EXHIBIT 10.30
Dated May 2007
THE PERSONS NAMED IN SCHEDULE 1
and
VALIDUS HOLDINGS LTD
SHARE SALE AGREEMENT
relating to the sale and purchase of the whole
of the issued share capital of
Talbot Holdings Ltd
XXXXXXXXXX XXX
Xxx Xxxx Xxxxxx
Xxxxxx XX0X 0XX
Telephone: (00-00) 0000 0000
Facsimile: (00-00) 0000 0000
Ref: AIC
TABLE OF CONTENTS
CLAUSE PAGE
------ ----
1 Interpretation........................................................ 2
2 Agreement to Sell the Shares.......................................... 14
3 Consideration......................................................... 15
4 Conditions............................................................ 20
5 Actions Pending Completion............................................ 22
6 Completion............................................................ 28
7 Leakage............................................................... 29
8 Warranties............................................................ 30
9 Whole Agreement and Remedies.......................................... 32
10 Other Provisions...................................................... 33
Schedule 1 Particulars of Sellers, Shares Sold etc....................... 48
Schedule 2 Particulars of the Company and Subsidiaries................... 49
Schedule 3 Completion Obligations........................................ 60
Schedule 4 Warranties given by the Sellers and Warrantors under
Clause 8...................................................... 63
Schedule 5 Limitation of Liability under Clause 8.1...................... 81
Schedule 6 Properties.................................................... 89
Schedule 7 Optionholders................................................. 94
Schedule 8 Employment parties............................................ 96
Schedule 9 Terms applicable to the Base Share Consideration.............. 97
Schedule 10 Rule 3b-4 of the Exchange Act and definition of US Person.... 99
Schedule 11 Share Election Form.......................................... 101
i
AGREEMENT FOR SALE OF SHARES
THIS AGREEMENT is made on May 2007
BETWEEN:
(1) THE PERSONS named in Schedule 1 (the "SELLERS" and each a "SELLER"); and
(2) VALIDUS HOLDINGS LTD, a company with limited liability organised under the
laws of Bermuda (Registration No. EC37417) whose principal place of
business is at 00 Xxx Xx Xxxxx Xxxx, Xxxxxxxx, XX00, Xxxxxxx (xxx
"PURCHASER").
WHEREAS:
(A) The Sellers have agreed to sell the Shares (as defined below) and to assume
the obligations imposed on the Sellers under this Agreement subject to and
in accordance with the terms of this Agreement.
(B) The Purchaser has agreed to purchase the Shares and assume the obligations
imposed on the Purchaser under this Agreement subject to and in accordance
with the terms of this Agreement.
(C) The Shares which those Employee Sellers who are Optionholders will sell to
the Purchaser in accordance with the terms of this Agreement will include:
(i) the EBT Common Shares which will be transferred by the EBT to certain
of the Optionholders prior to, and conditional upon, Completion
pursuant to the exercise by them of all of the Options held by them
over Common Shares as at the date of this Agreement in accordance with
the Share Option Scheme; and
(ii) the Class B Common Shares which will be issued to certain of the
Optionholders prior to, and conditional upon, Completion pursuant to
the exercise by them of all of the Options held by them over Class B
Common Shares as at the date of this Agreement in accordance with the
Share Option Scheme,
such transactions, the "OPTIONS TRANSACTIONS".
(D) Simultaneously with the execution and delivery of this Agreement, each of
the persons identified in Schedule 8 hereto has entered into a term sheet
between such person and a Group Company, contemplating the execution and
delivery of an amendment and restatement of such person's existing
employment arrangement with such Group Company to be effective at
Completion.
It is agreed as follows:
1 INTERPRETATION
In this Agreement, unless the context otherwise requires, the provisions in
this Clause 1 apply:
2
1.1 DEFINITIONS
"A PREFERENCE SHARES" means the 60,504,000 7.5 per cent. cumulative,
convertible, redeemable A preference shares with a par value of US$0.002
each in the capital of the Company;
"2005 ACCOUNTS" means the audited consolidated financial statements of the
Group as at 31 December 2005;
"ACCOUNTS" means the audited consolidated financial statements of the Group
as at the Accounts Date;
"ACCOUNTS DATE" means 31 December 2006;
"ACCRUED PREFERENCE DIVIDEND" means the dividend which will be accrued and
payable on the A Preference Shares pursuant to the Byelaws in respect of
the period from (but excluding) 1 November 2006 up to (and including) the
date of Completion, together with all other amounts accrued but unpaid on
the A Preference Shares pursuant to the Byelaws;
"ACTUARIAL RESERVES REVIEW" means the actuarial reserves review dated 9
February 2007 prepared by EMB Consultancy in respect of the Group;
"AGREED TERMS" means, in relation to a document, such document in the terms
agreed between the parties and signed for identification by or on behalf of
the Purchaser and the Sellers' Solicitors with such alterations as may be
agreed in writing between the parties from time to time for any reason
including to take account of any changes between the date of this Agreement
and Completion;
"B PREFERENCE SHARES" means the 12,499,000 convertible, redeemable B
convertible preference shares with a par value of US$0.002 each in the
capital of the Company;
"BASE SHARE CONSIDERATION" has the meaning set out in Clause 3.1.1(ii);
"BMA" means the Bermuda Monetary Authority;
"BONUS LETTERS" means the letters dated 25 February 2004 from Talbot
Underwriting Ltd to each of XX Xxxxxxx and XX Xxxx relating to certain cash
payments, which letters are disclosed in the Data Room;
"BUSINESS DAY" means a day on which banks are open for business in London
and Bermuda (excluding Saturdays, Sundays and public holidays);
"BYELAWS" means the Byelaws of the Company as at the date of this
Agreement;
"CASH COMPONENT" has the meaning set out in Clause 3.1.4(ii);
"CLASS B COMMON SHARES" means the 7,462,500 Class B Common Shares of par
value US$0.002 each in the capital of the Company into which Options over
Class B Common Shares will be converted prior to, and conditional upon,
Completion in accordance with the Share Option Scheme;
"CODAN" means Codan Trust Company Limited, acting solely in its capacity as
trustee of whichever Trust or Trusts is or are then relevant;
"COMMON SHARES" means the 50,000,000 common shares of par value US$0.002
each in the capital of the Company in issue as at the date of this
Agreement which include, for the avoidance of doubt, the EBT Common Shares;
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"COMPANY" means Talbot Holdings Ltd, a company incorporated in Bermuda
(Registration No. 31149) whose registered office is at Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxxxx, XX00, Xxxxxxx;
"COMPANY PENSION SCHEME" means the defined contribution group personal
pension scheme sponsored by the Group;
"COMPLETION" means the completion of the sale and purchase of the Shares
pursuant to Clause 6;
"CONSIDERATION" has the meaning set out in Clause 3.1.1;
"CONDITIONS PRECEDENT" means the conditions set out in Clause 4.1;
"CONFIDENTIALITY AGREEMENT" means the agreement dated 25 January 2007 and
made between the Purchaser (1) and the Company (2) pursuant to which the
Company made available certain confidential information relating to the
Group;
"CORE WARRANTIES" means those Warranties set out in paragraphs 1.2, 1.5,
2.2, 2.5, 2.6.1, 2.11.1 and 2.11.2 of Schedule 4;
"CURE PERIOD" has the meaning given to that term in the definition of
Material Adverse Event in this Clause 1.1;
"DATA ROOM" means the virtual data room administered by Xxxxxxx Corporation
Limited the contents of which are listed in the Data Room Index;
"DATA ROOM INDEX" means the index of documents included in the Data Room
attached as Schedule 2 of the Disclosure Letter;
"DISCLOSURE LETTER" means the letter of even date with this Agreement from
the Warrantors to the Purchaser;
"DORMANT SUBSIDIARIES" means the Subsidiaries set out in Section B of Part
2 of Schedule 2;
"DUE DILIGENCE REPORTS" means the Vendor Due Diligence Report, the Tax Due
Diligence Report and the Actuarial Reserves Review and each a "DUE
DILIGENCE REPORT";
"EARLIEST COMPLETION DATE" means the date falling two Business Days after
the Conditions Precedent have been satisfied or waived and the Sellers have
provided evidence of their ability to satisfy the obligations specified in
Schedule 3;
"EBT" means the Talbot Holdings Employee Benefit Trust;
"EBT COMMON SHARES" means the 875,000 common shares of par value US$0.002
each in the capital of the Company currently held by Codan (in its capacity
as trustee of the EBT) which will be transferred to those Optionholders who
have Options over Common Shares on the exercise by them of those Options
prior to, and conditional upon, Completion in accordance with the Share
Option Scheme;
"EBT LOAN" means the loan from the Company to the EBT for the purpose of
acquiring Common Shares from departing employees, which amounts to
US$517,500 and L49,980.87;
"EMPLOYEE" means an employee of any Group Company, including a Senior
Employee;
"EMPLOYEE SELLER CASH CONSIDERATION" has the meaning set out in Clause
3.1.1(ii);
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"EMPLOYEE SELLER CONSIDERATION" has the meaning set out in Clause
3.1.1(ii);
"EMPLOYEE SELLERS" means the Sellers listed in Part 1 of Schedule 1 (other
than PC Xxxxxxxxx, XX Xxxxxxxxxx, XX Redhead, the Ashdown Trust, the
Dynevor Trust and the Rams Hill Trust) and each an "EMPLOYEE SELLER";
"EMPLOYEE SHAREHOLDERS' AGREEMENT" means the agreement dated 16 February
2002 between, inter alia, the Company and certain of the Employee Sellers
as disclosed in the Data Room;
"ENCUMBRANCE" means any claim, charge, mortgage, security, lien, option,
power of sale, hypothecation or other third party right, retention of
title, right of pre-emption, right of first refusal or security interest of
any kind;
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
amended;
"EXERCISE PRICE" means the total aggregate exercise price payable by each
Optionholder as set out against his/her name in column (3) of Schedule 7 in
respect of all of the Options to be exercised by him/her prior to, and
conditional upon, Completion;
"FAL" or "FUNDS AT LLOYD'S" has the meaning given to that term under the
Lloyd's Membership Byelaw (No. 5 of 2005);
"FAL PROVIDERS' AGREEMENT" means the Amended and Restated FAL Providers'
Agreement dated 29 November 2006 (document 6.1.8.3 of the Data Room Index);
"FSA" means the UK Financial Services Authority;
"GROUP" or "GROUP COMPANIES" means the Company and the Subsidiaries and
"GROUP COMPANY" means any one of them;
"GROUP'S CAPITAL STACK" means the leveraged capital structure employed by
the Group to meet its Funds at Lloyd's requirements in respect of any
Lloyd's year of account, the details of which are disclosed in the Data
Room;
"INFORMATION MEMORANDUM" means the Information Memorandum relating to the
Company dated January 2007;
"INSTITUTIONAL SELLERS" means the Sellers listed in Part 3 of Schedule 1
and each an "INSTITUTIONAL SELLER";
"INTEREST RATE" means the rate per annum of two per cent above the base
rate from time to time of Lloyds TSB Bank plc;
"LEAKAGE" means (whether direct or indirect):
(a) any (A) dividend or distribution declared, paid or made, whether or
not in specie, by any Group Company to any shareholders of the Company
including any of the Sellers or their connected persons, other than
the payments referred to in sub-paragraph (j) below, or (B) investment
or loan (other than season ticket loans made to employees in
accordance with their employment arrangements) made, or committed to
be made, by any Group Company in or to any shareholder of the Company
(including any of the Sellers) or their respective connected persons
(other than to another Group Company);
(b) any payments or accruals made, or agreed to be made, by any Group
Company, to (or assets transferred to or liabilities assumed,
indemnified or incurred for the
5
benefit of) any of the Sellers or their connected persons by any Group
Company other than payments or accruals made, or required to be made,
pursuant to the terms of commercial agreements in the ordinary course
of any Group Company's trading which, for the avoidance of doubt,
shall include all of the payments or accruals referred to in
sub-paragraphs (k) and (l) below;
(c) any payments or accruals made, or agreed to be made, by any Group
Company to any of the Sellers or their connected persons, in respect
of any share capital or other securities or debt obligations of any
Group Company being issued, redeemed, purchased, repaid or prepaid, or
any other return of capital;
(d) the waiver by any Group Company of any amount owed to that Group
Company by the Sellers or their connected persons, other than any of
the waivers referred to in sub-paragraph (k) below;
(e) any fees, costs or expenses incurred, paid or accrued or agreed to be
incurred, paid or accrued by any Group Company of professional fees
incurred in connection with this Agreement or the transactions to be
entered into pursuant to this Agreement ("PROFESSIONAL FEES"); and
(f) any payment made or agreed to be made to any pension scheme of any of
the Sellers or their connected persons in excess of payments made in
the ordinary course of business pursuant to that Seller's contractual
entitlement to the same,
but shall not include (each of the following, a "PERMITTED LEAKAGE"):
(g) payments and accruals of salary, employer's National Insurance
contributions, employee benefits and directors' fees and expenses
required to be made in accordance with the existing contractual terms
included in documents listed in the Data Room Index (or otherwise
required by applicable law or regulation or arising from the
transactions to be entered into pursuant to this Agreement);
(h) payments, awards and allocations of bonuses and accruals of
entitlements to, and discretionary amounts, which may be considered to
have accrued, in respect of, any bonuses in accordance with the terms
of the Staff Profit Share Plan or the Bonus Letters;
(i) payments and accruals of expenses made to any of the Sellers in the
ordinary and usual course of business;
(j) payments and accruals of the Accrued Preference Dividend;
(k) payments made or accrued, or waivers granted or entitlements arising
in relation to any of 1384 Capital Limited, the Shrewsbury Companies
or participants in the Group's Capital Stack (including all interest
and other payments on or in respect of the Group's Capital Stack) in
each case required to be made in accordance with existing contractual
terms of documents listed in the Data Room Index;
(l) any management fees paid or accrued up to the date of Completion by
any Group Company to Olympus or The Black Diamond Group LLC required
to be made pursuant to the Management Fee Agreements (but excluding:
(i) any pre-paid amount of such management fees to the extent that it
relates to a period which is unexpired as at the date of Completion;
and (ii) for the avoidance of doubt, any fees or expenses, whether
payable pursuant to such agreements or otherwise, in relation to any
of the transactions to be entered into pursuant to this Agreement);
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(m) the amount of L230,000 accrued in the Accounts in respect of the
Vendor Due Diligence Report;
(n) any employer's National Insurance required to be paid in relation to
any acceleration of payments made under the Staff Profit Share Plan or
in respect of unpaid bonuses as disclosed in the Disclosure Letter
and/or the exercise of the Options by the Optionholders, as the case
may be;
(o) the cost of any directors and officers insurance and run-off insurance
cover and the cost of any pension trustee liability insurance and any
run-off insurance cover;
(p) any other Leakage which has been provided for in the Accounts; or
(q) any payments agreed to be made or accrued or interest payments or
other amounts due to any of the Sellers or their connected persons as
a result of any of the matters listed in (g) to (p) above,
provided that Permitted Leakage, other than waivers, may only be made in
cash (and not other assets);
"LEASES" means the leases and licence held by the Group in respect of the
Properties as described in more detail in Schedule 6;
"LLOYD'S" means the Council and Society of Lloyd's incorporated under the
Lloyd's Acts 1871 to 1982 of England and Wales;
"LOSSES" means all losses, liabilities, costs (including legal costs),
charges, expenses, actions, proceedings, claims, damages and demands;
"MANAGEMENT FEE AGREEMENTS" means the terms of an engagement letter dated 5
December 2001 from Black Diamond Group LLC to the Company, as subsequently
extended by further letters, most recently a letter dated 9 February 2006
and the management fee agreement dated 25 November 2003 between Olympus
Advisory Partners Inc. and the Company, in each case as disclosed in the
Data Room;
"MANAGEMENT PRESENTATIONS" means the presentations by management of the
Group to the Purchaser and its advisers on 19, 20 and 21 March 2007;
"MANAGEMENT WARRANTIES" means the Warranties set out in paragraph 2 of
Schedule 4, and each a "MANAGEMENT WARRANTY";
"MATERIAL ADVERSE EFFECT" means any breach as set out in paragraphs (i),
(ii) or (iii) of the definition of Material Adverse Event (in the case of
Clauses 5.1 and 5.2 and any deemed repetition at Completion of the Core
Warranties occurring after the date of this Agreement and in any other case
occurring at any time) which reduces the net asset value of the Group by
more than US$40 million below the net asset value of the Group as stated in
the Accounts, but shall not include any such breach resulting from:
(i) events or factors affecting the insurance industry or the economy
generally unless they affect the Group disproportionately in relation
to other companies with similar exposures and to a material extent;
(ii) the identity of, or facts relating uniquely to, the Purchaser; or
(iii) any action required to be taken in order to implement any
transactions contemplated by this Agreement;
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"MATERIAL ADVERSE EVENT" means any of the following:
(i) there having been a breach by the Sellers of Clauses 5.1 or 5.2 which
could reasonably have been avoided or prevented by the Sellers;
(ii) other than the Core Warranties (to which sub-paragraph (iii) below
shall apply), there having been a breach of the Warranties as at the
date of this Agreement, which breach would not have arisen but for the
fraud or wilful default of any of the Sellers; or
(iii) there having been a breach of any of the Core Warranties, including a
breach were any such Core Warranties deemed to be repeated at any time
prior to Completion, which, in the case of the Core Warranties set out
in paragraphs 2.5 and 2.6.1 of Schedule 4, could reasonably have been
avoided or prevented by any of the Warrantors,
and which in each case (a) (except in the case of Core Warranties 1.2 and
1.5 of Schedule 4) has a Material Adverse Effect and (b) (if capable of
remedy) (and a breach of Core Warranties 2.11.1 and 2.11.2 shall be deemed
not to be capable of remedy) has not been remedied within 14 days of the
Purchaser giving notice to the Sellers of the occurrence of the Material
Adverse Event or, if earlier, by the Earliest Completion Date (provided
that the Purchaser has given such notice) (the "CURE PERIOD");
"NET CASH CONSIDERATION" means:
(i) in respect of a Non-Employee Seller, the amount of Non-Employee Cash
Consideration set out next to his/her/its name in column (8) of
Schedule 1 less his/her/its pro rata share (by reference to
his/her/its percentage shareholding in the Company on a fully diluted
basis) of the Permitted Deductions;
(ii) in respect of an Employee Seller (other than in respect of their
Option Shares to which the provisions of (iii) below shall apply), the
amount of Employee Seller Cash Consideration set out next to his/her
name in column (8) of Schedule 1 less his/her pro rata share (by
reference to his/her percentage shareholding in the Company (excluding
his/her Option Shares) on a fully diluted basis) of the Permitted
Deductions; and
(iii) in respect of an Optionholder in relation to the Employee Seller Cash
Consideration payable to that Optionholder in respect of his/her
Option Shares, the amount set out against his/her name in column (9)
of Schedule 1 after deducting therefrom (i) the amount of that
Optionholder's Exercise Price, (ii) his/her pro rata share (by
reference to the percentage his/her Option Shares bears to the total
share capital of the Company on a fully diluted basis) of the
Permitted Deductions; and (iii) any amount required to be deducted by
Talbot Underwriting Services Ltd under PAYE or in respect of
employees' National Insurance, in accordance with applicable
legislation in connection with the exercise of the Options of each
Optionholder;
"MINIMUM CASH AMOUNT" means, in respect of each Employee Seller, an amount
equal to the following:
(i) his/her pro rata share of the Permitted Deductions (as set out in
paragraphs (ii) and/or (iii) of the definition of Net Cash
Consideration in this Clause 1.1 as applicable);
8
(ii) the Exercise Price (if any) payable by that Employee Seller in respect
of his/her Option Shares; and
(iii) the amount (if any) required to be deducted by Talbot Underwriting
Services Ltd under PAYE or in respect of employee's National
Insurance, in each case in accordance with applicable legislation in
connection with any exercise by that Employee Seller of his/her
Options;
"NON-EMPLOYEE SELLER CASH CONSIDERATION" has the meaning set out in Clause
3.1.1(i);
"NON-EMPLOYEE SELLERS" means all of the Sellers other than Employee
Sellers, and each a "NON-EMPLOYEE SELLER";
"OLYMPUS" means each of OGF III (Caymans 1), L.P., OGF IV (Caymans 1), L.P.
