERS REINSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
By: /s/ Xxxxxx X. xx Xxxxx
----------------------------------------
Name: Xxxxxx X. xx Xxxxx
Title: Secretary
UNDERWRITERS ACQUISITION COMPANY LTD.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
By: /s/ Xxxxxx X. xx Xxxxx
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Name: Xxxxxx X. xx Xxxxx
Title: Assistant Secretary
VENTON HOLDINGS LTD.
By: /s/ X.X. Xxxxxx
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Name: X.X. Xxxxxx
Title: Director
By: /s/ X.X. Xxxxx
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Name: X.X. Xxxxx
Title: Director