and Olympus Executive Fund, L.P. or, where the context so requires, all of
them together;
"OPTIONHOLDERS" means the Employee Sellers who hold options over shares in
the Company as at the date of this Agreement, and who will exercise those
options for shares in the Company prior to, and conditional upon,
Completion being those Employee Sellers listed in column (1) of Schedule 7,
and each an "OPTIONHOLDER";
"OPTIONS" means the options over the share capital of the Company held as
at the date of this Agreement by the Optionholders, such Options being as
listed against the names of each Optionholder in column (2) of Schedule 7
(being all of the options in existence as at the date of this Agreement
under the Share Option Scheme);
"OPTION SHARES" means the Shares received by each Optionholder on the
exercise of his/her Options (all of which Options shall be exercised in
full on or before Completion);
"OPTIONS TRANSACTIONS" has the meaning given in recital (C);
"PAYMENT INSTRUCTIONS" has the meaning set out in Clause 3.1.9(i);
"PERMITTED DEDUCTIONS" means any professional fees or expenses which the
Company has contracted to pay and which are payable by the Sellers in
connection with this Agreement as approved by any two of MEA Xxxxxxxxx, CNR
Xxxxx, GAM Bonvarlet, XX Xxxxxxxx or ND Xxxxxxx, provided that at least one
of the approving persons must be MEA Xxxxxxxxx, GAM Bonvarlet or ND
Xxxxxxx;
"PROPERTIES" means the leasehold properties, brief details of which are set
out in Schedule 6 and "PROPERTY" means any one of or any part or parts of
any one of them;
"PURCHASER'S GROUP" means the Purchaser and its subsidiaries and holding
company from time to time and any subsidiaries of such holding company
(and, following Completion, shall include the Group Companies);
"PURCHASER'S SOLICITORS" means Xxxxxxx Xxxxxxx of One Xxxxxx Xxxx, Xxxxxx
XX0X 0XX;
"REGISTRATION RIGHTS AGREEMENT" means the agreement dated 24 November 2003
between (inter alia) the Company, its shareholders, Olympus, Reservoir
Capital Partners L.P., Reservoir Capital Master Fund L.P. and Intermediate
Capital Group PLC as disclosed in the Data Room;
"RELEVANT REGULATOR" means each of Lloyd's, the FSA and the BMA;
"RESERVOIR AGENT" means Reservoir Capital Group LLC;
9
"RESERVOIR LETTER OF CREDIT" means the letter of credit provided by
Reservoir Capital Partners, L.P., Reservoir Capital Master Fund, L.P.,
Reservoir Capital Master Fund II, L.P. and Reservoir Capital Investment
Partners, L.P;
"RING FENCING LETTERS" means the three letters from Lloyd's addressed to
Talbot Underwriting Ltd dated 9 November 2001, 11 February 2002 and 19
November 2003 relating to past liabilities of Shrewsbury Underwriting
Capital Ltd and Shrewsbury Underwriting Capital (Bermuda) Ltd;
"SELLERS' SOLICITORS" means Xxxxxxxxxx XXX xx Xxx Xxxx Xxxxxx, Xxxxxx XX0X
0XX;
"SENIOR EMPLOYEE" means each of MEA Xxxxxxxxx, CNR Xxxxx, ND Xxxxxxx, GAM
Bonvarlet, XX Xxxxxxxx, NJ Xxxxx, XX Xxxxxxxx, XX Xxxxxxx, XX Xxxxxxx, XX
Xxxx, XX Xxxxx, XX Xxxxxxx, JRA Xxxxxxx, SEH Xxxx, G Xxxxx, JAJA XxXxxxxx,
XX Xxxxxx, XX Xxxxx, JAA Xxxxxxxxx, I Xxxxxxx, XX Xxxxx and XX Xxxxxx;
"SHAREHOLDERS' AGREEMENT" means the agreement dated 25 November 2003
between the Company and its shareholders as disclosed in the Data Room;
"SHARE CONSIDERATION" has the meaning set forth in Clause 3.1.4(i);
"SHARE OPTION SCHEME" means the Talbot Holdings Ltd. Share Option Plan,
details of which are included in the Data Room and pursuant to which
options have been granted over 875,000 Common Shares and 7,462,500 Class B
Common Shares;
"SHARES" means the Common Shares, Class B Common Shares, A Preference
Shares and B Preference Shares, which together will constitute the whole of
the issued share capital of the Company as at the date of Completion;
"SHREWSBURY COMPANIES" means Shrewsbury Underwriting Capital Ltd,
Shrewsbury Underwriting Capital (Bermuda) Ltd and Shrewsbury Holdings Ltd;
"SHREWSBURY TRANSACTIONS" means: (a) the sale by the Company of all of the
issued share capital of Shrewsbury Holdings Limited to Xxxxxx Xxxxx,
Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxx and Xxxxx Xxxxxxx as trustees for the then
existing shareholders in the Company in proportion to their then existing
holdings; and (b) the subsequent sale by Shrewsbury Holdings Limited of:
(i) (A) all of the 67,746,236 issued A common shares of $1.00 each in the
capital of Shrewsbury Underwriting Capital (Bermuda) Ltd; and (B) all of
the 58,006,255 issued A ordinary shares of L1.00 each in the capital of
Shrewsbury Underwriting Capital Ltd to FOSPV Limited; and (ii) (A) all of
the 1,357,640 issued C common shares of $0.05 each in the capital of
Shrewsbury Underwriting Capital (Bermuda) Ltd; and (B) all of the 1,162,450
issued C ordinary shares of L0.05 each in the capital of Shrewsbury
Underwriting Capital Ltd to Global Securitisation Services Limited, in its
capacity as trustee of Great Ormond Street;
"STAFF PROFIT SHARE PLAN" means the staff profit share plan adopted by
Talbot Underwriting Ltd on 6 May 2003, as subsequently amended on 26
October 2005, 14 March 2006 and 27 April 2007, and which is disclosed in
the Data Room;
"SUBSIDIARIES" means the subsidiaries of the Company details of which are
contained in Part 2 of Schedule 2;
"SYNDICATE 1183" means the Lloyd's syndicate in respect of which Talbot
Underwriting Ltd. acts as managing agent (as defined in the Underwriting
Byelaw (No. 2 of 2003));
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"TALBOT 2002" means Talbot 2002 Underwriting Capital Ltd, details of which
are set out in Section A of Part 2 of Schedule 2;
"TAXATION" or "TAX" means all forms of taxation and statutory,
governmental, state, federal, provincial, local, government or municipal
charges, duties, imposts, deductions, liabilities to account,
contributions, withholdings, liabilities and levies, including US federal
excise tax and other premium tax (and any other tax whatsoever) whether of
the United Kingdom, the United States, Bermuda or elsewhere in the world,
and any interest, penalty, charges, fines or surcharge relating thereto
whether the Company or any of the Subsidiaries is primarily liable or
secondarily liable;
"TAXATION AUTHORITY" means any taxing, government, local government, fiscal
or other authority (whether within or outside the United Kingdom) competent
to impose, assess, administer or collect any Taxation, including Her
Majesty's Revenue & Customs (and any predecessor authority) and the United
States Internal Revenue Service;
"TAX DUE DILIGENCE REPORT" means the tax due diligence report dated 9 March
2007, together with the erratum issued on 4 May 2007, prepared by KPMG in
respect of the Group;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"TERMINATION AGREEMENTS" means the agreements to terminate each of the
Shareholders' Agreement, the Employee Shareholders' Agreement, the
Management Fee Agreements and the Registration Rights Agreement, in each
case in Agreed Terms;
"TITLE AND CAPACITY WARRANTIES" means the Warranties set out in Part 1 of
Schedule 4 and each a "TITLE AND CAPACITY WARRANTY";
"TRUSTS" means those trusts whose assets include, or as at Completion will
include, Shares and each a "TRUST";
"TRUSTEES" means Codan and Xxxxx Xxxxxx solely in their capacity as trustee
of the relevant trust and each a "TRUSTEE";
"UK GAAP" means generally accepted accounting practices and principles in
the United Kingdom for non public companies;
"US" means the United States of America;
"US DOLLAR" or "US$" means the lawful currency of the US;
"US GAAP" means generally accepted accounting practices and principles in
the US for non public companies;
"US SELLERS" means the Sellers listed in Part 2 of Schedule 1 and each a
"US SELLER";
"VALIDUS" means the Purchaser;
"VALIDUS BYE-LAWS" means the bye-laws of Validus as originally adopted on
December 7, 2005 and as in effect from time to time;
"VALIDUS COMMON SHARES" means the voting common shares of the Purchaser,
par value US$0.10 per share;
"VALIDUS SECURITIES" means the Validus Common Shares to be issued to
Employee Sellers as contemplated under Clause 3 of this Agreement;
11
"VAT" means United Kingdom Value Added Tax;
"VATA" means the Value Added Tax Xxx 0000;
"VENDOR DUE DILIGENCE REPORT" means the vendor due diligence report dated 7
March 2007 prepared by PricewaterhouseCoopers in respect of the Group;
"WARRANTIES" means the warranties set out in Schedule 4 and "WARRANTY"
means any one of them; and
"WARRANTORS" means MEA Xxxxxxxxx, CNR Xxxxx, ND Xxxxxxx, GAM Bonvarlet, XX
Xxxxxxxx, NJ Xxxxx, XX Xxxxxxxx, XX Xxxxxxx, DP Redhead and XX Xxxx and
each a "WARRANTOR".
1.2 SUBORDINATE LEGISLATION
References to a statutory provision include any subordinate legislation
made from time to time under that provision which is in force at the date
of this Agreement.
1.3 MODIFICATION ETC. OF STATUTES
References to a statute or statutory provision include that statute or
provision as from time to time modified or re-enacted or consolidated
whether before or after the date of this Agreement so far as such
modification, re-enactment or consolidation applies or is capable of
applying to any transactions entered into in accordance with this Agreement
prior to Completion and (so far as liability thereunder may exist or can
arise) shall include also any past statutory provision (as from time to
time modified, re-enacted or consolidated) which such provision has
directly or indirectly replaced except to the extent that any statutory
provision made or enacted after the date of this Agreement would create or
increase a liability of any party under this Agreement.
1.4 CONNECTED PERSONS
1.4.1 A person who is an individual shall be deemed to be connected with
another individual if that person is the individual's wife or husband,
or is a relative, or the wife or husband of a relative, of the
individual or of the individual's wife or husband.
1.4.2 A company is connected with another company:
(i) if the same person has control of both, or a person has control
of one and persons connected with him, or he and persons
connected with him, have control of the other; or
(ii) if a group of two or more persons has control of each company,
and the groups either consist of the same persons or could be
regarded as consisting of the same persons by treating (in one or
more cases) a member of either group as replaced by a person with
whom he is connected.
A company is connected with another person if that person has control
of it or if that person and persons connected with him together have
control of it.
1.4.3 Any two or more persons acting together to secure or exercise control
of a company shall be treated in relation to that company as connected
with one
12
another and with any person acting on the directions of any of them to
secure or exercise control of the company.
1.4.4 Any general partner of any of the Institutional Sellers shall be
deemed to be connected with that Institutional Seller.
1.4.5 In this Clause 1.4:
(i) "company" includes any body corporate or unincorporated
association;
(ii) "relative" means brother, sister, ancestor or lineal descendant;
(iii) "control" means the exercise, or the ability to exercise or the
entitlement to acquire, direct or indirect control over the
company's affairs, and in particular, but without prejudice to
the generality of the preceding words, the possession of or the
entitlement to acquire:
(a) the greater part of the share capital or issued share
capital of the company or of the voting power in the
company; or
(b) such part of the issued share capital of the company as
would, if the whole of the income of the company were in
fact distributed among the participators (without regard to
any rights which he/she or any other person has as a loan
creditor), entitle him/her to receive the greater part of
the amount so distributed; or
(c) such rights as would, in the event of the winding-up of the
company or in any other circumstances, entitle him to
receive the greater part of the assets of the company which
would then be available for distribution among the
participators.
1.5 ACCOUNTS
Any reference to "audited accounts" shall include, where applicable, the
directors' and auditors' reports, and consolidated financial statements
comprising the consolidated balance sheets of the Company and subsidiaries
as of the Accounts Date and 31 December 2005, and the related consolidated
statements of income/(loss) and comprehensive income/(loss), changes in
shareholders' equity and cash flows for the years then ended and all
accompanying notes to the consolidated financial statements, together with
all documents which are or would be required by law to be annexed to that
company's accounts to be laid before that company in general meeting in
respect of the accounting reference period in question.
1.6 COMPANIES XXX 0000
The words "HOLDING COMPANY" and "SUBSIDIARY" shall have the same meanings
in this Agreement as their respective definitions in the Companies Xxx
0000.
1.7 INTERPRETATION XXX 0000
Xxx Xxxxxxxxxxxxxx Xxx 0000 shall apply to this Agreement in the same way
as it applies to an enactment.
13
1.8 INCLUDING, ETC
Any phrase introduced by the terms "INCLUDING", "INCLUDE," "IN PARTICULAR"
or any similar expression shall be construed as illustrative and shall not
limit the generality of the words preceding those terms nor shall any words
following such terms be considered an exhaustive list.
1.9 CLAUSES, SCHEDULES ETC.
References to this Agreement include any recitals and Schedules to it and
references to Clauses and Schedules are to clauses of and schedules to this
Agreement. References to paragraphs within a Schedule are to paragraphs of
that Schedule.
1.10 INFORMATION
Any reference to books, records or other information means books, records
or other information in any form including paper, electronically stored
data, magnetic media, film and microfilm.
1.11 HEADINGS
Headings shall be ignored in construing this Agreement.
2 AGREEMENT TO SELL THE SHARES
2.1 SALE AND PURCHASE OF SHARES
2.1.1 On and subject to the terms of this Agreement, on Completion:
(i) each Seller (as to those of the Shares specified against
his/her/its name in columns (3) to (7), as the case may be, of
Schedule 1) agrees to sell or procure to be sold; and
(ii) the Purchaser, relying on the several warranties and undertakings
contained in this Agreement, agrees to purchase,
the Shares.
2.1.2 The Shares shall be sold with full title guarantee free from all
Encumbrances and together with all rights and advantages now and
hereafter attaching to them as at Completion (including the right to
receive all dividends or distributions declared, made or paid on or
after Completion other than any unpaid Accrued Preference Dividend).
2.1.3 None of the parties shall be obliged to complete the acquisition or
sale of the Shares unless the acquisition and sale of all of the
Shares is completed simultaneously.
2.2 RIGHTS OF PRE-EMPTION
The Sellers hereby waive irrevocably: (i) any and all rights of pre-emption
over the Shares conferred either by the Byelaws or by any other document or
in any other way; and (ii) any and all rights conferred by the Employee
Shareholders' Agreement on the UK Steering
14
Group (as defined therein) to specify the transferee of any of the Shares
and any obligation imposed by that agreement on an Employee Seller to
notify the UK Steering Group of his/her intention to sell the Shares in
accordance with the terms of this Agreement and shall procure that on or
prior to Completion any and all such rights and obligations are waived
irrevocably by any other person entitled thereto.
2.3 TERMINATION OF CERTAIN EXISTING AGREEMENTS
On Completion, the parties to each of the Shareholders' Agreement, the
Employee Shareholders' Agreement, the Management Fee Agreements and the
Registration Rights Agreement who are parties to this Agreement agree that
the Shareholders' Agreement, the Employee Shareholders' Agreement, the
Management Fee Agreements and the Registration Rights Agreement shall be
terminated with effect from Completion and no party shall have any claim
against the other or against any Group Company in respect thereof other
than, in the case of the Management Fee Agreements, any fees and expenses
accrued up to the date of Completion.
2.4 Each Seller, on behalf of itself and any person controlled by that Seller,
effective upon Completion, hereby unconditionally waives any change of
control or other similar right or provision or any right which it might
have (whether pursuant to the FAL Providers' Agreement or otherwise) to
participate in the Group's Capital Stack or otherwise to provide FAL in
respect of the underwriting of Talbot 2002 in relation to the 2008 or any
subsequent underwriting year of account, or to negotiate or meet with the
Group Companies with respect to funding the Group's Capital Stack or
otherwise providing FAL in respect of the underwriting of Talbot 2002 in
relation to the 2008 or any subsequent underwriting year of account. For
the avoidance of doubt, notwithstanding any other provision of this
Agreement, except as specifically stated in this Clause 2.4 nothing in this
Agreement will be construed or interpreted as waiving, relinquishing,
restricting or limiting any rights relating to the Group's Capital Stack
held by any Seller who participates in the Group's Capital Stack under the
FAL Providers' Agreement, any previous FAL providers' agreement or any
other relevant document.
3 CONSIDERATION
3.1 AMOUNT
3.1.1 The deemed aggregate consideration for the purchase of the Shares
under this Agreement shall be US$410,000,000.00 in cash and Validus
Common Shares (the "CONSIDERATION").
The Consideration shall be allocated and paid as follows:
(i) with respect to the aggregate Shares owned at Completion by
Non-Employee Sellers, cash consideration in the amount of
US$302,999,413.64 ("NON-EMPLOYEE SELLER CASH CONSIDERATION"), to
be allocated among the Non-Employee Sellers as set out in Clause
3.1.2 below; and
(ii) with respect to the aggregate Shares owned at Completion by
Employee Sellers: (a) consideration in the amount of
US$79,176,543.36 payable as set forth in Clauses 3.1.3 and 3.1.4
("EMPLOYEE SELLER CASH CONSIDERATION"); and (b) 1,209,741 Validus
Common Shares (such
15
number of shares to be appropriately adjusted for any stock
dividends, stock splits or recombinations or similar transactions
after the date of this Agreement and prior to Completion) duly
authorised by Validus and, upon Completion, to be allocated in
accordance with Clause 3.1.5(i) and validly issued, fully paid
and non-assessable (meaning that no further sums are required to
be paid by holders thereof in connection with the issue thereof)
and entitled to vote and participate in distributions and
dividends on a pari passu basis with the Validus Common Shares
then in issue, in accordance with the Validus Bye-Laws (the "BASE
SHARE CONSIDERATION" and, together with the Employee Seller Cash
Consideration, the "EMPLOYEE SELLER CONSIDERATION"). The Employee
Seller Consideration shall be allocated among the Employee
Sellers as set out in Clauses 3.1.3 to 3.1.7 below.
3.1.2 The Non-Employee Seller Cash Consideration shall be paid by the
Purchaser to the Sellers' Solicitors (to hold on trust for the
Non-Employee Sellers) at Completion in accordance with Clause 6.3 by
crediting the account which shall have been notified to the Purchaser
in accordance with Clause 10.11. Such amount shall be allocated among
the Non-Employee Sellers such that each Non-Employee Seller shall be
paid his/her/its Net Cash Consideration and his/her/its pro rata
amount of the Permitted Deductions shall be paid in accordance with
Clause 3.1.8. Such amount shall be paid by the Sellers' Solicitors to
each of the Non-Employee Sellers by crediting the account of that
Non-Employee Seller which shall have been notified to the Sellers'
Solicitors in accordance with Clause 10.11. For the avoidance of
doubt, provided the Purchaser has delivered the aggregate Non-Employee
Seller Cash Consideration to the Sellers' Solicitors in accordance
with this Clause 3.1.2, the Purchaser shall be deemed to have
delivered the Non-Employee Seller Cash Consideration to the
Non-Employee Sellers and shall have no responsibility with respect to
the allocation among the Non-Employee Sellers set out above, including
the timing or method of it.
3.1.3 Subject to any elections made by any Employee Sellers pursuant to
Clause 3.1.4, the Employee Seller Cash Consideration amounts shall be
paid by the Purchaser to the Sellers' Solicitors (to hold on trust for
the Employee Sellers) at Completion in accordance with Clause 6.3 by
crediting the account which shall have been notified to the Purchaser
in accordance with Clause 10.11. Except in the case of the Option
Shares to which the provisions of Clause 3.1.7 shall apply, the
Employee Seller Cash Consideration shall be allocated among the
Employee Sellers such that each Employee Seller shall be paid his/her
Net Cash Consideration and his/her/its pro rata amount of the
Permitted Deductions shall be paid in accordance with Clause 3.1.8.
Such amount shall be paid by the Sellers' Solicitors to each of the
Employee Sellers by crediting the account of that Employee Seller
which shall have been notified to the Sellers' Solicitors in
accordance with Clause 10.11. For the avoidance of doubt, provided the
Purchaser has delivered the aggregate Employee Seller Cash
Consideration to the Sellers' Solicitors in accordance with this
Clause 3.1.3, the Purchaser shall be deemed to have delivered the
Employee Seller Cash Consideration to the Employee Sellers and shall
have no responsibility with respect to the allocation among the
Employee Sellers set out above, including the timing or method of it.
16
3.1.4
(i) The Employee Seller Cash Consideration payable to any Employee
Seller will, subject to the following proviso, be paid by the
Purchaser in cash; provided however that any Employee Seller may
elect, which election, once duly made in accordance with the
terms hereof, shall be irrevocable (such election, being
hereinafter referred to as "SHARE ELECTION") to receive (subject
to the provisions of sub-paragraph (ii) below) a portion of the
Employee Seller Cash Consideration payable to him/her in an
amount of Validus Common Shares equal to (a) the portion of such
Employee Seller Cash Consideration subject to such Share Election
divided by (b) US$23.00 (such number of shares to be
appropriately adjusted by the Purchaser for any stock dividends,
stock splits or recombinations or similar transactions after the
date of this Agreement and prior to Completion) duly authorised
by Validus and, upon Completion, to be validly issued, fully paid
and non-assessable (meaning that no further sums are required to
be paid by holders thereof in connection with the issue thereof)
and entitled to vote and participate in distributions and
dividends on a pari passu basis with the Validus Common Shares
then in issue, in accordance with the Validus Bye-Laws. A Share
Election will only be effective if the applicable Employee Seller
delivers to Validus (with a copy to the Company Secretary of the
Company) a duly executed and completed Share Election Form in the
form attached hereto as Schedule 11 (a "SHARE ELECTION FORM")
within two weeks of the date of this Agreement. Validus Common
Shares issued pursuant to this Clause 3.1.4(i) are referred to
herein as "ELECTION SHARE CONSIDERATION" and, taken together with
Base Share Consideration, "SHARE CONSIDERATION." For the
avoidance of doubt, any Employee Seller Cash Consideration with
respect to which a Share Election was not duly made in accordance
with the terms hereof shall be payable in cash.
(ii) To the extent that any Share Election made by an Employee Seller
would result in the cash component of the Employee Seller
Consideration payable to that Employee Seller (the "CASH
COMPONENT") being less than his/her Minimum Cash Amount, his/her
Share Election shall be amended and the percentage amount
included in his/her Share Election Form reduced such that the
amount of the Cash Component payable to that Employee Seller is
not less than the Minimum Cash Amount.
3.1.5
(i) The Base Share Consideration shall be issued by the Purchaser to
each Employee Seller as to the number of Validus Common Shares
set out against his/her name in column (10) of Schedule 1 in
accordance with terms set out in Clause 3.1.1(ii) and Schedule 9,
including the provisions with respect to transfer restrictions,
forfeiture and repurchase by Validus for nominal consideration on
the terms set out in Schedule 9.
(ii) The Election Share Consideration (if any) shall be issued by the
Purchaser to each Employee Seller who has made a valid election
in accordance with the terms set out in Clause 3.1.4. For the
avoidance of doubt, the provisions with respect to transfer
restrictions, forfeiture and repurchase by
17
Validus for nominal consideration on the terms set out in
Schedule 9 shall not apply to the Election Share Consideration.
(iii) Notwithstanding the foregoing, Validus will pay cash in lieu of
any fractional Validus Common Shares otherwise issuable to any
Employee Seller as Share Consideration, at a rate of US$23.00 per
whole Validus Common Share (pro rated for such fractional share).
3.1.6
(i) On Completion, the Purchaser shall provide each Employee Seller
with a duly certified extract from the Validus share register,
showing the registration of the Validus Common Shares issued to
him/her as Share Consideration in the name of such Employee
Seller. An issue of Validus Common Shares in accordance with
Clauses 3.1.4 to 3.1.6, shall be a good discharge by the
Purchaser of its obligation under this Agreement to issue the
Validus Common Shares representing the Share Consideration.
(ii) Validus Common Shares issued as Share Consideration will be
subject to the Validus Bye-laws, including without limitation the
restrictions on transfer contained therein, and each Employee
Seller hereby agrees to execute and hereby agrees to be bound by
any lock-up or similar agreement generally executed by members of
management of Validus or its subsidiaries in connection with the
initial public offering of common shares of Validus.
3.1.7 Subject to any elections made by any Employee Sellers in respect of
their Option Shares pursuant to Clause 3.1.4, the total aggregate
amount of the Employee Seller Cash Consideration payable to the
Optionholders on Completion in respect of their Option Shares shall be
allocated and paid by the Sellers' Solicitors as follows:
(i) the total amount of the Exercise Prices due from Optionholders to
the Company on the issue to them of Class B Common Shares will be
paid to the Company;
(ii) such amount of the Exercise Prices due from Optionholders to the
EBT on the transfer to them of the EBT Common Shares as is
required to repay in full the amount outstanding under the EBT
Loan as at the date of Completion shall be paid to the Company
and such payment by the Sellers' Solicitors to the Company shall
be good discharge to the EBT of its obligation to the Company
under the EBT Loan and shall constitute full and final settlement
of the same;
(iii) subject to (ii) above, the remaining amount (if any) due from
Optionholders to the EBT on the transfer to them of the EBT
Common Shares shall be paid to the EBT;
(iv) any amount required to be deducted by Talbot Underwriting
Services Ltd under PAYE or in respect of employees' National
Insurance in accordance with applicable legislation in connection
with the exercise of the Options shall be paid to Talbot
Underwriting Services Ltd;
(v) each Optionholder shall be paid his/her Net Cash Consideration;
and
18
(vi) each Optionholder's pro rata amount of the Permitted Deductions
shall be paid in accordance with Clause 3.1.8,
by crediting the appropriate account, in each case, which shall have
been notified to the Sellers' Solicitors in accordance with Clause
10.11.
3.1.8 Permitted Deductions shall be paid by the Sellers' Solicitors in
accordance with the Payment Instructions as follows:
(i) to the extent that such Permitted Deductions relate to
professional fees and expenses which constitute Leakage, an
amount equal to such Leakage, as set out in the Payment
Instructions, will be paid to the Company on Completion; and
(ii) the remaining amount of Permitted Deductions shall be paid to the
relevant advisers, in the amounts set out in the Payment
Instructions, by crediting the appropriate account, in each case,
which shall have been notified to the Sellers' Solicitors in
accordance with Clause 10.11.
3.1.9
(i) No later than three Business Days prior to Completion, the
persons listed in Clause 10.5 shall notify the Sellers'
Solicitors of the amounts payable in accordance with Clauses
3.1.2 to 3.1.8 to each of the Non-Employee Sellers, each of the
Employees Sellers, the Company, the EBT, Talbot Underwriting
Services Ltd, each Optionholder and each adviser (as the case may
be) (the "PAYMENT INSTRUCTIONS").
(ii) The Sellers' Solicitors shall be entitled to rely upon the
Payment Instructions and shall be under no obligation to verify
the accuracy or otherwise of such instructions. For the avoidance
of doubt, the Sellers' Solicitors shall have no liability to any
person, and each of the Sellers and the Purchaser waives any
right to bring or make any claim or otherwise to seek any
recourse or compensation against or from the Sellers' Solicitors,
for any payments made by the Sellers' Solicitors in accordance
with the Payment Instructions and the provisions of Clauses 3.1.2
to 3.1.8.
3.1.10 Validus hereby agrees that to the extent Validus files a
registration statement on Form S-3 (or successor form) with the US
Securities Exchange Commission in connection with a shelf-registration
of Validus Common Shares and generally offers Validus senior
management shareholders the opportunity to register a portion of their
Validus Common Shares as selling shareholders in such registration
statement, Validus will offer the Employee Sellers an opportunity to
participate therein on substantially similar terms with respect to a
portion of their Share Consideration, subject to applicable law and
the Validus Bye-Laws. Notwithstanding the foregoing, Validus shall not
be required to include such Validus Common Shares in such registration
statement to the extent such shares are then freely tradeable without
restriction under the US Securities Act of 1933, as amended, either
pursuant to an exemption available with respect thereto under Rule
144(k) or Regulation S promulgated thereunder.
19
3.2 REDUCTION OF CONSIDERATION
If any payment is made by any Seller to the Purchaser in respect of any
claim against that Seller for any breach of any of the Warranties, the
pre-Completion covenants in Clause 5 or any other provision of this
Agreement (or any agreement entered into pursuant to this Agreement), the
payment shall be made by way of adjustment of the Consideration paid to
that Seller and the amount of the Consideration paid to that Seller shall
be deemed to have been reduced by the amount of such payment.
4 CONDITIONS
4.1 CONDITIONS PRECEDENT
4.1.1 The respective obligations of each of the parties hereto to effect
Completion of this Agreement are conditional upon:
(i) the FSA having given notice in writing in terms satisfactory to
the Sellers and the Purchaser (each acting reasonably and in good
faith) that the FSA approves or has no objection to the Purchaser
and any other relevant member of the Purchaser's Group and any
controller (within the meaning of the Financial Services and
Markets Act 2000) of any of them acquiring control (within the
meaning of the Financial Services and Markets Act 2000) of Talbot
Underwriting Ltd and Underwriting Risk Services Ltd pursuant to
this Agreement or, in the absence of such notice, the three month
period within which the FSA may serve a notice of objection under
those provisions having elapsed without the FSA having served any
notice of objection;
(ii) the BMA having given notice in writing in terms satisfactory to
the Sellers and the Purchaser (each acting reasonably and in good
faith) that the BMA approves or has no objection to the Purchaser
or any other relevant member of the Purchaser's Group acquiring
control of the Company, Talbot Capital Ltd and Talbot Insurance
(Bermuda) Ltd pursuant to this Agreement and to becoming an
indirect shareholder controller of Talbot Insurance (Bermuda) Ltd
in accordance with the Bermuda Insurance Xxx 0000;
(iii) Lloyd's having given notice in writing in accordance with
paragraph 12 of the Membership Byelaw (No. 5 of 2005) in terms
satisfactory to the Sellers and the Purchaser (each acting
reasonably and in good faith) that it approves or has no
objection to the Purchaser and any other relevant member of the
Purchaser's Group and any controller (within the meaning of the
Definitions Byelaw (No. 7 of 2005)) acquiring control (within the
meaning of the Definitions Byelaw (No. 7 of 2005)) of Talbot 2002
and Talbot Underwriting Capital Ltd;
(iv) the Franchise Board (being a board established by Lloyd's with
that name) having given notice in writing in accordance with
paragraph 43 of the Underwriting Byelaw (No. 2 of 2003) in terms
satisfactory to the Sellers and the Purchaser (each acting
reasonably and in good faith) that it approves or has no
objection to the Purchaser and any other relevant member of the
Purchaser's Group and any controller acquiring control ("control"
and
20
"controller" being within the meaning of the Definitions Byelaw
(No. 7 of 2005)) of Talbot Underwriting Ltd; and
(v) the persons mentioned in paragraph 9 of the undertaking given by
Underwriting Risk Services Ltd as part of its coverholder
application form having been notified of the matters required to
be notified pursuant to such paragraph (including any changes to
the information requested in paragraph k of Part A, Section 1 of
such application form as a result of Completion).
4.1.2 The obligation of the Purchaser to effect Completion of this
Agreement is conditional upon Talbot Underwriting Ltd having received
written confirmation from Lloyd's that the sale of the Shares to the
Purchaser will not affect any assurance or commitment given by Lloyd's
in the Ring Fencing Letters.
4.2 RESPONSIBILITY FOR SATISFACTION
4.2.1 The parties shall use all reasonable endeavours to ensure the
satisfaction of the Conditions Precedent as soon as reasonably
practicable, including procuring the making of all requisite
applications and notifications and using reasonable endeavours to
procure the provision as promptly as possible of all such information
as is requested by any Relevant Regulator in connection with the
satisfaction of the Conditions Precedent. Each Party undertakes to
inform the other party of all communications (whether in writing or
otherwise) with any Relevant Regulator as soon as reasonably
practicable and to provide such other party with copies of all
documents provided to any such body.
4.2.2 Without prejudice to Clause 4.2.1, the Sellers and the Purchaser
agree that all requests and enquiries from any Relevant Regulator,
government, governmental, supranational or trade agency, court or
other regulatory body shall be dealt with by the Sellers and the
Purchaser in consultation with each other and the Sellers and the
Purchaser shall promptly co-operate with and provide all necessary
information and assistance reasonably required by such regulator,
government, agency, court or body upon being requested to do so by the
other.
4.3 NON-SATISFACTION
4.3.1 The Purchaser shall promptly give notice to the Sellers, and the
Sellers shall promptly give notice to the Purchaser, of the
satisfaction of the Conditions Precedent as soon as reasonably
practicable, and in any event within five Business Days of becoming
aware of the same. If the Conditions Precedent are not satisfied on or
before 24 August 2007 or such other date as the Purchaser and the
Sellers may agree, the Purchaser or (in the case of the Conditions
Precedent contained in Clause 4.1.1 only) the Sellers may in its or
their sole discretion terminate this Agreement. Where this Agreement
is terminated under this Clause 4.3, no party shall have any claim
against any other under it, save for fraud or any claim arising from
breach of any undertaking contained in Clause 4.2, and that provision
along with the provisions of Clauses 10.2, 10.3, 10.10, 10.14, 10.17
and 10.18, shall remain in full force and effect notwithstanding this
Agreement having otherwise terminated.
21
4.3.2 Notwithstanding the foregoing, neither the Sellers nor the Purchaser
may rely, either as a basis for not consummating Completion or
terminating this Agreement and abandoning the transactions
contemplated hereby, on the failure of any condition set out in Clause
4.1 to be satisfied if such failure was caused by such party's breach
of any provision of this Agreement or failure to use its reasonable
endeavours to consummate Completion, as required by and subject to
Clause 4.2.
5 ACTIONS PENDING COMPLETION
5.1 SELLERS' GENERAL OBLIGATIONS
Each Seller shall use all reasonable endeavours to procure that, pending
Completion, subject to Clause 5.5 and save insofar as agreed in writing by
the Purchaser (such agreement not to be unreasonably withheld or delayed):
5.1.1 subject to any restrictions imposed on the Group Companies pursuant
to this Clause 5 or any other obligations with which the Purchaser has
requested in writing that any Group Company comply, each Group Company
will carry on its business (including the management and operation of
Syndicate 1183) in all material respects in the ordinary and usual
course and substantially consistent with its practice in the 12 months
prior to Completion, provided that this shall not prohibit any action
that is required to be taken in order to effect (in accordance with
the terms of this Agreement) the transactions contemplated by this
Agreement;
5.1.2 each Group Company shall not make or agree to make any payment other
than normal course payments in the ordinary and usual course of
business and consistent with past practice;
5.1.3 each Group Company shall manage its working capital and maintain its
accounting records in the ordinary and usual course of business and in
all material respects in a manner consistent with the 12 months ended
31 December 2006;
5.1.4 each Group Company will:
(i) maintain in force all insurance policies normally kept in force
by it for the benefit of it and/or the Group Companies (which,
for the avoidance of doubt, does not include any inwards or
outwards insurance or reinsurance contracts or any other
insurance or reinsurance contracts entered into by Syndicate 1183
or Talbot 2002);
(ii) will not amend any such insurance policies but, for the avoidance
of doubt, the Company shall not be precluded from notifying its
insurers about, and making such amendments to its directors and
officers insurance cover as the directors of the Company (acting
reasonably) may consider prudent in respect of, the Purchaser's
forthcoming public offering of its securities or the transactions
contemplated by this Agreement;
(iii) will make all insurance claims under such policies in relation
to itself and/or the Group Companies in accordance with the
ordinary course of business and its previous practice of making
such insurance claims; and
(iv) will not settle any such claim below the amount claimed;
22
5.1.5 each Group Company shall operate materially in accordance with all
regulatory requirements (including the Lloyd's Byelaws and the
regulations of the Lloyd's Franchise Board from time to time);
5.1.6 Talbot 2002 shall not amend, terminate or waive the benefits of or
permit the amendment, termination or waiver of, any agreement in
relation to the Group's Capital Stack;
5.1.7 prompt written notice is provided to the Purchaser at any time any
undertaking or warranty of the Sellers or the Warrantors ceases to be
accurate in any material respect (whether or not such warranty is
required to be reaffirmed at any time after the date of this
Agreement); and
5.1.8 to the extent reasonably requested by the Purchaser, senior
management of the Company cooperate and assist the Purchaser in
obtaining waivers and consents from Lloyds TSB of any change of
control or other rights arising or resulting from Completion.
5.2 RESTRICTIONS ON THE SELLERS
Without prejudice to the generality of Clause 5.1, each Seller shall,
between the date of this Agreement and Completion, use all reasonable
endeavours to procure, that each Group Company shall not, except to the
extent expressly set forth in this Agreement to give effect to, and to
comply with, this Agreement or any other agreement to which both the
Company and the Purchaser is a party, without the prior written consent of
the Purchaser such consent not to be unreasonably withheld or delayed,
directly or indirectly:
5.2.1 incur or enter into any agreement or commitment involving any capital
expenditure in excess of L250,000 singly or together with other
capital expenditures exclusive of VAT, except as otherwise set out in
the Disclosure Letter;
5.2.2 save as permitted under Clause 5.2.1, enter into or amend any
contract not in the ordinary and usual course of business and which
either: (i) is not capable of being terminated by the Group Companies
in their sole discretion at any time with twelve months' notice or
less without compensation, penalty or premium; or (ii) involves total
expenditure in excess of L150,000, taken together with all other
contracts so entered into or amended;
5.2.3 permit or cause any Leakage except Permitted Deductions which shall
be repaid to the Company on Completion pursuant to Clause 3.1.8(i);
5.2.4 in relation to any Property:
(i) apply for any planning permission;
(ii) effect any change of use of such Property;
(iii) except as disclosed in the Disclosure Letter, terminate or serve
any notice to terminate, surrender or accept any surrender of or
waive the terms of any lease, tenancy or licence;
(iv) agree any new rent or fee payable under any lease, tenancy or
licence, provided that no such consent shall be required in
respect of any increase in rent payable in respect of any
Property pursuant to a rent review in
23
accordance with the terms of the existing lease or licence with
any unconnected third party;
(v) enter into or vary any agreement, lease, tenancy, licence or
other commitment; or
(vi) sell, convey, transfer, assign or charge any Property or grant
any rights or easements over any Property or enter into any
covenants affecting any Property or agree to do any of the
foregoing;
5.2.5 (i) incur any borrowings or any other indebtedness or request the
issue of any letter of credit in the aggregate in excess of L100,000
all of which shall be prepayable at any time without penalty or
premium; (ii) prepay any indebtedness prior to its scheduled maturity
or amend the terms governing any indebtedness; (iii) otherwise pay,
discharge or satisfy any claims, liabilities or obligations (whether
absolute, accrued, contingent or otherwise) except (in the case of
this sub-clause (iii) only but subject to the other terms of this
Agreement) in the ordinary course of business consistent with previous
practice;
5.2.6 except as required by law, contemplated by the term sheets referred
to in recital (D) or as disclosed in the Disclosure Letter:
(i) make any amendment (whether to take effect prior to, on or after
Completion) to the terms and conditions of employment of any
Employee, consultant or officer of any Group Company (including
as to remuneration, pension entitlements or other benefits) or
agree to provide any gratuitous payment or benefit to any such
person or any of his or her dependents; or
(ii) terminate or take any steps to terminate the contract of
employment of, or dismiss (constructively or otherwise), any
Employee, consultant or officer (except in accordance with normal
disciplinary procedures); or
(iii) engage or appoint any employee with a salary of L100,000 or more
per annum;
5.2.7 discontinue or amend the Company Pension Scheme or commence to wind
it up or communicate to any employee any plan, proposal or intention
to amend, wind up, terminate or exercise any discretion other than in
accordance with the terms of the documents governing, the Company
Pension Scheme;
5.2.8 amend the Staff Profit Share Plan or the Bonus Letters or, except as
disclosed in the Disclosure Letter, communicate to any employee any
plan, proposal or intention to amend, terminate or exercise any
discretion, or accelerate the payment of any amount deferred or
deferrable thereunder;
5.2.9 pay, or agree to pay, or accelerate the payment of:
(i) any gratuitous bonus; or
(ii) any benefits under the Company Pension Scheme, the Staff Profit
Share Plan or the Bonus Letters, each as in effect on the date of
this Agreement, or any other bonus arrangement other than
scheduled payments as required by the terms of the documents
governing such scheme, plan or bonus arrangement or other than as
disclosed in the Disclosure Letter;
24
5.2.10 introduce or seek to introduce any new pension scheme, profit share
plan or other bonus or incentive compensation arrangements or any
employee benefit plan or arrangements;
5.2.11 other than any acquisition, disposal or investment (or any agreement
to do any of the foregoing) in respect of the assets of Syndicate 1183
and alterations made to the investment portfolio containing the assets
of the Group comprising the Funds at Lloyd's arrangements, in each
case in accordance with the applicable investment management
guidelines and investment policies and guidelines, each as in effect
on the date of this Agreement and in the ordinary course of business,
acquire or agree to acquire or dispose of or agree to dispose of any
assets for amounts which when aggregated exceed L250,000, exclusive of
VAT;
5.2.12 amend any of the terms on which facilities or services which are
material to the Group are supplied, except where required to do so in
order to comply with any applicable legal or regulatory requirements
or in respect of the negotiations discussed in the disclosures against
paragraphs 2.5.2 and 2.21.3 of Schedule 4 in the Disclosure Letter;
5.2.13 save as required in connection with the Options Transactions,
create, allot, issue, reduce, redeem or repurchase any share or loan
capital (or option to subscribe for or right to acquire the same) of
any Group Company other than to another Group Company;
5.2.14 other than as disclosed in the Disclosure Letter or any acquisition,
disposal or investment (or any agreement to do any of the foregoing)
in respect of the assets of Syndicate 1183 and alterations made to the
investment portfolio containing the assets of the Group comprising the
Funds at Lloyd's arrangements, in each case in accordance with the
applicable investment management guidelines and investment policies
and guidelines, each as in effect on the date of this Agreement and in
the ordinary course of business, acquire or agree to acquire any
share, shares or other interest in any company, partnership or other
venture;
5.2.15 other than as disclosed in the Disclosure Letter, make any change to
its accounting practices or policies (except to the extent required to
comply with any changes after the date of the Agreement, in UK GAAP or
US GAAP as applicable) or amend its memorandum, articles of
association or byelaws (as applicable) except as required by law;
5.2.16 save for claims under inwards and outwards insurance and reinsurance
policies and broker and coverholder disputes in Syndicate 1183's
ordinary course of business, commence any litigation or arbitration
proceedings to which a Group Company is a party which are material
and/or involve a potential liability of L100,000 or more or settle any
such litigation or arbitration proceedings which were commenced prior
to the date of this Agreement;
5.2.17 make any change to the nature or organisation of its business;
5.2.18 discontinue or cease to operate all or any part of its business;
5.2.19 materially alter, amend, vary, cancel or commute any material
reinsurance arrangements to which any Group Company is a party;
25
5.2.20 make or change any tax election, file an amendment to any tax return
or settle or compromise any tax liability, except where required to do
so in order to comply with any applicable legal or regulatory
requirement;
5.2.21 enter into any transaction with or for the benefit of any of its
directors or any other person who is connected with any of its
directors (within the meaning of section 839 of the Income and
Corporation Taxes Act 1988) other than on normal arm's length terms;
5.2.22 appoint new auditors;
5.2.23 fail to deal with customer information as required by applicable law
or contract or fail to maintain proprietary information consistent
with, and on the same basis as, past practice;
5.2.24 fail to keep accounting records on a basis consistent with
applicable law and past practice;
5.2.25 save for ex gratia payments arising in the ordinary course of
business of Syndicate 1183, make any ex gratia payments;
5.2.26 save as disclosed in the Disclosure Letter, change the investment
managers appointed by any Group Company or alter or amend or deviate
from the investment policy, guidelines or criteria of the Group
Companies as in effect on the date of this Agreement;
5.2.27 alter or amend its line structure or write any new classes of
business (in each case from those disclosed in the Data Room) which
would be material to the Group; or
5.2.28 authorise any of, or agree to take or cause any of, the foregoing
actions.
5.3 TERMINATION
5.3.1 The Purchaser shall be entitled by notice in writing to the Sellers
to terminate this Agreement (other than Clauses 1, 10.3,10.10,10.14,
10.17 and 10.18) if prior to the Earliest Completion Date a Material
Adverse Event has occurred and is continuing at the date such notice
is served provided that the Purchaser cannot terminate this Agreement
pursuant to this Clause 5.3.1 in respect of a Material Adverse Event
that has a Cure Period until such period has expired without the
Material Adverse Event being remedied.
5.3.2 For the avoidance of doubt, the Purchaser's right of termination
under Clause 5.3.1 shall terminate and cease to have any further
effect on the Earliest Completion Date, whether or not Completion
shall occur on that date.
5.3.3 Any failure by the Purchaser to exercise its right to terminate this
Agreement under this Clause 5.3 shall not constitute a waiver of any
other rights of the Purchaser under this Agreement arising out of any
breach of any Warranty or Clauses 5.1 or 5.2.
5.4 OTHER RELEVANT SELLERS' OBLIGATIONS PRIOR TO COMPLETION
5.4.1 Without prejudice to the generality of Clauses 5.1 and 5.2, prior to
Completion each Seller shall use reasonable endeavours to procure that
the Group Companies shall:
26
(i) allow the Purchaser and its agents (including legal advisers,
auditors, financial advisers and actuaries), upon reasonable
notice, reasonable access to, and to take copies of, the books,
records and documents of or relating in whole or in part to the
Group, provided that the obligations of the Sellers under this
Clause 5.4.1(i) shall not extend to allowing access to
information which would compromise litigation privilege or which
might compromise privilege in respect of future litigation or
which is reasonably regarded as confidential to the activities of
the Sellers otherwise than in relation to the Group Companies ;
and
(ii) (a) maintain their respective books and records in all material
respects in the same manner and with the same degree of care that
such books and records have been maintained prior to the date of
this Agreement and in accordance with all applicable laws and
Lloyd's requirements; and (b) provide to the Purchaser, if
requested, promptly after they become available, all statutory or
other similar statements and reports filed with any Relevant
Regulator, including all such statements and reports required by
Lloyd's, and all such statements shall be prepared on a basis
consistent with previous practice and in accordance with the
regulations applicable thereto; and (c) allow the Purchaser to
appoint an observer to attend any board meetings of any Group
Company or any meetings of the audit, remuneration, independent
review or investment committees of the board of any Group Company
and provide at least 48 hours notice of, and the agenda relating
to, the same.
5.4.2 Prior to Completion, none of the Warrantors will knowingly and
deliberately take any action which they could reasonably have avoided
or prevented that would or is reasonably likely to result in any of
the Warranties ceasing to be true (whether or not such Warranty is
required to be reaffirmed at any time after the date of this
Agreement).
5.5 NORMAL COURSE PAYMENTS
For the avoidance of doubt, nothing in any of the foregoing provisions of
this Clause 5 or any other provision of this Agreement shall restrict the
ability of any Group Company (without the need to obtain the Purchaser's
consent) to make payments or accruals or to accrue liabilities in the
ordinary course of business as carried on at the date of this Agreement,
which shall include:
5.5.1 payments or accruals required by contract or by law or regulation in
respect of the Group's Capital Stack (including all applicable
interest payments);
5.5.2 payments or accruals of the Accrued Preference Dividend;
5.5.3 Permitted Leakage; and
5.5.4 Permitted Deductions, and to the extent such payments constitute
Leakage they shall be repaid to the Company on Completion pursuant to
Clause 3.1.8(i).
5.6 RESTRICTIVE COVENANTS
5.6.1 Each Seller which is a body corporate shall not (and undertakes to
procure that no person controlled by it shall), and each Seller that
is not a body corporate
27
undertakes that he/she shall not, either directly or indirectly and
either alone or in conjunction with or on behalf of any other person
(whether on his/her/its own account or as a principal, partner,
shareholder, director, employee, consultant, agent or in any other
capacity whatsoever):
(i) either pending or within two years after Completion, solicit,
induce or endeavour to entice to leave the service or the
employment of any member of the Group, any Senior Employee with
whom that Seller had dealings in the 12 months prior to
Completion (whether or not such Senior Employee would breach
their contract of employment or engagement by reason of leaving
the service of the business in which they work) provided,
however, that the foregoing will not prohibit any Seller from (i)
making generalised searches for employees by the use of
advertisements in the media (including trade media) or by
engaging search firms to engage in searches that are not targeted
or focused on any Senior Employee; or (ii) hiring any person
whose employment has been terminated by the Purchaser's Group or
any Group Company on or after Completion; and/or
(ii) without limitation to the provisions of this Clause 5.6 and
without limitation in time, use any trade or business or domain
name or e-mail address or distinctive xxxx, style or logo used by
or in the business of any member of the Group at any time during
the two years before Completion or anything intended or likely to
be confused with the same, except to the extent relevant to
ongoing employment with any Group Company or the Purchaser's
Group.
5.6.2 Each undertaking contained in Clause 5.6.1 shall be construed as a
separate and severable undertaking and if one or more of the
undertakings is held to be against the public interest or unlawful or
in any way an unreasonable restraint of trade or unenforceable in
whole or in part for any reason, the remaining undertakings or parts
thereof, as appropriate, shall continue to bind the Sellers with such
deletion or modification as may be necessary to make it valid and
enforceable.
5.6.3 The Sellers agree that the undertakings contained in Clause 5.6.1 are
reasonable and are entered into for the purpose of protecting the
goodwill and confidential information of the business of each Group
Company and that accordingly the benefit of the undertakings in Clause
5.6.1 may be assigned by the Purchaser and its successors in title
without the consent of the Sellers.
6 COMPLETION
6.1 DATE AND PLACE
Completion shall take place at the offices of the Sellers' Solicitors or at
such other place as may reasonably be agreed between the Purchaser and the
Sellers two Business Days following fulfilment of the Conditions Precedent
or on such other date as may be agreed between the Purchaser and the
Sellers.
28
6.2 OBLIGATIONS ON COMPLETION
On Completion the Sellers and the Purchaser shall each procure that their
obligations specified in Schedule 3 are fulfilled.
6.3 PAYMENT OF PRICE
Against compliance with the foregoing provisions the Purchaser shall pay
the Consideration to the Sellers in accordance with the provisions of
Clause 3.1.
6.4 RIGHT TO TERMINATE
If the foregoing provisions of this Clause 6 are not complied with in any
material respect by either the Sellers or the Purchaser to the reasonable
satisfaction of the other by or on the date set for Completion, the
non-defaulting party shall be entitled (in addition to and without
prejudice to all other rights or remedies available to it including the
right to claim damages) by written notice to the defaulting party served on
such date:
6.4.1 to elect to terminate this Agreement without liability on the part of
the non-defaulting party; or
6.4.2 to effect Completion so far as practicable having regard to the
defaults which have occurred; or
6.4.3 to fix a new date for Completion (not being more than 20 Business
Days after the agreed date for Completion) in which case the foregoing
provisions of this Clause 6 shall apply to Completion as so deferred.
7 LEAKAGE
7.1.1 In the event of any Leakage which constitutes a breach of Clause
5.2.3 or the warranty set out in paragraph 2.15.3 of Schedule 4, the
only person(s) who shall be liable for such breach shall be the
Seller(s) who (or whose connected persons) received such Leakage and
in such instance:
(i) prior to Completion, the Purchaser may (at its election) either (a)
deduct an amount equal to such Leakage received by that Seller(s) (or
his/her/its connected persons) from the Consideration due to that
Seller and his/her/its Net Cash Consideration shall be reduced
accordingly or (b) recover such Leakage in accordance with sub-clause
(ii) below; and
(ii) after Completion, the Seller who received any Leakage (either directly
or through his/her/its connected persons) shall pay, on demand, to the
Company (or such Group Company as the Purchaser may direct) an amount
of cash equal to the Leakage received by him/her/it or his/her/its
connected persons.
7.1.2 No later than two Business Days prior to Completion, there shall be
delivered to the Purchaser a statement (in such form as shall be
agreed between the Purchaser and the Sellers, acting reasonably)
providing details of any Leakage which has occurred between the
Accounts Date and the date of Completion, together with details of any
payments made or to be made or costs incurred or to be incurred by any
Group Company between the Accounts Date and the date of Completion
under sub-paragraphs (j), (k), (l) and (o) of the definition of
Permitted Leakage.
29
8 WARRANTIES
8.1 INCORPORATION OF SCHEDULE 4
8.1.1 Each Seller warrants to the Purchaser in the terms set out in
paragraph 1 of Schedule 4, each Warrantor warrants to the Purchaser in
the terms set out in paragraph 2 of Schedule 4 and in each case
subject to:
(i) the matters referred to in Clause 8.2;
(ii) any matter or thing hereafter done or omitted to be done pursuant
to and in accordance with this Agreement or otherwise at the
request in writing or with the approval in writing of the
Purchaser; and
(iii) the limitations of liability set out in Schedule 5.
Each Employee Seller warrants to the Purchaser in the terms set out in
paragraph 3 of Schedule 4.
8.1.2 Each Seller (as to the Warranties set out in paragraph 1 of Schedule
4 only) and Warrantor (as to the Warranties set out in paragraph 2 of
Schedule 4) acknowledges that the Purchaser has entered into this
Agreement in reliance upon the Warranties given by him/her/it. Save as
expressly otherwise provided, the Warranties shall be separate and
independent and shall not be limited by reference to any other
paragraph of the said Schedule or by anything in this Agreement.
8.1.3 Any statement qualified by the expression "so far as the Warrantors
are aware", "to the Warrantors' knowledge, information and belief",
"known to the Warrantors" or any similar expression shall be deemed to
refer only to matters within the actual knowledge of the Warrantors
having made due and careful enquiries of each other.
8.1.4 Each of the Sellers agrees and undertakes that (in the absence of
fraud) he/she/it has no rights against and shall not make any claim
against any Employee, director, agent or officer of any Group Company
on whom he/she/it may have relied or from whom he/she/it requested
information or assistance in respect of giving the Warranties,
preparing the Disclosure Letter or agreeing to any other term of this
Agreement or any other agreement or documents entered into pursuant to
this Agreement.
8.2 SELLERS' DISCLOSURES
8.2.1
(i) The Warranties, other than the Core Warranties, are subject to
the following matters:
(a) any matter which is fairly disclosed in this Agreement, the
Disclosure Letter or in any of the documents listed in the
Data Room Index; and
(b) all matters fairly disclosed in the Due Diligence Reports.
For the avoidance of doubt any disclaimers or limitations of
liability included in the Due Diligence Reports will not
constitute fair disclosure.
(ii) The Core Warranties are subject only to matters fairly disclosed
in the Disclosure Letter.
30
8.2.2 References in the Disclosure Letter to paragraph numbers shall be to
paragraph numbers in Schedule 4 to which the disclosure is most likely
to relate. Such references are given for convenience only and shall
not limit the effect of any of the disclosures, all of which are made
against the Warranties as a whole. Information set out in the
Disclosure Letter is included solely to qualify the Warranties, is not
an admission of liability with respect to the matters covered by the
information, is not warranted in any respect whatsoever and may not be
required to be disclosed pursuant to this Agreement. The inclusion of
any specific item or amount in the Disclosure Letter is not intended
to imply that such item or amount (or higher or lower amounts) is or
is not material, and no party shall use the fact of the inclusion of
any such item or amount in the Disclosure Letter in any dispute as to
whether any obligation, item, amount or matter not described therein
is or is not material for the purposes of this Agreement.
8.2.3 References to matters being "FAIRLY DISCLOSED" means to matters
fairly disclosed with sufficient detail to identify the nature and
scope of the same and to provide an understanding of the matters and
their effects.
8.3 EFFECT OF COMPLETION
The Warranties and, insofar as the same shall not have been performed at
Completion, all other provisions of this Agreement shall not be
extinguished or affected by Completion, or by any other event or matter
whatsoever (including any satisfaction of the Conditions Precedent), except
by a specific and duly authorised written waiver or release by the
Purchaser (in the case of the Warranties) and the beneficiary of such
provision (in the case of any other provision of this Agreement).
8.4 WARRANTIES BY THE PURCHASER
The Purchaser warrants to the Sellers in the following terms:
8.4.1 the Purchaser has the requisite corporate power and authority to
enter into and perform this Agreement;
8.4.2 this Agreement will, when executed by the Purchaser, constitute a
valid and binding obligation on the Purchaser enforceable in
accordance with its terms subject with respect to enforceability to
the effect of bankruptcy, insolvency, reorganisation, moratorium or
similar laws now or hereafter affecting the enforcement of creditors'
rights generally and to the availability of equitable remedies; and
8.4.3 except for the consents of the Relevant Regulators specified in the
Conditions Precedent, no consent, approval, authorisation or order of
any court or government or local agency or body or any other person is
required by the Purchaser for the execution or implementation of this
Agreement and compliance with the terms of this Agreement.
31
9 WHOLE AGREEMENT AND REMEDIES
9.1 WHOLE AGREEMENT
This Agreement contains the whole agreement between the parties relating to
the subject matter of this Agreement at the date hereof to the exclusion of
any terms implied by law which may be excluded by contract and supersedes
any previous written or oral agreement between the parties in relation to
the matters dealt with in this Agreement.
9.2 ACKNOWLEDGEMENT
9.2.1 The Purchaser acknowledges and agrees (in the absence of fraud or
wilful default) that it has not been induced to enter into this
Agreement by any representation, warranty or undertaking not expressly
incorporated into this Agreement.
9.2.2 Without prejudice to Clauses 6.4, 9.1, 9.2.1 and 10.3, the Purchaser
agrees and undertakes that (in the absence of fraud) it has no rights
against and shall not make any claim, in each case with respect to the
terms of this Agreement and the purchase of the Shares, against any
employee, director, agent, officer (other than any Seller solely in
respect of his/her/its Warranties and other obligations of that Seller
hereunder, but subject to the terms of this Agreement) of any Group
Company or of any Seller on whom it may have relied solely in
connection with its decision to enter into this Agreement and any
other agreement or document entered into pursuant to this Agreement.
9.3 REMEDIES
So far as permitted by law and except in the case of fraud or wilful
default or as otherwise expressly set out in this Agreement, each party
agrees and acknowledges that its only right and remedy in relation to any
representation, warranty or undertaking made or given in connection with
this Agreement or any other breach of this Agreement shall be for damages
for breach of the terms of this Agreement against the person who breached
the terms in question to the exclusion of all other rights and remedies
(including those in tort or arising under statute or any right of
termination or rescission). Notwithstanding the foregoing, in the event of
any breach of Clauses 5.6, 10.3 or 10.9, the Purchaser shall be entitled to
seek an injunction or specific performance as relevant.
9.4 REASONABLENESS OF THIS CLAUSE
Each party to this Agreement confirms it has received independent legal
advice relating to all the matters provided for in this Agreement,
including the provisions of this Clause, and agrees, having considered the
terms of this Clause and the Agreement as a whole, that the provisions of
this Clause are fair and reasonable.
9.5 INTERPRETATION
In Clauses 8.4, 9.1 and 9.4, "THIS AGREEMENT" includes the Disclosure
Letter, the Confidentiality Agreement, and all documents entered into
pursuant to this Agreement.
32
10 OTHER PROVISIONS
10.1 LIMITATIONS ON SELLERS' LIABILITY
No liability shall attach to any Seller or Warrantor in respect of any
claims under a Warranty or any other provision of this Agreement other than
the covenants set out in Clauses 5.1, 5.2, 5.6 and 7 to the extent that a
limitation set out in Schedule 5 applies. Each provision of Schedule 5
shall be read and construed without prejudice to each of the other
provisions of Schedule 5.
10.2 ANNOUNCEMENTS
No announcement or circular in connection with the existence or the subject
matter of this Agreement shall be made or issued by or on behalf of the
Sellers or the Purchaser without the prior written approval of the Sellers
and the Purchaser (such approval not to be unreasonably withheld or
delayed). This shall not affect any announcement or circular which, in the
judgement of the party (acting reasonably) making the announcement or
releasing the circular, is required by law or any regulatory body or the
rules of any recognised stock exchange or is otherwise determined by such
person (acting reasonably) to be required to be made in a registration
statement filed with the Securities and Exchange Commission provided that a
copy of such announcement or circular shall, after making such announcement
or sending such circular, be provided to each of the people listed in
Clause 10.5. For the purpose of this Clause 10.2 the press releases agreed
between the parties relating to the announcement of the transaction
contemplated by this Agreement shall not require any further approval.
10.3 CONFIDENTIALITY
10.3.1 This Clause 10.3 shall be without prejudice to the Confidentiality
Agreement, which agreement shall continue notwithstanding Completion.
In the event of any conflict between the Confidentiality Agreement and
this Clause 10.3 this Clause shall prevail.
10.3.2 Subject to Clause 10.3.4, each of the Sellers shall treat (and
procure that its connected persons treat) as confidential and not
disclose or use any information received or obtained as a result of
entering into this Agreement (or any agreement entered into pursuant
to this Agreement) which relates to:
(i) the provisions of this Agreement and any agreement entered into
pursuant to this Agreement;
(ii) the negotiations relating to this Agreement (and such other
agreements); or
(iii) the Purchaser's Group or any Group Company's business, financial
or other affairs (including the business, financial or other
affairs of the Group Companies and including, in each case,
future plans and targets).
10.3.3 Subject to Clause 10.3.4, the Purchaser shall treat (and procure
that its connected persons treat) as confidential and not disclose or
use any information received or obtained as a result of entering into
this Agreement (or any agreement entered into pursuant to this
Agreement) which relates to:
33
(i) the provisions of this Agreement and any agreement entered into
pursuant to this Agreement;
(ii) the negotiations relating to this Agreement (and such other
agreements); or
(iii) any Seller's business, financial or other affairs (including
future plans and targets).
10.3.4 Neither Clause 10.3.2 nor 10.3.3 shall prohibit disclosure or use of
any information if and to the extent:
(i) the disclosure or use is, in the judgement of the party (acting
reasonably) disclosing or using any such information, required by
law, any regulatory body or the rules and regulations of any
recognised stock exchange or is otherwise determined by such
person acting reasonably to be required or needed to be made in a
registration statement filed with the Securities and Exchange
Commission or is required or needed in connection with
discussions with any rating or similar agency;
(ii) the disclosure or use is required to vest the full benefit of
this Agreement in any of the Sellers or the Purchaser, as the
case may be;
(iii) the disclosure or use is required for the purpose of any
judicial proceedings arising out of this Agreement or any other
agreement entered into under or pursuant to this Agreement or the
disclosure is reasonably required to be made to a Taxation
Authority in connection with the Taxation affairs of the
disclosing party;
(iv) the disclosure is made to professional advisers of the Purchaser
or any of the Sellers on terms that such professional advisers
undertake to comply with the provisions of Clause 10.3.2 or
10.3.3 in respect of such information as if they were a party to
this Agreement;
(v) the disclosure is made by the Purchaser to its directors,
shareholders or capital providers;
(vi) the disclosure is made by any Institutional Seller to:
(a) any general partner, limited partner, trustee, nominee or
manager of, any Institutional Seller or to any group
undertaking of any Institutional Seller, or any investor or
potential investor in any of them; or
(b) any employee or officer of any Institutional Seller;
(vii) the information is or becomes publicly available (other than by
breach of the Confidentiality Agreement or of this Agreement);
(viii) the other party has given prior written approval to the
disclosure or use; or
(ix) the information is independently developed after Completion,
provided that prior to disclosure or use of any information pursuant
to Clause 10.3.4(i) or (iii) (except in the case of disclosure to a
Taxation Authority or a registration statement or other filing filed
with the Securities and Exchange Commission or a disclosure to any
stock exchange, rating or similar agency or capital provider), the
party concerned shall promptly notify the other party of such
34
requirement with a view to providing the other party with a reasonable
opportunity to agree the content of such disclosure or use. In
relation to a registration statement or other filing filed with the
Securities and Exchange Commission or a disclosure to any stock
exchange, rating or similar agency or capital provider, a copy of such
statement or other filing shall, after filing or making such statement
or other filing, be provided to each of the people listed in Clause
10.5.
10.4 SUCCESSORS AND ASSIGNS
10.4.1 Subject to Clause 10.4.2, this Agreement is personal to the parties
to it. Accordingly, neither the Purchaser nor the Sellers may assign,
hold on trust or otherwise transfer the benefit of all or any of the
other's obligations under this Agreement, or any benefit arising under
or out of this Agreement nor shall the Purchaser be entitled to make
any claim against the Sellers in respect of any loss which it does not
suffer in its own capacity as beneficial owner of the Shares except as
contemplated by Clause 10.4.2.
10.4.2 Subject to Clause 10.4.3 and except as otherwise expressly provided
in this Agreement, either the Sellers or the Purchaser may, without
the consent of the other, assign to a connected company the benefit of
all or any of the other party's obligations under this Agreement,
provided, however, that such assignment shall not be absolute but
shall be expressed to have effect only for so long as the assignee
remains a connected company and that immediately before ceasing to be
a connected company, the assignee shall assign the benefit to a
connected company of the party concerned. For the purposes of this
sub-clause a connected company is a company which is a subsidiary of
the party concerned or which is a holding company of such party or a
subsidiary of such holding company.
10.4.3 In no circumstances shall the liability of a party under this
Agreement to an assignee be greater than it would have been in if no
assignment had been made.
10.5 ACTION BY THE SELLERS
Where this Agreement or any other documents, agreements or arrangements
contemplated hereby or delivered in connection herewith provides or
requires consent, approval or agreement to be obtained from the Sellers (or
any relevant group of them), such provision or requirement will be
satisfied by obtaining the approval and agreement of the following people:
10.5.1 MEA Xxxxxxxxx and CNR Xxxxx jointly in respect of the Employee
Sellers, PC Xxxxxxxxx, XX Xxxxxxxxxx, XX Redhead, the Ashdown Trust,
the Dynevor Trust and the Rams Hill Trust;
10.5.2 Xxxxx Xxxxxx in respect of the Non-Employee Sellers holding Common
Shares;
10.5.3 Xxx Xxxxx in respect of the Non-Employee Sellers holding A
Preference Shares (other than those referred to in Clause 10.5.1); and
10.5.4 Xxxxx Xxxx in respect of the Non-Employee Sellers holding B
Preference Shares,
and all of the parties to this Agreement shall be entitled to rely on any
consent, approval or agreement of the people listed in 10.5.1 to 10.5.4
above as the consent, approval or agreement of all of the Employee Sellers
and/or Non-Employee Sellers, as the case may
35
be, (or any relevant group of them) for the purposes of this Agreement
without further enquiry.
10.6 THIRD PARTY RIGHTS
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 to enforce any term of this
Agreement.
10.7 VARIATION
No variation of this Agreement shall be effective unless in writing and
signed by or on behalf of each of the Purchaser and the Sellers. Any
amendment to this Agreement which disproportionately affects any one or
more of the Sellers shall require the specific consent of such Seller(s).
10.8 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement both as regards any dates
and periods mentioned and as regards any dates and periods which may be
substituted for them in accordance with this Agreement or by agreement in
writing between the parties.
10.9 FURTHER ASSURANCE
At any time after the date of this Agreement, each Seller shall and shall
use all reasonable endeavours to procure that any necessary third party
shall execute such documents and do such acts and things as the Purchaser
may reasonably require for the purpose of vesting title to the Shares in
the Purchaser.
10.10 COSTS
Except for the amount referred to in sub-paragraph (m) of the definition of
Leakage in Clause 1.1, the Sellers (and, for the avoidance of doubt, not
any Group Company) shall bear all costs incurred by them in connection with
the preparation negotiation and entering into this Agreement and the sale
of the Shares, including the preparation of the Due Diligence Reports. The
Purchaser shall bear all such costs incurred by it.
10.11 METHOD OF PAYMENT
Wherever in this Agreement provision is made for the payment by one party
to the other, such payment shall be effected by crediting for same day
value the account specified by the payee to the payer reasonably in advance
and in sufficient detail (including name, account number, sort code and
account location) to enable payment by telegraphic or other electronic
means to be effected on or before the due date for payment.
10.12 STAMP DUTY, FEES AND TAXES
The Purchaser shall bear the cost of all UK, Bermuda, US and Cayman Island
stamp duty and registration and transfer taxes payable as a result of the
acquisition by the Purchaser of the Shares.
36
10.13 INTEREST
If any Seller or the Purchaser defaults in the payment when due of any sum
payable under this Agreement (howsoever determined), the liability of the
relevant Seller or the Purchaser (as the case may be) shall be increased to
include interest on such sum from the date when such payment is due until
the date of actual payment (as well after as before judgment) at the
Interest Rate. Such interest shall accrue from day to day.
10.14 NOTICES
10.14.1 Any notice, claim or demand in connection with this Agreement shall
be in writing in English (a "NOTICE") and shall be sufficiently given
or served if delivered or sent:
In the case of any of the Sellers: To the address shown next to their name in
Schedule 1 provided that, for the purposes
of Clauses 5.3, 10.2 and 10.3.4 only,
delivery by the Purchaser of any such
notice, claim or demand to the people
listed in 10.5.1 to 10.5.4 above at their
respective addresses shall be deemed to be
delivery of such notice, claim or demand to
all Employee Sellers and/or Non Employee
Sellers, as the case may be, (or any
relevant group of them) for the purposes of
this Agreement
In the case of the Purchaser: Validus Holdings, Ltd.
00 Xxx-Xx-Xxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx,
Xxxxxxxxx: Chief Financial Officer and
General Counsel
(Facsimile: (000) 000-0000)
with copies to:
Xxxxxxx Xxxxxxx
One Xxxxxx Xxxx
Xxxxxx XX0X 0XX
Attention: Xxxxxxx Xxxxxxx and
Xxxxxxx Xxxxxxx
Reference: RXS/AKK/01143617
(Facsimile: x00 (0)00 0000 0000)
Xxxxxx Xxxxxx & Xxxxxxx LLP
00 Xxxx Xx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq. and
Xxxxxxxxxxx X. Xxx, Esq.
(Facsimile: (000) 000-0000)
or (in any of the above cases) to such other address or fax number in
the United Kingdom as the relevant party may have notified to the
other in accordance with this Clause.
37
10.14.2 Any Notice may be delivered by hand or sent by fax or prepaid post
(first class in the case of service in the United Kingdom and airmail
in the case of international service). Notices may not be sent by
email. Without prejudice to the foregoing, any Notice shall
conclusively be deemed to have been received on the next working day
in the place to which it is sent, if sent by fax (provided no notice
of non-delivery or non-receipt has been received by the sender), or 48
hours from the time of posting (if sent by first class post to an
address in the United Kingdom) or 96 hours from the time of posting
(if sent by post to an address outside of the United Kingdom), or at
the time of delivery, if delivered by hand.
10.15 INVALIDITY
If any term in this Agreement shall be held to be illegal, invalid or
unenforceable, in whole or in part, under any enactment or rule of law,
such term or part shall to that extent be deemed not to form part of this
Agreement, but the legality, validity or enforceability of the remainder of
this Agreement shall not be affected.
10.16 COUNTERPARTS
This Agreement may be entered into in any number of counterparts, all of
which taken together shall constitute one and the same instrument. Any
party may enter into this Agreement by executing any such counterpart.
10.17 GOVERNING LAW AND SUBMISSION TO JURISDICTION
10.17.1 This Agreement and the documents to be entered into pursuant to it
shall be governed by and construed in accordance with English law.
10.17.2 All the parties irrevocably agree that the courts of England are to
have exclusive jurisdiction to settle any dispute which may arise out
of or in connection with this Agreement and the documents to be
entered into pursuant to it. All the parties irrevocably submit to the
jurisdiction of such courts and waive any objection to proceedings in
any such court on the ground of venue or on the ground that
proceedings have been brought in an inconvenient forum.
10.18 APPOINTMENT OF PROCESS AGENT
10.18.1 Each of OGF III (Caymans 1), L.P., OGF IV (Caymans 1), L.P. and
Olympus Executive Fund, L.P. irrevocably appoints Hackwood Secretaries
Limited at its registered office for the time being, (being at the
date hereof at Xxx Xxxx Xxxxxx, Xxxxxx XX0X 0XX) as its agent to
accept service of process in England and Wales in any legal action or
proceedings arising out of or in connection with this Agreement,
service upon which shall be deemed completed whether or not forwarded
to or received by the other parties.
10.18.2 Each of Reservoir Capital Partners and Reservoir Master Fund
irrevocably appoints Ashurst (attention Xxxx Xxxxxxx/Xxxxx Er) of
Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX as its agent to
accept service of process in England and Wales in any legal action or
proceedings arising out of or in connection with this Agreement,
service upon whom shall be deemed completed whether or not forwarded
to or received by the other parties.
38
10.18.3 Each of the US Sellers irrevocably appoints Xxxx Xxxxx Xxxxxxxx
Xxxxxx LLP of Xxxxxxx Xxxxx, 0 Xxxxxxxx Xxxxx, Xxxxxx XX0 0XX or any
successor firm as his/her/its agent to accept service of process in
England and Wales in any legal action or proceedings arising out of or
in connection with this Agreement, service upon which shall be deemed
completed whether or not forwarded to or received by the other
parties.
10.18.4 Intermediate Capital GP Limited irrevocably appoints Intermediate
Capital Investments Limited at its registered office for the time
being, (being at the date hereof at 00 Xxx Xxxxx Xxxxxx, Xxxxxx XX0X
0XX) as its agent to accept service of process in England and Wales in
any legal action or proceedings arising out of or in connection with
this Agreement, service upon which shall be deemed completed whether
or not forwarded to or received by the other parties.
10.18.5 Codan irrevocably appoints Hackwood Secretaries Limited at its
registered office for the time being, (being at the date hereof at Xxx
Xxxx Xxxxxx, Xxxxxx XX0X 0XX) as its agent to accept service of
process in England and Wales in any legal action or proceedings
arising out of or in connection with this Agreement, service upon whom
shall be deemed completed whether or not forwarded to or received by
the other parties.
10.18.6 The Purchaser hereby irrevocably appoints Xxxxxx Secretaries
Limited of One Xxxxxx Xxxx, Xxxxxx XX0X 0XX as its agent to accept
service of process in England in any legal action or proceedings
arising out of this Agreement, service upon whom shall be deemed
completed whether or not forwarded to or received by the Purchaser.
10.18.7 Each party that has a process agent appointed agrees to inform the
other parties, in writing, of any change in the address of such
process agent within 28 days.
10.18.8 If such process agent ceases to be able to act as such or to have
an address in England, each of the parties irrevocably agrees to
appoint a new process agent in England acceptable to the other parties
and to deliver to the other parties within 14 days a copy of a written
acceptance of appointment by the process agent.
10.18.9 Nothing in this Agreement shall affect the right to serve process
in any other manner permitted by law or the right to bring proceedings
in any other jurisdiction for the purposes of the enforcement or
execution of any judgement or other settlement in any other courts.
10.19 SHARE AWARDS
Validus undertakes to the Employee Sellers to comply with the terms set out
in Annex A of its offer letter dated 18 April 2007 in respect of the issue
of US$15,000,000.00 of Validus Common Shares to Employees in accordance
with the terms of that Annex A (subject to such amendments as may be agreed
between Validus and the Employee Sellers) (the "SHARE AWARDS"). The
allocations of Share Awards that have already been provided for in the term
sheets referred to in Recital (D) shall form part of the US$15,000,000.00
of Validus Common Shares referred to above.
39
IN WITNESS whereof this Agreement has been duly executed.
SIGNED by VALIDUS HOLDINGS, LTD.: )
)
)
)
SIGNED by MEA XXXXXXXXX: )
)
)
)
SIGNED by CNR XXXXX: )
)
)
)
SIGNED by ND XXXXXXX: )
)
)
)
SIGNED by GAM BONVARLET: )
)
)
)
SIGNED by NJ XXXXX: )
)
)
)
SIGNED by XX XXXXXXX: )
)
)
)
SIGNED by XX XXXXXXXX: )
)
)
)
SIGNED by XX XXXX: )
)
)
)
40
SIGNED by RI XXXXXXXX: )
)
)
)
SIGNED by MEA Xxxxxxxxx as )
attorney for the following: WM )
ABSOLOM, M XXXXXXXX, J XXXXXXX, )
SEH XXXX, XX XXXXXXXX, XX )
BOULTWOOD, XX XXXXX, S XXXXXXXXX, )
XX XXXXX, XX XXXXXX, XX XXXXXX, )
XX XXXXXXX, PC XXXXXXXX, A XXXXX, )
XX XXXXXX, P XXXXXXX, N XXXXXX, S )
HOUSE, X XXXXXX, A XXXXXX, XX )
XXXXX, M XXXXX XX XXXXXX, SJ )
MORRITT, XX XXXXXX, N XXXXX, DI )
XXXXXX, A WEST, XX XXXXX AND JC )
XXXXXXXX )
SIGNED by C.N. Xxxxxx Xxxxx as )
attorney for the following: M )
XXXXXX, R XXXX, G XXXXX, J )
XXXXXXXX, XX XXXXXXXX, XX )
XXXXXXX, XX XXXXXX, XX XXXXX, R )
XXXXXX, C KOSTIS, JAJA XXXXXXXX, )
M PERRY, XX XXXXXXX, S XXXXXXX )
AND XX XXXXXXXXXX )
SIGNED by RI Xxxxxxxx as attorney )
for the following: G XXXXXXXX, LE )
XXXXXX, PC XXXXXXXXX )
AND XXXXXX REDHEAD )
41
SIGNED by Xxxxx AS Xxxxxxx on )
behalf of Codan Trust Company )
Limited in its capacity as )
trustee of the ASHDOWN TRUST )
(BEING A TRUST OF CNR XXXXX & )
FAMILY) )
SIGNED by Xxxxx AS Xxxxxxx on )
behalf of Codan Trust Company )
Limited in its capacity as )
trustee of the DYNEVOR TRUST )
(BEING A TRUST OF MEA XXXXXXXXX & )
FAMILY) )
SIGNED by Xxxxx AS Xxxxxxx on )
behalf of Codan Trust Company )
Limited in its capacity as )
trustee of the RAMS HILL TRUST )
(BEING A TRUST OF XX XXXXXXX & )
FAMILY) )
42
SIGNED by HE XXXXXX )
)
)
)
SIGNED by HE XXXXXX )
in her capacity as trustee of )
HE XXXXXX IRREVOCABLE TRUST 1 )
)
SIGNED by HE XXXXXX )
in her capacity as trustee of HE )
XXXXXX IRREVOCABLE TRUST 2 )
)
SIGNED by J XXXXXXXX )
)
)
)
SIGNED by J XXXXXXXX ON BEHALF OF )
JPS & CO. LLC )
)
SIGNED by XX XXXXX )
)
)
)
SIGNED by XX XXXXX )
)
)
)
SIGNED by XX XXXXXXX )
)
)
)
43
SIGNED by XX XXXXX )
)
)
)
SIGNED by Xxxxxx Xxxxxx on behalf )
of INTER ATLANTIC ADVISERS LTD, )
the general partner of )
INTER-ATLANTIC FUND, LP. )
44
SIGNED by Xxxxx X. Xxxxx on )
behalf of OGF III (Caymans) Ltd, )
a general partner, on behalf of )
OGF III (CAYMANS 1), L.P. )
SIGNED by Xxxxx X. Xxxxx on )
behalf of OGF IV (Caymans Ltd), a )
general partner, on behalf of OGF )
IV (CAYMANS 1), L.P. )
SIGNED by Xxxxx X. Xxxxxx, acting )
by JAC, L.L.C. on behalf of OEF, )
L.P., a general partner, on )
behalf of OLYMPUS EXECUTIVE FUND, )
L.P. )
45
SIGNED by Xxxxx Xxxx being a )
person who in accordance with the )
law of Delaware, United States of )
America is acting under the )
authority of Reservoir Capital )
Group, L.L.C. as general partner )
of RESERVOIR CAPITAL PARTNERS, )
L.P. AND RCP GP, LLC AS GENERAL )
PARTNER OF RESERVOIR CAPITAL )
MASTER FUND, L.P. )
46
SIGNED by MEA Xxxxxxxxx as )
attorney for INTERMEDIATE CAPITAL )
GP LIMITED )
)
SIGNED by MEA Xxxxxxxxx as )
attorney for INTERMEDIATE CAPITAL )
INVESTMENTS LIMITED )
)
47
SCHEDULE 1
PARTICULARS OF SELLERS, SHARES SOLD ETC
48
SCHEDULE 2
PARTICULARS OF THE COMPANY AND SUBSIDIARIES
PART 1
PARTICULARS OF THE COMPANY
TALBOT HOLDINGS LTD
REGISTERED NUMBER: 31149
REGISTERED OFFICE: Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx, XX00, Xxxxxxx
DATE AND PLACE OF INCORPORATION: 15 October 2001, Bermuda
DIRECTORS: CNR Xxxxx
MEA Xxxxxxxxx
GB Xxxxxx
HE Xxxxxx
A Xxxxxxxxxx
C Xxxx
XX Newbigging
XX Xxxxx
XX Xxxxx
P A Xxxxx
ND Xxxxxxx
GAM Bonvarlet
XX Xxxxx
SECRETARY: XX Xxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: KPMG Audit plc
AUTHORISED SHARE CAPITAL: Common shares of US$0.002 each 405,350,000
Class B common shares of US$0.002 each 10,000,000
A preference shares of US$0.002 each 70,400,000
B preference shares of US$0.002 each 14,250,000
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Common shares of US$0.002 each 50,000,000
Class B common shares of US$0.002 each --
A preference shares of US$0.002 each 60,504,000
B preference shares of US$0.002 each 12,499,000
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Refer to Schedule 1
49
PART 2
PARTICULARS OF THE SUBSIDIARIES
SECTION A - ACTIVE SUBSIDIARIES
1 TALBOT UNDERWRITING HOLDINGS LTD
REGISTERED NUMBER: 02180028
REGISTERED OFFICE: Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
DATE XXX XXXXX XX XXXXXXXXXXXXX: 00 Xxxxxxx 0000, Xxxxxxx and Wales
DIRECTORS: CNR Xxxxx
MEA Xxxxxxxxx
GAM Bonvarlet
XX Xxxxxxxx
HE Xxxxxx
XX Keys
XX Xxxxxxxxxx
XX Xxxxx
XX Xxxxx
DP Redhead
XX Xxxx
XX Xxxxxxx
ND Xxxxxxx
SECRETARY: XX Xxxxxxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: KPMG Audit plc
AUTHORISED SHARE CAPITAL: Ordinary L1 Shares 4,620,000
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Ordinary L1 Shares 1,255,100
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Holdings Ltd 1,255,100
50
2 TALBOT INSURANCE (BERMUDA) LTD
REGISTERED NUMBER: 33308
REGISTERED OFFICE: Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx
DATE AND PLACE OF INCORPORATION: Bermuda, 3 March 2003
DIRECTORS: CNR Xxxxx
MEA Xxxxxxxxx
GAM Bonvarlet
XX Xxxxxxxx
GB Xxxxxx
X Xxxxxxxxxx
R Xxxxxxx-Xxxxxxx
ND Xxxxxxx
SECRETARY: XX Xxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: KPMG Audit plc
AUTHORISED SHARE CAPITAL: Common shares of US$1 each 120,000
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Common shares of US$1 each 120,000
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Holdings Ltd 120,000
51
3 TALBOT 2002 UNDERWRITING CAPITAL LTD
REGISTERED NUMBER: 04257249
REGISTERED OFFICE: Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
DATE XXX XXXXX XX XXXXXXXXXXXXX: 00 Xxxx 0000, Xxxxxxx and Wales
DIRECTORS: CNR Xxxxx
MEA Xxxxxxxxx
XX Clouting
GAM Bonvarlet
ND Xxxxxxx
SECRETARY: XX Xxxxxxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: KPMG Audit plc
AUTHORISED SHARE CAPITAL: Ordinary L1 shares 50,000
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Ordinary L1 shares 1
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Holdings Ltd 1
52
4 TALBOT CAPITAL LTD
REGISTERED NUMBER: 31148
REGISTERED OFFICE: Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx, Xxxxxxxx XX00, Xxxxxxx
DATE AND PLACE OF INCORPORATION: 15 October 2001, Bermuda
DIRECTORS: CNR Xxxxx
MEA Xxxxxxxxx
XX Clouting
GB Xxxxxx
X Xxxxxx
ND Xxxxxxx
GAM Bonvarlet
SECRETARY: XX Xxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: KPMG Auditors plc
AUTHORISED SHARE CAPITAL: Common shares of US$1 each 12,000
Class A shares of Bermuda $0.01 each 100
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Common shares of US$1 each 12,000
Class A shares of Bermuda $0.01 each --
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Holdings Ltd 12,000
53
5 TALBOT UNDERWRITING LTD
REGISTERED NUMBER: 02202362
REGISTERED OFFICE: Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
DATE XXX XXXXX XX XXXXXXXXXXXXX: 0 Xxxxxxxx 0000, Xxxxxxx and Wales
DIRECTORS: CNR Xxxxx
MEA Xxxxxxxxx
GAM Bonvarlet
XX Xxxxxxxx
HE Xxxxxx
XX Xxxxxxx
XX Xxxx
XX Xxxxxxxx
XX Xxxxxxxxxx
XX Xxxxx
DP Redhead
XX Xxxx
XX Xxxxxxx
ND Xxxxxxx
SECRETARY: XX Xxxxxxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: KPMG Audit plc
AUTHORISED SHARE CAPITAL: Ordinary L1 shares 400,000
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Ordinary L1 shares 400,000
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Underwriting Holdings Ltd 400,000
54
6 UNDERWRITING RISK SERVICES LTD
REGISTERED NUMBER: 03260112
REGISTERED OFFICE: Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
DATE XXX XXXXX XX XXXXXXXXXXXXX: 00 Xxxxxxx 0000, Xxxxxxx and Wales
DIRECTORS: CNR Xxxxx
GAM Bonvarlet
XX Xxxxxxxx
MEA Xxxxxxxxx
XX Clouting
NJ Xxxxx
XX Keys
XX Xxxxxx
ND Xxxxxxx
SECRETARY: XX Xxxxxxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: KPMG Audit plc
AUTHORISED SHARE CAPITAL: Ordinary L1 shares 2,500,000
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Ordinary L1 shares 25,000
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Underwriting Holdings Ltd 25,000
55
7 TALBOT UNDERWRITING SERVICES LTD
REGISTERED NUMBER: 03043304
REGISTERED OFFICE: Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
DATE XXX XXXXX XX XXXXXXXXXXXXX: 0 Xxxxx 0000, Xxxxxxx and Wales
DIRECTORS: CNR Xxxxx
GAM Bonvarlet
XX Xxxxxxxx
MEA Xxxxxxxxx
ND Xxxxxxx
SECRETARY: XX Xxxxxxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: KPMG Audit plc
AUTHORISED SHARE CAPITAL: Ordinary L1 shares 100
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Ordinary L1 shares 1
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Underwriting Holdings Ltd 1
56
SECTION B - DORMANT SUBSIDIARIES
1 TALBOT UNDERWRITING CAPITAL LTD
REGISTERED NUMBER: 3439486
REGISTERED OFFICE: Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX
DATE XXX XXXXX XX XXXXXXXXXXXXX: 00 Xxxxxxxxx 0000, Xxxxxxx and Wales
DIRECTORS: CNR Xxxxx
MEA Xxxxxxxxx
XX Clouting
ND Xxxxxxx
SECRETARY: XX Xxxxxxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: Dormant - not audited
AUTHORISED SHARE CAPITAL: Ordinary L1 shares 1,000,000
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Ordinary L1 shares 956,560
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Holdings Ltd 956,560
57
2 MARINASURE LTD
REGISTERED NUMBER: 2745324
REGISTERED OFFICE: Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx Xx, Xxxxxx XX0X 0XX
DATE AND PLACE OF INCORPORATION: England and Wales, 7 September 1992
DIRECTORS: MEA Xxxxxxxxx
SECRETARY: XX Xxxxxxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: Dormant - not audited
AUTHORISED SHARE CAPITAL: Ordinary shares of L1 each 100
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Ordinary shares of L1 shares 2
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Underwriting Holdings Ltd 2
58
3 YACHTSURE LTD
REGISTERED NUMBER: 2978236
REGISTERED OFFICE: Xxxxxxxxxxx Xxxxx, 00 Xxxxxxxxxxx Xx, Xxxxxx XX0X 0XX
DATE AND PLACE OF INCORPORATION: England and Wales, 6 October 1994
DIRECTORS: CNR Xxxxx
MEA Xxxxxxxxx
NJ Xxxxx
XX Xxxxxx
SECRETARY: XX Xxxxxxxx
ACCOUNTING REFERENCE DATE: 31 December
AUDITORS: Dormant - not audited
AUTHORISED SHARE CAPITAL: Ordinary shares of L0.01 each 100,000
ISSUED AND FULLY PAID-UP SHARE CAPITAL: Ordinary shares of L0.01 shares 10
INDIVIDUAL SHAREHOLDERS NO. OF SHARES
Talbot Underwriting Holdings Ltd 10
59
SCHEDULE 3
COMPLETION OBLIGATIONS
1 SELLERS' OBLIGATIONS
1.1 GENERAL
On Completion each Seller shall, in accordance with Clause 6, exercise
his/her/its votes as a shareholder in and/or (where applicable) as a
director of the Company (or any Group Company as appropriate) to procure
the delivery to the Purchaser of, and, in the case of paragraph 1.1.1,
shall deliver to the Purchaser:
1.1.1 transfers of his/her/its Shares duly executed by the registered
holders in favour of the Purchaser or as it may direct accompanied by
the relevant share certificates (or an express indemnity in a form
reasonably satisfactory to the Purchaser in the case of any
certificate found to be missing) save that no share certificates shall
have been issued, and accordingly none shall be delivered, in respect
of the Class B Common Shares issued to the Optionholders in respect of
the exercise of their Options;
1.1.2 the Termination Agreements duly executed by those Sellers who are
parties to them and in relation to the Management Fee Agreements by
all parties thereto;
1.1.3 evidence of the due fulfilment of the Condition Precedent set out in
Clause 4.1.2;
1.1.4 evidence of the consummation of the Options Transactions; and
1.1.5 a duly certified copy of any power of attorney under which any person
who executes this Agreement, the Disclosure Letter and/or any transfer
of Shares on behalf of any Seller is authorised to do so.
1.2 RESIGNATIONS
On Completion, the Sellers shall procure the delivery to the Purchaser of:
1.2.1 (if so required by the Purchaser) signed resignation letters from the
auditors of each Group Company other than the Dormant Subsidiaries
resigning their office as such, to take effect immediately upon
Completion, and acknowledging that they have no claim against any
Group Company and, in the case of each Group Company incorporated in
England and Wales, containing a statement pursuant to section 394(1)
of the Companies Xxx 0000 that there are no circumstances connected
with their ceasing to hold office which they consider should be
brought to the attention of any members or creditors; and
1.2.2 signed resignation letters from each of the following directors
resigning from each Group Company of which he/she is a director:
(i) XX Xxxxxxxxxx;
(ii) HE Xxxxxx;
(iii) XX Xxxxx;
(iv) XX Xxxxx;
(v) DP Redhead;
60
(vi) C Xxxx;
(vii) PA Xxxxx; and
(viii) XX Xxxxx.
1.3 BOARD RESOLUTIONS OF THE GROUP COMPANIES
On Completion each Seller who is a director of any Group Company shall
exercise his/her votes as a director of the relevant Group Company to
procure the passing of Board Resolutions of each Group Company inter alia:
1.3.1 (if so required by the Purchaser) revoking all existing authorities
to bankers in respect of the operation of its bank accounts and giving
authority in favour of such persons as the Purchaser may nominate to
operate such accounts;
1.3.2 approving the registration of the share transfers referred to in
paragraph 1.1.1 of this Schedule;
1.3.3 appointing each of the persons notified by the Purchaser to the
Seller not more than 48 hours before Completion as a director of each
of the Group Companies identified by the Purchaser in such notice,
such appointments to take effect immediately upon Completion, subject
to FSA and Lloyd's approval of such appointments having been obtained;
1.3.4 accepting each of the resignations referred to in paragraph 1.2
above;
1.3.5 (if so required by the Purchaser) appointing PricewaterhouseCoopers
to replace the existing auditors of each Group Company other than the
Dormant Subsidiaries,
1.3.6 in the case of the Company, approving the transfers of the Shares for
registration and the updating of the Company's statutory books to
reflect the same; and
1.3.7 approving the delivery of the statutory books (which shall be written
up to but not including the date of Completion) to or to the order of
the Purchaser, and shall hand to the Purchaser duly certified copies
of such Resolutions.
1.4 ADOPTION OF NEW BYELAWS
On Completion the Sellers shall, if requested by the Purchaser, procure
that new Byelaws of the Company, in the form notified to the Sellers by the
Purchaser, are adopted conditional upon and with effect from Completion.
2 PURCHASER'S OBLIGATIONS
On Completion the Purchaser shall deliver to the Sellers:
61
2.1 evidence of the due fulfilment of the Conditions Precedent set out in
Clauses 4.1.1;
2.2 evidence that the Purchaser is authorised to execute this Agreement and the
Disclosure Letter; and
2.3 a duly certified extract of Validus' share register showing the Share
Consideration issued to each of the relevant Employee Sellers in accordance
with Clause 3.1.6(i).
62
SCHEDULE 4
WARRANTIES GIVEN BY THE SELLERS AND WARRANTORS UNDER CLAUSE 8
1 WARRANTIES BY THE SELLERS
Each Seller severally warrants to the Purchaser in the following terms:
1.1 CAPACITY AND AUTHORITY OF THE SELLERS
He/she/it has the requisite capacity and authority to enter into and
perform this Agreement.
1.2 TITLE
He/she/it is, and on Completion will be, the sole legal and beneficial
owner of the Shares listed against his/her/its name in Schedule 1.
1.3 EFFECT OF COMPLETION
This Agreement will, when executed by him/her/it, constitute a valid and
binding obligation on him/her/it enforceable in accordance with its terms,
subject with respect to enforceability to the effect of bankruptcy,
insolvency, reorganisation, moratorium or similar laws now or hereafter
affecting the enforcement of creditors' rights generally and to the
availability of equitable remedies.
1.4 CONSENTS AND AUTHORISATIONS
No consent, approval, authorisation or order of any court or government or
local agency or body or any other person is required by him/her/it for the
execution or implementation of this Agreement and compliance with the terms
of this Agreement, other than the consents of the Relevant Regulators
specified in the conditions precedent set out in Clause 4.1.1.
1.5 THE SHARES
There are, and on Completion will be, no Encumbrances on, over or affecting
the Shares listed against his/her/its name in Schedule 1.
1.6 DIVIDENDS AND DISTRIBUTION
Since the Accounts Date, except for the Accrued Preference Dividend and the
amounts provided for in the Accounts or fairly disclosed in the Disclosure
Letter, no dividend or other payment or distribution has been, or prior to
Completion will be, received by him/her/it from the Company or any of the
Group Companies.
2 WARRANTIES BY THE WARRANTORS
Each Warrantor severally warrants to the Purchaser in the following terms:
63
2.1 INCORPORATION, AUTHORITY AND NON-CONTRAVENTION
Each Group Company is duly incorporated and validly existing under its
respective laws of incorporation.
2.2 GROUP COMPANIES
2.2.1 The information set out in Schedule 2 is accurate in all material
respects.
2.2.2 The Shares will represent and constitute the entire issued and
outstanding share capital (including options or rights to acquire
additional share capital) of the Company as at the date of Completion.
2.2.3 The Company is not directly or indirectly, including through any
Group Company the holder or beneficial owner of any shares or
securities of any other person (whether incorporated in the United
Kingdom or elsewhere) other than the Subsidiaries and has not agreed
to acquire any such shares or securities.
2.2.4 The Company, directly or indirectly, legally and beneficially owns,
and on Completion will own, free from Encumbrances the whole of the
issued share capital of the Subsidiaries and all such shares are fully
paid or credited as fully paid and no other person or entity has any
rights, entitlements, claims, options or warrants with respect to any
share in any of the Subsidiaries.
2.3 PRE-EMPTION ETC.
Except in respect of the A Preference Shares, the B Preference Shares and
the Options currently in issue, no person has the right (whether
exercisable now or in the future and whether contingent or not) to call for
the allotment, conversion or issue of any share or loan capital or any
other security giving rise to a right over the capital of any Group Company
under any option or other agreement (including conversion rights and rights
of pre-emption) or otherwise and there are no Encumbrances on the shares of
any Subsidiary or any arrangements or obligations to create any
Encumbrances.
2.4 STATUTORY BOOKS AND RECORDS
2.4.1 The statutory books, books of accounts and other records of a
material nature of each Group Company are up-to-date and accurately
reflect what is required by law to be dealt with in such books.
2.4.2 So far as the Warrantors are aware no notice or allegation that any
is incorrect or should be rectified has been received.
2.4.3 All accounts, documents and returns required by law to be delivered
or made to the Registrar of Companies or any other authority in any
relevant jurisdiction in respect of the Group Companies have been duly
delivered or made.
2.5 LICENCES AND CONSENTS
2.5.1 LICENCES AND CONSENTS OBTAINED
All material licences, consents and registrations ("LICENCES")
necessary for the carrying on of the business of the Group as now
carried on have been obtained
64
and are in full force and effect and do not contain conditions which would
hinder the ordinary and usual course of its business or are affected by the
transactions contemplated by this Agreement except for the consents
required under Clause 4 and have been and are being complied with in all
material respects necessary for the carrying on of the business of the
Group.
2.5.2 NO INVESTIGATION AS TO LICENCES
There is no investigation, enquiry or proceeding outstanding or, so far as
the Warrantors are aware, anticipated which is likely to result in the
suspension, cancellation, modification, revocation or non-renewal of any
Licence, and so far as the Warrantors are aware, no facts or circumstances
exist which are likely to give rise to any such investigation, enquiry or
proceeding.
2.6 COMPLIANCE WITH LAWS
2.6.1 BUSINESS CONDUCTED IN COMPLIANCE WITH LAWS
Each of the Group Companies is conducting its business in compliance
with applicable laws and regulations (including the regulations from
time to time issued by the Lloyd's Franchise Board) and no entity has
been in material breach of any such laws and regulations.
2.6.2 NO COMMUNICATION AS TO NON COMPLIANCE WITH LAWS
No Group Company has received any notice or other communication
(official or otherwise) from any court, tribunal, arbitrator,
governmental agency or regulatory body with respect to an alleged,
actual or potential violation and/or failure to comply with any
applicable law or regulation, or requiring it to take or omit any
action.
2.7 LITIGATION
Save as disclosed in the information in the Data Room or in the Disclosure
Letter and save for claims under inwards and outwards insurance and
reinsurance policies and broker and coverholder disputes in Syndicate
1183's ordinary course of business, there are not, nor have there been in
the two years prior to the date hereof, nor, so far as the Warrantors are
aware, are there threatened, any disputes, claims, proceedings, suits or
actions directly involving a Group Company or, so far as the Warrantors are
aware, pending or threatened against any officer or director of any Group
Company with respect to the business of any Group Company, including in
relation to the conduct of the underwriting of Syndicates 376 and 1183 by
Talbot Underwriting Ltd or to any agreement or arrangement with any broker,
agent or intermediary in respect of the placing of insurance or reinsurance
business with Syndicates 376 or 1183.
2.8 VENDOR DUE DILIGENCE REPORT
2.8.1 The Warrantors are not aware of any material inaccuracy in any of the
factual information contained in the Vendor Due Diligence Report.
65
2.8.2 The Warrantors are not aware of any facts or circumstances relating
to the Group not stated in the Vendor Due Diligence Report, the
omission of which makes any statements contained therein misleading in
any material respect.
2.9 TAX DUE DILIGENCE REPORT
2.9.1 The Warrantors are not aware of any material inaccuracy in any of the
factual information contained in the Tax Due Diligence Report.
2.9.2 The Warrantors are not aware of any facts or circumstances relating
to the Group not stated in the Tax Due Diligence Report, the omission
of which makes any statements contained therein misleading in any
material respect.
2.10 ACTUARIAL RESERVES REVIEW
2.10.1 The Warrantors are not aware of any material inaccuracy in any of
the factual information contained in the Actuarial Reserves Review.
2.10.2 The Warrantors are not aware of any facts or circumstances relating
to the Group not stated in the Actuarial Reserves Review, the omission
of which makes any statements contained therein misleading in any
material respect.
2.11 LATEST ACCOUNTS
2.11.1 The Accounts and the 2005 Accounts have been prepared:
(i) in accordance with applicable law and in accordance with US GAAP
applied on a consistent basis throughout the periods presented;
and
(ii) subject to paragraph 2.11.1(i), on a basis consistent with that
adopted in preparing the audited accounts of the Company for the
previous two financial years.
2.11.2 The Accounts and the 2005 Accounts each present fairly, in all
material respects, the financial position of the Group as at the
Accounts Date and 31 December 2005 (as the case may be) and the
results of their operations and their cash flows for the years then
ended in conformity with US GAAP.
2.11.3
(i) The public accountants whose report is attached to the Accounts
are independent within the meaning of both the Auditing Practices
Board guidance and the Independent Federation of Accountants (the
relevant guidance for Bermuda) and that report has not been
withdrawn or modified.
(ii) The public accountants are, as at the date of this Agreement,
independent within the meaning of the US Securities Act of 1933.
2.11.4 The estimated 30 June 2007 consolidated balance sheet of the Group
Companies, a true and accurate copy of which is contained as Document
4.11.1 in the Data Room Index, was prepared (i) on a basis consistent
with the Accounts and (ii) in good faith and based on assumptions
which, on the date such balance sheet was prepared, were believed by
the Warrantors to be reasonable and to fairly present in all material
respects the consolidated estimated financial position of all entities
and persons required by US GAAP to be included therein.
66
2.11.5 The 2008 quarterly financial projection materials, a true and
accurate copy of which is contained as Document 4.11.2 in the Data
Room Index were prepared (i) on a basis consistent with the Accounts
and (ii) in good faith and based on assumptions which on the date such
projection materials were prepared were believed by the Warrantors to
be reasonable and to fairly present in all material respects the data
they purported to present.
2.11.6 The forecasted financial and operating data contained in the
Information Memorandum have each been prepared in good faith based
upon assumptions that, as at the date of preparation of the
Information Memorandum, were believed by the Warrantors to be
reasonable and to fairly present the data it purported to present.
2.12 OWNERSHIP OF ASSETS
Other than as set forth in the Accounts or the notes thereto, all assets
included in the Accounts or acquired by any of the Group Companies or which
have otherwise arisen since the Accounts Date, other than any assets
disposed of or realised in the ordinary and usual course of business:
2.12.1 are legally and beneficially owned by the Group Companies; and
2.12.2 are free from Encumbrances, other than those arising by operation of
law or in the ordinary and usual course of business and, for the
avoidance of doubt, Encumbrances in the ordinary and usual course of
business shall include all Encumbrances over:
(i) assets of the Group Companies which relate to the Group's Funds
at Lloyd's arrangements which Encumbrances arise because of such
arrangements;
(ii) the assets of Syndicate 1183, which Encumbrances arise pursuant
to Lloyd's premium trust deeds; and
(iii) the designated insurer trust accounts of Underwriting Risk
Services Ltd, which Encumbrances arise pursuant to regulatory
requirements and contractual obligations in relation to client
money.
2.13 SUFFICIENCY OF ASSETS
So far as the Warrantors are aware, the property, rights and assets owned,
leased or otherwise used by the Group Companies comprise all the property,
rights and assets necessary for the carrying on of the business of each
Group Company in the manner in, and to the extent to, which it is presently
conducted.
2.14 LIABILITIES
2.14.1 So far as the Warrantors are aware, there are no liabilities,
whether actual or contingent, of any of the Group Companies other than
(i) liabilities disclosed or provided for in the Accounts; (ii)
liabilities incurred in the ordinary and usual course of business
since the Accounts Date, none of which has had or, so far as the
Warrantors are aware, may have a material adverse effect on the
financial or
67
trading position of the Group; or (iii) liabilities disclosed
elsewhere in this Agreement.
2.14.2 No Group Company has any liability in relation to insurance business
written by it into years of account prior to 2002.
2.14.3 Except as expressly stated in the Accounts or in the Disclosure
Letter, no Group Company is subject to any material exposure,
individually or in the aggregate, under any futures or option
contracts, swaps, xxxxxx or similar instruments to which any Group
Company is a party.
2.15 IMPORTANT BUSINESS SINCE THE ACCOUNTS DATE
2.15.1 Since the Accounts Date, save as disclosed in the information
contained in the Data Room or in the Disclosure Letter, there has not
been any material adverse change in the business, assets, liabilities,
operations, employee or customer relations or financial or trading
position of any Group Company to an extent which is material in the
context of the Group taken as a whole and the Warrantors are not aware
of any event which is likely to give rise to any such change.
2.15.2 Since the Accounts Date:
(i) no loan or loan capital has been repaid by any Group Company in
whole or in part or has become liable to be so repaid; and
(ii) no shareholders' resolution of any Group Company has been passed
other than resolutions relating to the routine business of annual
shareholders' meetings.
2.15.3 Other than as disclosed in the Disclosure Letter, between the
Accounts Date and the date of this Agreement, no Group Company has
taken any of the actions set out in Clauses 5.2.1 to 5.2.3, 5.2.5,
5.2.11, 5.2.13, 5.2.14, 5.2.17, 5.2.18, 5.2.21, 5.2.22 and 5.2.25 to
5.2.27 which would have been a breach of such covenants if they were
deemed to have been given for the period between Accounts Date and the
date of this Agreement.
2.16 INTELLECTUAL PROPERTY
2.16.1 OWNERSHIP OF INTELLECTUAL PROPERTY
So far as the Warrantors are aware, each of the Group Companies owns
or possesses, or has the right to use or can acquire on reasonable
terms, all know-how (including proprietary or confidential
information, systems or procedures), trade marks, trade names, logos
or other intellectual property (including the "Talbot", "Marinasure"
and "Yachtsure" trade names and logos) (collectively, "INTELLECTUAL
PROPERTY") or valid and enforceable licences of Intellectual Property
necessary for the Group to carry on its business in the manner and to
the extent to which it is presently conducted.
2.16.2 NO INFRINGEMENT OF INTELLECTUAL PROPERTY
No Group Company has received any notice and the Warrantors are not
otherwise aware of any actual or potential infringement of, or
conflict with, asserted rights of
68
others with respect to any Intellectual Property or any licences of
Intellectual Property owned by the Group or necessary for the Group to
carry on its business.
2.17 INSURANCE
2.17.1 The Data Room contains details of all outwards reinsurance treaties
and other reinsurance arrangements incepting on or after 1 January
2007 which are material to the Group, together with details as at the
date hereof of any material claims made by any Group Company under
them which are outstanding.
2.17.2 Each Group Company has complied with its payment obligations under
all outstanding outwards reinsurance treaties to which it is a party.
2.17.3 No Group Company is a party to any contracts designed to obscure or
conceal the true financial position of the Group.
2.17.4 So far as the Warrantors are aware there is no material commission
nor any material termination or compensation payment due under any
reinsurance contract which will become payable by any Group Company as
a result of the acquisition contemplated by this Agreement.
2.17.5 Copies of all of the material insurance policies of each Group
Company, currently in effect, (excluding all inwards and outwards
insurance contracts and all other insurance or reinsurance contracts
entered into by Syndicate 1183 and/or Talbot 2002) and details of
related premiums are contained in the Data Room or in the Disclosure
Letter.
2.17.6 Such insurances are in effect and, so far as the Warrantors are
aware, there are no circumstances which might lead to any liability
under such insurance being avoided by the insurers.
2.17.7 In respect of all such insurances, there is no insurance claim
pending or outstanding for loss or damage in excess of L100,000 and,
as far as the Warrantors are aware, there are no circumstances likely
to give rise to any such claim.
2.18 EMPLOYMENT
2.18.1 The Data Room contains materially accurate details as at 1 April
2007 in relation to each Group Company of:
(i) the total number of Employees (including those who are on
maternity, paternity, adoption or parental leave, secondment or
absent on the grounds of disability or other long-term leave of
absence, and have or may have a statutory or contractual right to
return to work in a Group Company);
(ii) the salary of each such Employee;
(iii) the terms of the contract of employment of each Senior Employee;
(iv) the standard terms and conditions of employment applicable to all
other Employees of the Group and any non-standard terms and
conditions of employment; and
(v) the benefits provided to each category of Employee.
69
2.18.2 No Group Company has made any proposal to terminate the employment
of any Employee or to vary or amend the terms of employment of any
Employee (whether to their detriment or benefit).
2.18.3 Save to the extent to which provision or allowance has been made in
the Accounts or save as disclosed in the Data Room or in the
Disclosure Letter:
(i) there are no amounts owing or promised to any present or former
directors or Employees of any Group Company other than
remuneration accrued due or for reimbursement of business
expenses; and
(ii) no liability has been incurred by any Group Company for breach of
any employment contract or consultancy agreement, for redundancy
payments (including protective awards) or for compensation for
wrongful dismissal or unfair dismissal or discrimination (of any
kind) or breach of statutory duty or for failure to comply with
any order for the reinstatement or re-engagement of any Employee
or for the actual or proposed termination or suspension of
employment or variation of any terms of employment of any
Employee or former employee of any Group Company or for any other
employment-related claim, right of action or liability.
2.18.4 Except as disclosed in the Data Room or in the Disclosure Letter, no
material employment problem, dispute, disturbance or litigation
involving any of the Employees or former employees of any Group
Company exists or, so far as the Warrantors are aware, is current,
outstanding and/or imminent.
2.18.5 Save as disclosed in the Data Room or in the Disclosure Letter,
there is not in existence nor has any Group Company proposed to
introduce any share incentive, share option, profit sharing, bonus or
other incentive arrangements for or affecting any Employees.
2.18.6 There is no notice outstanding that terminates the contract of any
Senior Employee (whether given by the Senior Employee or the relevant
Group Company).
2.18.7 No offer of a contract of employment or a consultancy agreement has
been made by any Group Company to any individual which has not yet
been accepted or which has been accepted but where the individual's
employment or engagement has not yet started.
2.18.8 No trade union, staff association or any other body representing
workers is recognised by any Group Company and no request for such
recognition has been received and there are no collective agreements
relating to workers of any Group Company.
2.18.9 Save as disclosed in the Data Room, no Group Company has within the
three years preceding the date hereof entered into any agreement which
involved any Group Company acquiring or disposing of any undertaking
or part of one such that the Transfer of Undertakings (Protection of
Employment) Regulations 2006 (or equivalent provisions in any relevant
jurisdiction) applied thereto.
2.18.10 Save as disclosed in the Disclosure Letter or in the documents
listed in the Data Room Index, no Group Company has entered into any
material outsourcing agreement or arrangement for the management or
operation of its business or any part thereof other than with its
Employees.
70
2.18.11 All salaries, fees and wages and other remuneration and benefits of
all workers or any Group Company have, to the extent due, been paid or
discharged in full together with all related payments to third party
providers and the relevant authorities.
2.19 COMPANY PENSION SCHEME
2.19.1 The Company Pension Scheme is the only pension scheme or pension
arrangements and/or commitments operated or sponsored by the Group or
to which any Group Company may be required to make any pension related
payment.
2.19.2 The Data Room contains a copy of the rules currently governing the
Company Pension Scheme, the latest explanatory booklet and any
relevant and material announcements relating to the Company Pension
Scheme.
2.19.3 The Data Room contains details of the rate at which contributions to
the Company Pension Scheme are being paid.
2.19.4 All contributions due to the Company Pension Scheme have been paid
within any relevant time limits and details of all and any commitments
(whether contractual or otherwise) relating to employer pension
contributions have been fairly disclosed in the Data Room.
2.19.5 Save as disclosed in the Data Room or the Disclosure Letter, no
Group Company has received notice of any material dispute about the
benefits payable under the Company Pension Scheme in respect of any
present or former employee or director of any Group Company and, so
far as the Warrantors are aware, there are no circumstances which
might give rise to any such dispute.
2.19.6 So far as the Warrantors are aware, the Company Pension Scheme
complies with, and has been managed in all material respects in
accordance with, all applicable laws and no Employee has been excluded
from the Company Pension Scheme or provided with different benefits
under the Company Pension Scheme directly or indirectly because of
their sex or because they were employed on a part-time basis.
2.20 THE PROPERTIES
2.20.1 In addition to Clause 1 of this Agreement, in this paragraph 2.20 of
Schedule 4, unless the context otherwise requires:
"ENVIRONMENTAL LAWS" means all applicable laws, statutes, regulations,
secondary legislation, bye-laws, common law, directives, treaties and
other measures, judgments and decisions of any court or tribunal,
codes of practice and guidance notes which are legally binding and in
force as at the date of this Agreement in so far as they relate to or
apply to the Environment, including Part IIA of the Environmental
Protection Act 1990 and any regulations and guidance made or issued
thereunder;
2.20.2 The Properties comprise all of the premises and land owned, occupied
or otherwise used in connection with the businesses of the Group or in
which any Group Company has an interest or obligation.
71
2.20.3 No Group Company or any company which was previously a Subsidiary of
the Company has any continuing liability in respect of any leasehold
property other than the Properties.
2.20.4 The requisite details in relation to the Properties set out in
Schedule 6 are true, complete and accurate in all material respects.
2.20.5 In relation to each Property:
(i) so far as the Warrantors are aware, there is no material
subsisting breach, nor any material non-observance of any
covenant, condition or agreement contained in the Lease on the
part of any Group Company or the relevant landlord;
(ii) no landlord has refused to accept rent or made any complaint or
objection and the receipt for the payment of rent which fell due
immediately prior to the date of this Agreement is unqualified;
and
(iii) the Warrantors are not aware of any liabilities arising from
Environmental Laws affecting any Group Company which are not set
out in the Disclosure Letter.
2.21 CONTRACTS
2.21.1 Other than insurance and reinsurance contracts entered into by
Syndicate 1183 and/or Talbot 2002 in the ordinary course of business
with persons who are not connected to the Group as at the date of this
Agreement, each contract which is of material importance to the
business of the Group has been included in the Data Room.
2.21.2 Save as in respect of Talbot 2002's membership of Syndicate 1183,
none of the Group Companies is a member of any joint venture,
consortium, partnership or other unincorporated association (other
than a recognised trade association) which is material to the
operation of the business of the Group.
2.21.3 Other than insurance and reinsurance contracts entered into by
Syndicate 1183 and/or Talbot 2002 in the ordinary course of business,
all contracts to which any Group Company is a party and which are of
material importance to the business of the Group as now carried on are
binding obligations of that Group Company and, so far as the
Warrantors are aware:
(i) the terms thereof have been complied with in all material
respects by that Group Company;
(ii) there are no grounds for rescission, avoidance or repudiation of
any such contracts including upon giving effect to Completion
(except for such consents as are identified in the Disclosure
Letter); and
(iii) no notices of termination or of intention to terminate have been
received or sent by any Group Company.
2.21.4 No Group Company has any liability or obligation to any broker,
investment banker, financial adviser or other person, including any
Seller, or any of its connected persons with respect to fees,
expenses, commissions or other amounts that arise solely in relation
to the sale of the Shares.
72
2.21.5 There are no powers of attorney or other authorities (express or
implied) which are still outstanding or effective to or in favour of
any person to enter into any contract or commitment on behalf of any
Group Company (other than any power of attorney or other authority
given to directors or employees in the normal course or given pursuant
to ordinary course binder and lineslip business).
2.22 AGREEMENTS WITH CONNECTED PARTIES
2.22.1 Save as disclosed in the Data Room or the Disclosure Letter, there
is not outstanding:
(i) any loan made by any Group Company to, or debt owing to any Group
Company by, any director, officer, secretary or shareholder of
the Company, or any of their connected persons; or
(ii) any agreement or arrangement to which any Group Company is a
party and in which any director, officer, secretary or
shareholder of the Company or any such connected person is
interested (other than employment contracts, the Profit Share
Plan, directors service contracts, the Shareholders' Agreement,
the Employee Shareholders' Agreement and the various agreements
included in the Data Room whereby shareholders provide Funds at
Lloyd's to the Group).
2.22.2 Syndicate 1183 has not paid any commissions or other incentives to a
broker for business offered by that broker to Syndicate 1183 which the
Warrantors know to be illegal or contrary to any relevant rule or
regulation.
2.22.3 During the two years prior to the date of this Agreement no Group
Company has entered into an agreement with any broker whereby
additional commissions were payable but not disclosed on the slip.
2.23 INDEBTEDNESS
2.23.1 No outstanding indebtedness of any Group Company has become
repayable before its stated maturity, nor has any security in respect
of such indebtedness become enforceable by reason of default by any
Group Company (except that the indebtedness under each of the Group's
$25,000,000 facility with Lloyds TSB and the Group's $30,000,000
letter of credit arrangements shall become repayable upon a change of
control of the Company and the Reservoir Letters of Credit impose an
obligation on the Company, upon request from the Reservoir Agent, to
use best endeavours to procure that Talbot 2002 uses best endeavours
to procure that the letters of credit are redelivered by Lloyd's and
dealt with in the same way as Released Funds as set out in the FAL
Providers' Agreement on a change of control (both Released Funds and
change of control used in relation to the Reservoir Letter of Credit,
have the meanings set out in the FAL Providers' Agreement)).
2.23.2 No Group Company has received notice from any person demanding or
threatening to demand repayment of, or to take any steps to enforce
any security for, any indebtedness of any Group Company which is
repayable on demand.
73
2.23.3 All the Group Companies' borrowing facilities have been duly
executed on behalf of the relevant Group Company and are in full force
and effect and as far as the Warrantors are aware (save as specified
in paragraph 2.23.1 above):
(i) all undrawn amounts under such borrowing facilities are or will
be capable of drawdown; and
(ii) there is nothing which could cause any undrawn amounts under any
such borrowing facilities to be unavailable for drawing as
required.
2.23.4 The amounts borrowed by each Group Company do not exceed any
limitation on its borrowing contained in its bye-laws or articles of
association, any debenture or other deed or document binding upon it.
2.23.5 No Group Company is engaged in financing of a type which would not
require to be shown or reflected in audited accounts.
2.24 INSOLVENCY
2.24.1 No order has been made, members resolution passed or meeting
convened for the winding up (or other process whereby the business is
terminated and the assets of the company concerned are distributed
amongst the creditors and/or shareholders or other contributors) of
any Group Company and no cases or proceedings under any applicable
insolvency, reorganisation, or similar laws in any jurisdiction have
been brought against or notified to any Group Company and, so far as
the Warrantors are aware, no events have occurred which, under
applicable laws, would justify any such cases or proceedings.
2.24.2 As far as the Warrantors are aware, no petition has been presented
or other proceedings commenced for an administration order to be made
(or any other order to be made by which during the period it is in
force, the affairs, business and assets of the Group Company concerned
are managed by a person appointed for the purpose by a court,
governmental agency or similar body) in relation to any Group Company,
nor has any such order been made.
2.24.3 No receiver (including an administrative receiver), liquidator,
trustee, administrator, custodian or similar official has been
appointed in any jurisdiction in respect of the whole or any part of
the business or assets of any Group Company and, so far as the
Warrantors are aware, no step has been taken for or with a view to the
appointment of such a person.
2.24.4 No Group Company is insolvent (which shall include being unable to
pay its debts as they fall due and/or its assets being less than the
amount of its liabilities, taking into account its contingent and
prospective liabilities).
2.25 TAXATION
2.25.1 All returns and computations of the Group for Taxation purposes have
been made within the requisite period and are complete and correct in
all material respects. None of such returns or computations is the
subject of any dispute with the Group or any claim against the Group
by any Taxation Authority. Each Group Company has timely paid all
Taxes due and payable by it, including any US federal excise tax or
premium tax imposed by any Taxation Authority, and has timely withheld
and
74
paid to the appropriate Taxation Authority all Taxes required to be
withheld and paid by it.
2.25.2 No action, suit, proceeding or audit or any notice of inquiry of any
of the foregoing is pending, or has, so far as the Warrantors are
aware, been threatened, against or with respect to any Group Company
regarding Taxes.
2.25.3 So far as the Warrantors are aware, each Group Company is, and has
at all times been, resident for all Taxation purposes in the country
of its incorporation including for the purposes of any double taxation
arrangements. No claim has ever been made against a Group Company by a
Taxation Authority in a jurisdiction where any Group Company does not
file tax returns that such company is or may be subject to Taxes in
such jurisdiction. No Group Company, excluding for these purposes
Syndicate 1183, has, nor has it any time ever had, a branch agency,
permanent establishment or any person with a binding authority outside
the United Kingdom or Bermuda. So far as the Warrantors are aware, no
Group Company has any liability, direct or indirect, absolute or
contingent, for the Taxes of any other person (other than another
Group Company). No extension for the period of assessment or
collection of any Tax is currently in effect.
2.25.4 Each Group Company has complied in all material respects with all
statutory requirements, orders, provisions, directions or conditions
relating to VAT, including (for the avoidance of doubt) the terms of
any agreement reached with any Taxation Authority.
2.25.5 No Group Company has at any time been a member of a group
registration made pursuant to Sections 43 to 43C VATA (other than a
group registration of which all of the other members of which were
Group Companies).
2.25.6 Each document in the possession or under the control of a Group
Company, or to the production of which the Group Company is entitled
and on which the Group Company relies, and which in the UK, Bermuda or
elsewhere requires any stamp or xxxx to denote that:
(i) any duty, tax or fee required to be paid by law has been paid; or
(ii) a duty, tax or fee referred to in paragraph 2.25.7(i) is not
required to be paid, or that the document in question or the
event evidenced by it qualifies from a relief or exemption from
such duty, tax or fee; or
(iii) the document has been produced to the appropriate authority,
has been properly stamped or marked as appropriate and no such
document which is outside the UK or Bermuda would attract stamp duty
if it were to be brought into the UK or Bermuda respectively.
2.25.7 So far as the Warrantors are aware, except for the Subsidiaries that
are Non-U.S. Corporate Underwriters, within the meaning of the Closing
Agreement between the Council of Lloyd's and the Internal Revenue
Service, dated 1 January 2005, as amended (the "CLOSING AGREEMENT"),
no Group Company has been engaged in a trade or business in the United
States during the last ten years. So far as the Warrantors are aware,
each Subsidiary that is a Non-U.S. Corporate Underwriter is an
Eligible Corporate Underwriter, as defined in the Closing Agreement,
and the only income of each such Subsidiary that is effectively
connected with a trade or
75
business in the United States is such Subsidiary's taxable USCI or
USCL (as such terms are defined in the Closing Agreement).
2.25.8 So far as the Warrantors are aware, no Group Company or Syndicate
1183 has been a party to or otherwise involved in a transaction or
series of transactions where the main purpose, or one of the main
purposes, was the avoidance of Taxation or obtaining increased
benefits under the UK/US income tax treaty and no Group Company or
Syndicate 1183 has been required to disclose any transactions,
arrangements or schemes to any Taxation Authority pursuant to any
Taxation statute, law, rule or regulation. So far as the Warrantors
are aware, no Group Company or Syndicate 1183 has been the subject of
any notification to the Internal Revenue Service pursuant to section
11 of the 2005 FET Closing Agreement between Lloyd's, certain
underwriters at Lloyd's and the United States Commissioner of Internal
Revenue. No syndicate level or member level reinsurance ceded has been
reported to Lloyd's as having been entered into as part of a conduit
arrangement.
2.25.9 So far as the Warrantors are aware, each Group Company has correctly
deducted all income tax which is deductible and payable under the PAYE
system and/or any Taxation statute, law, rule or regulation and all
such amounts due to be paid to the relevant Taxation Authority prior
to the date of this Agreement have been so paid, including all
Taxation chargeable on benefits provided for directors, employees or
former employees of the Company or any persons required to be treated
as such.
2.25.10 So far as the Warrantors are aware, all material transactions
entered into between a Group Company and another member or any former
member of the Group, with effect from 1 January 2002 where one of the
entities involved was resident in a jurisdiction other than the UK and
with effect from 1 January 2005 where both of the entities involved
were resident in the UK, in the last two years have been entered into
on an arm's length basis and the consideration (if any) charged,
received or paid by each Group Company on all transactions entered
into by them has been equal to the consideration which might have been
expected to be charged, received or paid (as appropriate) between
independent persons dealing at arm's length. So far as the Warrantors
are aware, no Taxation Authority has made any claim that any such
transactions have been entered into other than on an arms length
basis.
2.25.11 No shares in or assets of a Group Company are subject to any charge
by any Taxation Authority or any power of sale, charge or mortgage in
connection with any inheritance tax or similar tax or estate duty and,
so far as the Warrantors are aware, no Taxation Authority has made any
claim to charge, or order the power of sale, charge or mortgage of,
the shares or assets of a Group Company with an unsatisfied liability
to inheritance tax or similar tax or estate duty.
2.25.12 No Group Company has agreed, undertaken or arranged, and nor is any
Group Company under any obligation, to reimburse, indemnify, discharge
or make good, any Taxation or any amount in respect of Taxation which
is the primary liability of another person other than a Group Company.
76
2.26 RELEVANT REGULATORS
2.26.1 Syndicate 1183 and each Group Company which is regulated by a
Relevant Regulator (a "REGULATED COMPANY") has obtained all necessary
consents, registrations and approvals from the Relevant Regulator and
the Registrar of Companies in Bermuda, if applicable.
2.26.2 No Regulated Company in the last three years has been notified of
any actual or proposed complaint, disciplinary inquiry or proceeding
by a Relevant Regulator and/or the Registrar of Companies in Bermuda,
if applicable, against any Regulated Company, or any directors,
officers or employees of any Regulated Company and no Regulated
Company or any directors, officers or employees of a Regulated Company
is or are currently a party to such proceedings and the Warrantors are
not aware of any grounds for any such complaint, disciplinary inquiry
or proceeding.
2.26.3 So far as the Warrantors are aware, nothing has been done or omitted
to be done by any Regulated Company in the last three years which
would constitute a material failure to comply with any applicable law
or any bye-law or other rule, regulation, requirement or code of
conduct of any Relevant Regulator and/or the Registrar of Companies in
Bermuda, if applicable, and no Regulated Company has any outstanding
liabilities in respect of any such failure.
2.26.4 No guarantee, indemnity or undertaking currently in force, apart
from in the ordinary course of business, has been given to any
Relevant Regulator by or in respect of any Regulated Company.
2.26.5 The audited accounts for Syndicate 1183 for the year ended 31
December 2006 have been prepared by Talbot Underwriting Ltd in
accordance with the requirements of the Insurance Accounts Directive
(Lloyd's Syndicate and Aggregate Accounts) Regulations 2004
(S.2004/3319) and the Syndicate Accounting Bye-Law (No.8 of 2005).
2.26.6 The Ring-Fencing Letters are true, complete and accurate copies of
the originals, represent all of the material provided to any Group
Company by Lloyd's in connection with the subject matter thereof, the
Company has received no intimation from Lloyd's that Lloyd's would act
in a manner contrary to that stated in the Ring-Fencing Letters in
relation to the subject matter of the letters, the arrangements
contemplated therein have not been rescinded by Lloyd's and, so far as
the Warrantors are aware, there is no reason to believe that they
would be rescinded in the future.
2.26.7 No Group Company in the last three years has received any notice
from Lloyd's including the Lloyd's Franchise Board limiting, or
indicating the possibility of a limitation of, the scope or quantum of
any of the Group's business activities and, so far as the Warrantors
are aware, no such notice is likely or expected.
2.27 UNDERWRITING
2.27.1 All minutes of the Group's Independent Review Committee in respect
of meetings of the same held in the one year period prior to the date
of this Agreement are in the Data Room.
77
2.27.2 All actuarial reports, actuarial certificates and loss and loss
adjustment expense reports prepared by EMB Consulting in respect of
Syndicate 1183 in the last 12 months have been made available to the
Purchaser upon the execution, by the Purchaser of an appropriate
release letter addressed to EMB Consulting.
2.28 SHREWSBURY TRANSACTIONS AND THE TRANSFER OF SYNDICATE 376
There have been no claims (i) under the warranties given by the Company in
respect of the Shrewsbury Transactions or the indemnities given by Talbot
Underwriting Ltd in respect of the transfer of Syndicate 376; and (ii) made
against the Company in respect of any transaction associated with the
Shrewsbury Transactions or against Talbot Underwriting Ltd in respect of
any transaction associated or connected with the transfer of Syndicate 376.
2.29 LLOYD'S
2.29.1 Other than those persons who are party to agreements entered into by
Talbot 2002 in relation to the Group's Capital Stack which are
contained in the documents in the Data Room Index, no person currently
provides (or has procured the provision of) Funds at Lloyd's for the
benefit of Talbot 2002 in respect of the 2007 or prior underwriting
years of account or is entitled to any fee or payment in respect of
the provision of Funds at Lloyd's for the benefit of Talbot 2002.
2.29.2 No current or past provider of Funds at Lloyd's for the benefit of
Talbot 2002 has any right to participate in or share profits in
relation to any Funds at Lloyd's for the benefit of Talbot 2002 for
the 2008 or any subsequent year of account without the prior agreement
of Talbot 2002 and no such agreement currently exists.
2.29.3 No person who currently provides (or procures the provision of)
Funds at Lloyd's for the benefit of Talbot 2002 (whether for the 2007
or any prior year of account) is entitled to any premium fee or other
payment in respect thereof, save as set out in the agreement by virtue
of which that person assumed the obligation to provide such Funds at
Lloyd's.
2.29.4 The 2002, 2003 and 2004 years of account of Syndicate 1183 have
closed, all fees due to any person in respect of the provision of
Funds at Lloyd's for the benefit of Talbot 2002 in its underwriting at
Lloyd's during those years of account have been, or shortly will be,
paid and the Group has complied with all agreements entered into with
the providers of Funds at Lloyd's in respect of those years of
account.
2.29.5 No member of the Group, other than Talbot 2002, has underwritten at
Lloyd's in the 2002 or subsequent years of account and no agreements
or arrangements for the provision of Funds at Lloyd's in respect of
the underwriting of any other member of the Group in the 2001 or prior
years of account remain in effect.
2.29.6 Talbot 2002 has not at any time underwritten insurance at Lloyd's
other than on Syndicate 1183.
2.29.7 Talbot 2002 is not currently and, so far as the Warrantors are
aware, has not at any time been in breach of, or given notice of any
intention to change the terms of, its agreement(s) with any provider
of Funds at Lloyd's which agreement remains in effect. So far as the
Warrantors are aware, none of the other parties to such agreement(s)
is currently or has at any time been in breach of it.
78
2.29.8 All fees, expenses and other monies payable by the Group Companies
to The Law Debenture Trust Corporation plc under the terms of the
various trust deeds relating to the Group's Funds at Lloyd's and/or
assets replacing the its Funds at Lloyd's have been paid when due and
no Group Company which is a party to any of those trust arrangements
or, so far as the Warrantors are aware, any other party thereto has at
any time been in breach of them.
2.29.9 No member of the Group is or has at any time during the last three
years been in dispute with any person who has provided or procured the
provision of Funds at Lloyd's for the benefit of Talbot 2002.
2.29.10 No person other than National Indemnity Company has any option,
right of first refusal or other legal entitlement to provide
reinsurance to close or any other reinsurance to Syndicate 1183 as a
result of its current or previous participation as a provider of Funds
at Lloyd's to Talbot 2002.
2.29.11 Other than as contained in the Data Room, there are no agreements
(whether written or otherwise) between any member of the Group and any
third party who is not a member of the Group relating to the provision
of the Funds at Lloyd's for Talbot 2002 (or any other member of the
Group).
2.30 COMPETITION
2.30.1 So far as the Warrantors are aware, there is, and has in the last
three years been, no aspect of the conduct of the business of the
Group:
(i) which infringes, or has infringed, any applicable competition
law;
(ii) in respect of which any filing, registration or notification is,
was or will be required by any applicable competition law
(whether or not the same has in fact been made);
(iii) which is, or was, the subject of an investigation under any
applicable competition law; or
(iv) in connection with which any Group Company has been subject to an
order or directions or has given any undertaking or commitments
or assurances under any applicable competition law.
2.30.2 No Group Company has knowingly, in the last three years, been put on
notice by a competition authority of any action or investigation under
any applicable competition law that will be taken against any of them
in relation to any of the current activities of the Group.
2.30.3 For the purposes of paragraphs 2.30.1 and 2.30.2, the term
"APPLICABLE COMPETITION LAW" means all competition laws applicable to
the business of the Group, whether of the United Kingdom, the European
Union, Bermuda or any other jurisdiction.
2.31 FOREIGN PRIVATE ISSUER
The Company is a "foreign private issuer" within the meaning of the
definition set out in Part 1 of Schedule 10.
3 EMPLOYEE SELLER WARRANTIES (made severally by the Employee Sellers only)
79
Each Employee Seller on its own behalf acknowledges, agrees, represents and
warrants and is aware that:
3.1.1 the Validus Securities have not been registered under the Securities
Act or under any federal, foreign, state or other jurisdiction's
securities laws; the transfer thereof is restricted by the Securities
Act and applicable securities laws; and Validus is under no obligation
to, and currently does not intend to, register or qualify the Validus
Securities for resale by the Employee Seller or assist the Employee
Seller in complying with any exemption under the Securities Act or the
securities laws of any such jurisdiction or any other jurisdiction. An
offer or sale directly or indirectly of Validus Securities by the
Employee Seller will be subject to the terms and provisions of this
Agreement, the Validus Bye-laws and any employment agreement that such
Employee Seller may be subject to and, in the absence of registration
under the Securities Act, will require the availability of an
exemption thereunder. Subject to the Validus Bye-laws, this Agreement
and any applicable employment agreements, certificates representing
Validus Securities will contain a restrictive legend reflecting such
restrictions for so long as such restrictions apply;
3.1.2 such Employee Seller confirms that he or she is not a "U.S. person"
within the meaning of Regulation S of the Securities Act (a portion of
which is for convenience purposes only attached hereto in Part 2 of
Schedule 10); and
3.1.3 such Employee Seller is acquiring the Validus Securities for his or
her own account, for investment only and not with a view toward the
transfer, resale or distribution thereof in violation of applicable
law.
80
SCHEDULE 5
LIMITATION OF LIABILITY UNDER CLAUSE 8.1
1 LIMITATION OF LIABILITY
For the avoidance of doubt:
(i) the Sellers (other than the Warrantors) shall have no liability
whatsoever under this Agreement for any breach of Warranty other than
a breach of the Title and Capacity Warranties and then each Seller
shall only be severally liable for his/her/its own breach of the Title
and Capacity Warranties given by him/her/it; and
(ii) only the Warrantors shall have any liability for any breach of the
Management Warranties and their liability for any such breach shall be
several.
Furthermore, notwithstanding any other provision of this Agreement, a
Seller shall not have any liability for any breach of the Title and
Capacity Warranties and a Warrantor shall not have any liability for any
breach of the Management Warranties:
1.1 TIME LIMITS
in respect of any claim, unless notice of such claim is given in writing by
the Purchaser to the relevant Seller or the Warrantors (as the case may be)
setting out reasonable details so far as practicable of the specific matter
in respect of which the claim is made including (if feasible) an estimate
of the amount of such claim within 12 months of the date of Completion, and
any such claim shall (if it has not been previously satisfied, settled or
withdrawn) be deemed to be withdrawn nine months after the date of
notification of the relevant claim in accordance with this paragraph 1.1
unless legal proceedings in respect of it have been served and are being
pursued with reasonable diligence (except that the time limits in this
paragraph 1.1 shall not apply to any claim for a breach of the Title and
Capacity Warranties);
1.2 MINIMUM CLAIMS
save for a claim for any breach of the Title and Capacity Warranties to
which this paragraph 1.2 shall not apply, in respect of any claim unless
and until the amount of the claim against all Warrantors (before the
application of paragraphs 1.3 and 1.4 below) exceeds L100,000 ("MINIMUM
CLAIM") (save that a series of claims arising from the same facts or
circumstances shall be aggregated for this purpose) but none of the
Warrantors shall be liable for a claim in excess of that amount unless the
liability determined in respect of any such claim (excluding interest,
costs and expenses) also exceeds that amount;
1.3 AGGREGATE MINIMUM CLAIMS
save for a claim for any breach of the Title and Capacity Warranties to
which this paragraph 1.3 shall not apply, in respect of any claim unless
the aggregate amount of all claims against all Warrantors (before the
application of paragraph 1.4 below) for breach of the Management Warranties
(taking no account of any claims for less than L100,000) exceeds L2,500,000
but if the aggregate liability in respect of all Minimum Claims exceeds
that figure then all Minimum Claims, including all Minimum Claims
previously notified, shall accrue against and be recoverable from the
Warrantors (and not just the excess over L2,500,000);
81
1.4 MAXIMUM CLAIMS
1.4.1 in respect of a claim for breach of any of the Title and Capacity
Warranties, to the extent that the total aggregate amount of the
liability of the relevant Seller against whom the claim has been made
for all claims made against him/her/it under this Agreement (including
for breach of Warranty) would exceed (in the case of each Non-Employee
Seller) the total Non-Employee Seller Cash Consideration received by
him/her/it in respect of his/her/its Shares or (in the case of each
Employee Seller) the total Employee Seller Cash Consideration received
by him/her/it in respect of his/her/its Shares;
1.4.2 in respect of a claim for breach of any of the Management Warranties,
without prejudice to the final two sentences of this paragraph 1.4.2,
to the extent that the total aggregate amount of the liability of the
relevant Warrantor in respect of all claims made against him/her for
breaches of the Management Warranties would exceed the amount set out
against his/her name below:
(i) MEA Xxxxxxxxx $ 985,978
(ii) CNR Xxxxx $1,050,777
(iii) ND Xxxxxxx $ 282,833
(iv) GAM Bonvarlet $ 210,971
(v) XX Xxxxxxxx $ 282,833
(vi) NJ Xxxxx $ 117,847
(vii) XX Xxxxxxxx $ 50,004
(viii) XX Xxxxxxx $ 188,556
(ix) DP Redhead $ 282,833
(x) XX Xxxx $ 176,950
and claims under the Management Warranties shall be borne by the
Warrantors as to the percentage set out against his/her name below,
with each Warrantor only being liable for his/her relevant percentage
amount of any claim:
(i) MEA Xxxxxxxxx 4.22%
(ii) CNR Xxxxx 4.79%
(iii) ND Xxxxxxx 1.15%
(iv) GAM Bonvarlet 1.58%
(v) XX Xxxxxxxx 1.15%
(vi) NJ Xxxxx 0.48%
(vii) XX Xxxxxxxx 0.38%
(viii) XX Xxxxxxx 0.77%
(ix) DP Redhead 1.15%
(x) XX Xxxx 0.96%
82
Notwithstanding any other provision of this Agreement, the total
aggregate amount of the liability of each of the Warrantors for all
breaches of the Title and Capacity Warranties, the Management
Warranties and any other provision of this Agreement shall not exceed
the total consideration received by him/her in respect of his/her
Shares. Accordingly, to the extent that any claim has been brought
against a Warrantor for breach of any of the Title and Capacity
Warranties or otherwise, the amount set out against his/her name in
the first table of this paragraph 1.4.2 shall be reduced down to such
amount (including to zero) as shall be necessary to ensure that
his/her total aggregate liability under this Agreement shall not
exceed the total consideration received by him/her;
1.5 CONTINGENT LIABILITIES
in respect of any liability which is contingent or otherwise not capable of
being quantified (a "CONTINGENT LIABILITY") unless and until such
Contingent Liability becomes an actual liability or becomes capable of
being quantified and is due and payable but this paragraph 1.5 shall not
operate to avoid a claim made in respect of a Contingent Liability within
the applicable time limit specified in paragraph 1.1 above if the requisite
details of such claim have been delivered before the expiry of such period
and legal proceedings served within nine months of such Contingent
Liability becoming an actual liability (or becoming capable of being
quantified) (even if this does not occur until after the expiry of the
relevant period) provided that if such Contingent Liability has not become
an actual liability or become capable of being quantified within four years
of the date of Completion, the Warrantors shall have no liability in
respect of such claim;
1.6 PROVISIONS IN THE ACCOUNTS
in respect of any claim if and to the extent that:
1.6.1 provision or reserve is made specifically for the matter giving rise
to the claim, or it is otherwise included as a liability or fairly
disclosed, in the Accounts; or
1.6.2 any sum is received specifically in respect of the matter giving rise
to the claim by any Group Company which has previously been written
off or provided against as irrecoverable in the Accounts;
1.7 ADJUSTMENTS
in respect of any claim if and to the extent that the subject matter
thereof is taken into account in the determination of the Consideration;
1.8 CIRCUMSTANCES ARISING
in respect of any matter, act, omission or circumstance (or any combination
thereof) (including, for the avoidance of doubt, the aggravation of a
matter or circumstance) to the extent that the same would not have occurred
or arisen but for:
1.8.1 ACTS OF PURCHASER:
(i) any act, omission, transaction or arrangement carried out at the
written request of or with the written consent of the Purchaser
or any other member of the Purchaser's Group before Completion or
in accordance with
83
the terms of this Agreement or any of the other documents entered
into pursuant to this Agreement (including any such act,
omission, transaction or arrangement which has any impact or
effect on the tax structure, arrangements, residency or
efficiency of any Group Company); or
(ii) any act, omission, admission of fact or liability, transaction or
arrangement of the Purchaser or any member of the Purchaser's
Group, or their respective directors, employees or agents or
successors in title, after Completion (including any such act,
omission, admission of fact or liability, transaction or
arrangement which has any impact or effect on the tax structure,
arrangement, residency or efficiency of any Group Company);
1.8.2 CHANGES IN LEGISLATION: the passing of, withdrawal of, or any change
in, after the date of this Agreement, any law, rule, regulation or
administrative practice (or any generally accepted interpretation or
application of any of the foregoing) of any government, governmental
department, agency or regulatory body including (without prejudice to
the generality of the foregoing) any increase in the rates of Taxation
or any imposition of Taxation or any withdrawal of relief from
Taxation not actually (or prospectively) in effect at the date of this
Agreement;
1.8.3 ACCOUNTING AND TAXATION CHANGES: any change in accounting or Taxation
policy, bases or practice of the Purchaser or any of the Group
Companies introduced or having effect after Completion,
or to the extent that it relates to any liability for Tax arising out of
the ordinary course of business of the Group after the Accounts Date;
1.9 INSURANCE
in respect of any claim to the extent of any net recovery under any policy
of insurance of any Group Company of a type that was in place at or prior
to the date of this Agreement, for any Losses arising from such claim;
1.10 NET BENEFIT
in respect of any claim for Losses suffered by the Purchaser or any of the
Group Companies to the extent of any corresponding savings by or net
benefit to the Purchaser or any other member of the Purchaser's Group or
any Group Company arising directly therefrom;
1.11 EQUAL TREATMENT OF THE WARRANTORS
notwithstanding any other provision of this Agreement, in respect of any
claim for breach of any of the Management Warranties unless the Purchaser
seeks to recover at the same time and to the same degree (taking into
account the financial caps and percentage amounts set out in paragraph
1.4.2, the several liability of each Warrantor and the other limitations of
liability set out in this Agreement) against each and every Warrantor and
treats all Warrantors equally. If the Purchaser withdraws a claim against
any of the Warrantors, the Purchaser shall also withdraw that claim against
each of the other Warrantors. If the Purchaser settles a claim against a
Warrantor, the Purchaser shall offer to the other Warrantors settlement
terms which are the same (taking into account the financial caps and
percentage amounts set out in paragraph 1.4.2 and the other limitations
84
of liability set out in this Agreement) as those agreed with that Warrantor
with whom the Purchaser has settled; and
1.12 LOSS OF PROFITS
in respect of any claims for any losses suffered by the Purchaser or any of
the Group Companies to the extent that the losses relate to indirect or
consequential loss or loss of profit.
2 SELLERS LIABILITY
2.1 The liability of each Seller and Warrantor under or pursuant to this
Agreement shall be several only and such liability shall be limited to the
amounts set out in paragraph 1.4 of this Schedule 5. None of the Sellers or
Warrantors shall be liable under this Agreement in respect of any claim for
breach of this Agreement (or any of the other documents to be entered into
pursuant to this Agreement) by another Seller or Warrantor.
2.2 Each Seller shall only be liable in respect of any breach of a Title and
Capacity Warranty or any other claim under this Agreement and the
Warrantors shall only be liable in respect of any breach of a Management
Warranty if and to the extent that, in each case, such claim is admitted by
the relevant Seller or the Warrantors (as the case may be) or determined by
a court of competent jurisdiction.
2.3 Without prejudice to Clause 8 (Warranties), Clause 9 (Whole Agreement and
Remedies) and Schedule 4 (Warranties given by the Sellers and Warrantors
under Clause 8) of this Agreement, the Purchaser acknowledges and agrees
that, except for the specific Warranties set out in paragraphs 2.8, 2.9 and
2.10 of Schedule 4, none of the Sellers or Warrantors gives or makes, nor
shall there be implied, any warranty as to the accuracy of any information
(whether in writing, verbal or howsoever provided), including the
forecasts, estimates, projections, statements of intent, statements of
opinion, or other forward looking statements provided to the Purchaser
(howsoever provided) on or prior to the date of this Agreement, including
any information in the Information Memorandum, the Management
Presentations, the Data Room, the Disclosure Letter, the Due Diligence
Reports, any other due diligence report prepared by or on behalf of the
Purchaser or the information supplied to or made available to the Purchaser
during its due diligence exercise nor, apart from the specific Warranties
set out in paragraphs 2.8, 2.9 and 2.10 of Schedule 4, is any warranty
given or shall any warranty be implied as to the accuracy or completeness
of, or otherwise in respect of, the contents of any of the foregoing, nor
is there any obligation on any Group Company, Seller or Warrantor or their
respective advisers to update any of the foregoing or to correct any
inaccuracies therein which may become apparent. For the avoidance of doubt,
(in the case of the Warrantors only, solely in respect of the specific
Warranties on the Due Diligence Reports set out in paragraphs 2.8, 2.9 and
2.10 of Schedule 4), none of the Warrantors or the Sellers shall have any
liability or responsibility whatsoever in respect of any of the foregoing
information or documents mentioned in this paragraph 2.3.
3 LIABILITY OF THE TRUSTEES
Notwithstanding anything else herein contained, the Trustees have entered
into this Agreement solely in their capacity as trustee of each of the
relevant Trusts and the benefits of this Agreement are held by the Trustees
subject to the provisions of such Trusts.
85
Notwithstanding any other provision of this Agreement, any and all
liabilities of the Trustees under this Agreement shall be limited to the
extent such liability can be met from and out of the property from time to
time subject to the trust funds of the relevant Trust or Trusts and,
accordingly:
3.1.1 the obligations of, and rights against, the Trustees under this
Agreement and any and all liability of the Trustees that may otherwise
arise in connection with this Agreement and the matters contained in
this Agreement shall be performed, satisfied and paid only out of, and
enforced only against and recourse under this Agreement shall be had
only against, the property from time to time subject to the trust
funds of the relevant Trust or Trusts; and
3.1.2 no obligation of the Trustees under this Agreement or that otherwise
may arise in connection with the matters contained in this Agreement
is binding upon, nor in respect thereof shall any resort or recourse
be had, judgment issued, or execution or other process levied against,
any other property of any Trustee held in its capacity as trustee of
any other trust (other than the relevant Trust or Trusts).
4 MITIGATION OF LOSS
Nothing in this Agreement shall or shall be deemed to abrogate or relieve
the Purchaser of any common law or other duty to mitigate any loss or
damage.
5 CONDUCT OF CLAIMS
5.1 NOTIFICATION
If the Purchaser or any Group Company becomes aware of any matter that may
give rise to a claim against any Seller or the Warrantors (as the case may
be) under this Agreement written notice of that fact setting out reasonable
details of the specific matter in respect of which the claim is made
including (if feasible) an estimate of the amount of such claim shall be
given as soon as reasonably practicable to the relevant Seller or the
Warrantors.
5.2 INVESTIGATION BY THE SELLERS
Without prejudice to the validity of the claim or alleged claim in
question, the Purchaser shall allow, and shall procure that the relevant
Group Companies allow, the Warrantors and their accountants and
professional advisers reasonably to investigate the matter or circumstance
alleged to give rise to such claim and whether and to what extent any
amount is payable in respect of such claim and for such purpose the
Purchaser shall give, and shall procure that the relevant Group Companies
give, subject to their being paid all reasonable costs and expenses, all
such reasonable information and assistance, including reasonable access to
premises and personnel, and the right to examine and copy or photograph any
assets, accounts, documents and records, as the Warrantors or their
accountants or professional advisers may reasonably request. The Warrantors
agree to keep all information obtained in relation to such investigation
confidential and to use it only for the purpose of the claim in question.
86
5.3 THIRD PARTY CLAIM/LIABILITY
If the claim in question is a result of or in connection with a claim by or
liability to a third party then no admission of liability shall be made by
or on behalf of the Purchaser or any Group Company and the claim shall not
be compromised, disposed of or settled without the consent of the
Warrantors (such consent not to be unreasonably withheld or delayed).
6 PRIOR RECEIPT
If, before any Seller or the Warrantors (as the case may be) pay(s) an
amount in discharge of any claim under this Agreement, the Purchaser or any
member of the Purchaser's Group recovers or is entitled to recover (whether
by payment, discount, credit, relief or otherwise) from a third party a sum
which is directly referable to the subject matter of the claim, the
Purchaser shall procure that, before steps are taken against that Seller or
the Warrantors under this Agreement, reasonable steps are taken to enforce
such recovery (and none of the Sellers or the Warrantors shall have any
liability to pay any amount by way of damages in respect of any claim
unless and until the Purchaser shall have taken such reasonable steps to
enforce such recovery) and any actual recovery (less any reasonable costs
and expenses incurred in such recovery) shall pro tanto reduce or satisfy,
as the case may be, such claim.
7 SUBSEQUENT RECOVERY
If any Seller pays an amount in discharge of any claim under this Agreement
and the Purchaser or any member of the Purchaser's Group subsequently
recovers from a third party a sum which is directly referable to the
subject matter of the claim, the Purchaser shall pay, or shall procure that
the relevant member of the Purchaser's Group pays, promptly to that Seller
an amount equal to (i) the sum recovered from the third party or (ii) if
less, the amount previously paid by that Seller to the Purchaser, in each
case less any reasonable costs and expenses incurred in obtaining such
recovery.
8 DOUBLE CLAIMS
The Purchaser shall not be entitled to recover from any Seller or the
Warrantors under this Agreement more than once in respect of the same Loss
or Losses suffered.
9 FRAUD AND WILFUL DEFAULT
None of the limitations contained in this Schedule 5 shall apply to any
claim against a Seller or the Warrantors (as the case may be) which arises
as a result of the fraud or wilful default of that Seller or the Warrantors
(as relevant).
10 NO RIGHT OF SET-OFF
No Seller shall be liable to make any payment under this Agreement nor
shall the Purchaser exercise any right of set off or counter claim against
or otherwise withhold payment of any sum stated to be payable by the
Purchaser to any Seller under the terms of this Agreement or under any
other agreement subsisting between them unless and until such liability has
been agreed between the Purchaser and the relevant Seller or adjudged
payable by that Seller by a court of competent jurisdiction.
87
In all circumstances, save to the extent of any deduction or withholding
required by law, the Purchaser hereby waives and relinquishes any right of
set off or counterclaim, deduction, withholding or retention which the
Purchaser might otherwise have in respect of any claim under this
Agreement.
11 OPPORTUNITY TO REMEDY BREACHES
Where a matter or default giving rise, or potentially giving rise, to any
claim is capable of remedy, the Purchaser shall provide written notice of
the claim in respect of such matter or default to the relevant person
against which such claim would be made as soon as reasonably practicable
and the relevant person shall only be liable to the extent the matter or
default is not remedied to the satisfaction of the Purchaser (acting
reasonably) without cost to the Purchaser within 30 Business Days after the
date on which such notice is served.
12 TAX
12.1 In calculating the liability of any Seller or the Warrantors for any breach
of this Agreement, there shall be taken into account the amount (if any) by
which any Taxation for which the Purchaser or any member of the Purchaser's
Group (including any Group Company) would otherwise have been accountable
or liable to be assessed is actually reduced or extinguished directly as a
result of the matter giving rise to such liability or any repayment of
Taxation directly attributable to the matter giving rise to such liability
and for the avoidance of any doubt such calculation shall only be performed
and taken into account at the time the Taxation is actually reduced and
extinguished and the benefit has been realised by the Purchaser or any
member of the Purchaser's Group (including any Group Company) in money or
money's worth.
12.2 The Purchaser shall procure that where any member of the Purchaser's Group
is entitled to relief from Taxation as referred to in paragraph 12.1, the
Purchaser's Group will take all reasonable steps (such steps being taken at
the cost and expense of the Sellers or the Warrantors as the case may be)
to obtain such relief, provided that such steps shall not include
disclaiming other reliefs that might be available, claiming such relief
ahead of any other relief that might be available to that member of the
Purchaser's Group, utilising that relief ahead of other reliefs surrendered
to it by other members of the Purchaser's Group or requiring the Purchaser
or any member of the Purchaser's Group (including any Group Company) to
arrange its Tax affairs in any way, or to do any matter or thing, which is
unduly onerous.
88
SCHEDULE 6
PROPERTIES
LEASEHOLD
Description: Fourth Floor, and car park stacker 3, Gracechurch
House, 00 Xxxxxxxxxxx Xxxxxx, Xxxxxx, XX0
Date of and parties to lease: Lease between 00 Xxxxxxxxxxx Xxxxxx (XX. 1) Limited
and 00 Xxxxxxxxxxx Xxxxxx (XX. 2) Limited and Talbot
Underwriting Services Ltd.
Legal owner: Talbot Underwriting Services Ltd.
Beneficial owner Talbot Underwriting Services Ltd. for and on behalf
of itself and the names of Syndicate 1183 from time
to time
Term: 10 years and 62 days from 23 October 2003
Rent: L314,525 per annum during the first five years of
the Term, thereafter the rent determined by the rent
review
Next rent review: 25 December 2008
Present use: A suite of offices
LEASEHOLD
Description: Fifth Floor, Gracechurch House, 00 Xxxxxxxxxxx
Xxxxxx, Xxxxxx, XX0
Date of and parties to lease: Lease dated 23 October 2003 between 00 Xxxxxxxxxxx
Xxxxxx (XX. 1) Limited and 00 Xxxxxxxxxxx Xxxxxx
(XX. 2) Limited and Talbot Underwriting Services Ltd.
Legal owner: Talbot Underwriting Services Ltd.
Beneficial owner Talbot Underwriting Services Ltd. for and on behalf
of itself and the names of Syndicate 1183 from time
to time
Term: 10 years and 25 days from 30 November 2003
Rent: Up to and including 29 March 2008 a peppercorn (if
demanded), thereafter L267,085 per annum subject to
the rent review
Next rent review: 25 December 2008
Present use: A suite of offices
89
LEASEHOLD
Description: Sixth Floor, Gracechurch House, 00 Xxxxxxxxxxx
Xxxxxx, Xxxxxx, XX0
Date of and parties to lease: Lease dated 23 October 2003 between 00 Xxxxxxxxxxx
Xxxxxx (XX. 1) Limited and 00 Xxxxxxxxxxx Xxxxxx
(XX. 2) Limited and Talbot Underwriting Services Ltd.
Legal owner: Talbot Underwriting Services Ltd.
Beneficial owner Talbot Underwriting Services Ltd. for and on behalf
of itself and the names of Syndicate 1183 from time
to time
Term: 10 years and 25 days from 30 November 2003
Rent: Up to and including 28 March 2008 a peppercorn, if
demanded, thereafter L176,855 per annum subject to
the rent review
Next rent review: 25 December 2008
Present use: A suite of offices
LEASEHOLD
Description: Part Basement, 00 Xxxxxxxxxxx Xxxxxx, XX0
Date of and parties to lease: Lease dated 13 January 1997 between the City of
London Real Property Company Limited and Venton
Services Limited (now known as Talbot Underwriting
Services Ltd (the reversion of the lease was
subsequently vested in 00 Xxxxxxxxxxx Xxxxxx (XX. 1)
Limited and 00 Xxxxxxxxxxx Xxxxxx (XX. 2) Limited))
Legal owner: Talbot Underwriting Services Ltd.
Beneficial owner Talbot Underwriting Services Ltd. for and on behalf
of itself and the names of Syndicate 1183 from time
to time
Term: 10 years from 29 September 1996
Lease expired on 28 September 2006
Rent: L2,520 per annum
Next rent review: Uncertain
Present use: Storage
90
LEASEHOLD
Description: Sub-basement Stores 1 and 12, 51 to 00 Xxxxxxxxxxx
Xxxxxx, XX0
Date of and parties to lease: lease between 00-00 Xxxxxxxxxxx Xxxxxx (XX. 1)
Limited and 00-00 Xxxxxxxxxxx Xxxxxx (XX. 2)
Limited) and Talbot Underwriting Services Ltd
Legal owner: Talbot Underwriting Services Ltd.
Beneficial owner Talbot Underwriting Services Ltd. for and on behalf
of itself and the names of Syndicate 1183 from time
to time
Term: 1 year from 23 January 2007
Rent: L5,535 per annum
Next rent review: N/A
Present use: Storage
LICENCE
Description: Car Park Stacker 3, 00 Xxxxxxxxxxx Xxxxxx, XX0
Date of and parties to lease: Licence dated 20 March 1997 between the City of
London Real Property Company Limited and Venton
Services Limited (now known as Talbot Underwriting
Services Ltd)
The use of this Car Park Stacker is invoiced under
the lease of the 0xx Xxxxx xx 00 Xxxxxxxxxxx Xxxxxx.
Legal owner: Talbot Underwriting Services Ltd.
Beneficial owner Talbot Underwriting Services Ltd. for and on behalf
of itself and the names of Syndicate 1183 from time
to time
Term: Indefinite
Rent: L5,500 per annum
Next rent review: N/A
Present use: Parking
91
LICENCE
Description: Car Park Stacker 2, 00 Xxxxxxxxxxx Xxxxxx, XX0
Date of and parties to lease: Unwritten licence from LS City & West End Limited
The use of this Car Park Stacker is invoiced
separately on a quarterly basis.
Legal owner: Talbot Underwriting Services Ltd.
Beneficial owner Talbot Underwriting Services Ltd. for and on behalf
of itself and the names of Syndicate 1183 from time
to time
Term: Rolling on a quarterly basis
Rent: L1,615.62 per quarter
Next rent review: N/A
Present use: Parking
LEASEHOLD
Description: Lloyd's Box 39, Lloyd's Building, One Xxxx Xxxxxx,
Xxxxxx XX0X 0XX
Date of and parties to Lease: Oral lease arrangement made on 1 January 2002
between Lloyd's and Talbot Underwriting Services
Ltd.
Term: 1 year rolling term from 1 January 2002
Rent: L189,823 per annum
Next rent review: 1 January 2008
LEASEHOLD
Description: Lloyd's Xxx 000, Xxxxx'x Xxxxxxxx, Xxx Xxxx Xxxxxx,
Xxxxxx XX0X 0XX
Date of and parties to Lease: Oral lease arrangement made on 1 January 2003
between Lloyd's and Talbot Underwriting Services
Ltd.
Term: 1 year rolling term from 1 January 2003
Rent: L60,853 per annum
Next rent review: 1 January 2008
92
LEASEHOLD
Description: Lloyd's Box 173, Lloyd's Building, One Xxxx Xxxxxx,
Xxxxxx XX0X 0XX
Date of and parties to Lease: Oral lease arrangement made on 1 January 2003
between Lloyd's and Talbot Underwriting Services
Ltd.
Term: 1 year rolling term from 1 January 2003
Rent: L87,404 per annum
Next rent review: 1 January 2008
LEASEHOLD
Description: Lloyd's Xxx 000, Xxxxx'x Xxxxxxxx, Xxx Xxxx Xxxxxx,
Xxxxxx XX0X 0XX
Date of and parties to Lease: Oral lease arrangement made on 1 January 2003
between Lloyd's and Talbot Underwriting Services
Ltd.
Term: 1 year rolling term from 1 January 2003
Rent: L51,575 per annum
Next rent review: 1 January 2008
LEASEHOLD
Description: Lloyd's Xxx 000, Xxxxx'x Xxxxxxxx, Xxx Xxxx Xxxxxx,
Xxxxxx XX0X 0XX
Date of and parties to Lease: Oral lease arrangement made on 1 January 2007
between Lloyd's and Talbot Underwriting Services
Ltd.
Term: 1 year rolling term from 1 January 2007
Rent: L69,750 per annum
Next rent review: 1 January 2007
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SCHEDULE 7
OPTIONHOLDERS
(2)
OPTIONS (3)
(1) OVER EXERCISE
NAME OF OPTIONHOLDER SHARES PRICE
-------------------- --------- ------------
CLASS B SHARE OPTIONHOLDERS
OPTIONS GRANTED IN 2003
Xxxxxx Xxxx 375,000 L 112,500
Xxxxxx Xxxxxx 125,000 L 37,500
Xxxxxx Xxxxxx 125,000 L 37,500
Xxxxxxx Xxxxxxxx 500,000 L 150,000
Xxxxxxx Xxxxx 500,000 L 150,000
Xxxx Xxxxx 125,000 L 37,500
Xxxx Xxxxxx 250,000 L 75,000
Xxxxx Xxxxxxxxxx 500,000 US$ 473,000
OPTIONS GRANTED IN 2004
Gilles Bonvarlet 1,250,000 US$1,182,500
Xxxxxxx Xxxxxxxxx 500,000 US$ 473,000
Xxxxxx Xxxxx 1,250,000 US$1,182,500
OPTIONS GRANTED IN 2005
Xxxxx Xxxxxxx 150,000 US$ 141,900
Xxxxx Xxxxx 150,000 US$ 141,900
Xxxxxxx Xxxxx 125,000 US$ 118,250
Xxxxx Xxxxxxxx 50,000 US$ 47,300
Xxxx Xxxxxx 75,000 US$ 70,950
Xxxxxxx Xxxx 100,000 US$ 94,600
Xxxxx Xxxxxxxx 50,000 US$ 47,300
Xxxxxx Xxxxxxx 75,000 US$ 70,950
94
(2)
OPTIONS (3)
(1) OVER EXERCISE
NAME OF OPTIONHOLDER SHARES PRICE
-------------------- --------- ------------
OPTIONS GRANTED IN 2006
Gilles Bonvarlet 500,000 US$ 473,000
Xxxxxx Xxxx 125,000 US$ 118,250
Xxxx Xxxxxxxxx 62,500 US$ 100,000
Xxxx Xxxxxxx 62,500 US$ 100,000
Xxx Xxxxxx 62,500 US$ 100,000
Xxxx Xxxxxx 62,500 US$ 100,000
Xxxxx Xxxxx 62,500 US$ 100,000
Xxxxxx Xxxxxx 62,500 US$ 100,000
Xxxxxx Xxxxx 62,500 US$ 100,000
Xxxxxx Xxxx 62,500 US$ 100,000
Xxxxxx Xxxxxx 62,500 US$ 100,000
EBT SHARE OPTIONHOLDERS
Xxxxxx Xxxx 125,000 US$ 118,250
Xxxxx Xxxxxxx 100,000 US$ 94,600
Xxxx Xxxxxx 75,000 US$ 70,950
Xxxxxxx Xxxx 100,000 US$ 94,600
Xxxx Xxxxx 125,000 US$ 118,250
Xxxx Xxxxxxxx 75,000 US$ 70,950
Xxxx Xxxxx 125,000 US$ 118,250
Xxxxxx Xxxxxxxxx 75,000 US$ 70,950
Xxxxxx Xxxxxxx 75,000 US$ 70,950
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SCHEDULE 8
EMPLOYMENT PARTIES
MEA Xxxxxxxxx
CNR Xxxxx
ND Xxxxxxx
GAM Bonvarlet
XX Xxxxxxxx
NJ Xxxxx
XX Xxxxxxxx
XX Xxxxxxx
XX Xxxx
XX Xxxxxxx
XX Xxxxx
XX Xxxxxxx
JRA Bamford
SEH Xxxx
G Xxxxx
XX XxXxxxxx
XX Xxxxxx
XX Xxxxx
JAA Colquhoun
I Fordham
XX Xxxxx
XX Xxxxxx
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SCHEDULE 9
TERMS APPLICABLE TO THE BASE SHARE CONSIDERATION
1 Prior to the end of the Restricted Period (as defined below), the Base
Share Consideration may not be Transferred (as defined below) by an
Employee Seller.
2 If an Employee Seller's employment with the Group Companies terminates,
Validus may repurchase, at a price per share equal to $0.01, such Base
Share Consideration which at the time of such termination remains subject
to a Restricted Period (and, for the avoidance of doubt, termination of the
Restricted Period pursuant to the provisions of paragraphs 3, 4 and 5 below
shall be deemed to have occurred prior to the termination of an Employee
Seller's employment).
3 The Restricted Period shall begin on the date of Completion and end with
respect to each Employee Seller's Base Share Consideration as follows: as
to 25% of his/her Base Share Consideration, on the first anniversary of the
date of Completion; as to 25% of his/her Base Share Consideration, on the
second anniversary of the date of Completion; as to 25% of his/her Base
Share Consideration, on the third anniversary of the date of Completion;
and as to 25% of his/her Base Share Consideration, on the fourth
anniversary of the date of Completion; in each case, so long as the
Employee Seller remains an employee of one of the Group Companies through
the applicable anniversary, except that, notwithstanding the foregoing, the
Restricted Period will terminate immediately in the circumstances set out
in paragraph 5 below.
4 Notwithstanding paragraph 3, the Restricted Period with respect to the Base
Share Consideration to be received by Xxxxxxx Xxxxxxxxx will terminate as
to 100% of his Base Share Consideration on the first anniversary of the
date of Completion, so long as Xxxxxxx Xxxxxxxxx remains an employee of one
of the Group Companies through such anniversary, except that,
notwithstanding the foregoing, the Restricted Period will terminate
immediately in the circumstances set out in paragraph 5 below.
5 The Restricted Period for each Employee Seller, with respect to that
Employee Seller's Base Share Consideration will terminate immediately with
respect to all of the Base Share Consideration of that Employee Seller:
5.1 at the time of termination of employment of that Employee Seller if the
Employee Seller is a "Good Leaver", which means the Employee Seller's
employment has terminated due to one of the following reasons:
5.1.1 agreed termination of employment;
5.1.2 injury, ill-health, disability or redundancy;
5.1.3 his/her death;
5.1.4 wrongful or unfair dismissal by the relevant Group Company;
5.1.5 the company in which he/she is employed ceasing to be a Validus Group
Company (as defined below);
5.1.6 the entire or substantially the whole of the business carried on by
Validus being transferred to a person other than a Validus Group
Company; or
97
5.1.7 retirement at the normal retirement age of the relevant Group Company
or early retirement on the grounds of ill health or with the consent
of the board of the relevant Group Company and in accordance with the
terms of the pension plan of which the Employee Seller is a member; or
5.2 on the occurrence of any transaction that constitutes a Change of Control
of Validus or on any sale or disposal by Validus after Completion of the
Company, Talbot Insurance (Bermuda) Ltd, Talbot Underwriting Ltd, Talbot
Underwriting Services Ltd or Talbot 2002 or of a majority of the business
or assets held by any such Group Company.
6 Upon Completion, the Base Share Consideration (notwithstanding the
Transfer/forfeiture restrictions set out in paragraphs 1 and 2 above) shall
be validly issued, fully paid and non-assessable (meaning that no further
sums are required to be paid by holders thereof in connection with the
issue thereof) and shall be entitled to vote and participate in
distributions and dividends, pari passu with all other Validus Common
Shares then in issue, in accordance with the Validus Bye-Laws.
7 For the avoidance of doubt, on termination of the Restricted Period in
accordance with any of paragraphs 3, 4 or 5 above, the Transfer and
forfeiture restrictions set out in paragraphs 1 and 2 above shall cease to
apply and shall have no further effect.
8 In this Schedule 9, the following definitions shall apply:
"CHANGE OF CONTROL OF VALIDUS" means a change of control of Validus (as
defined in the Validus 2005 Long Term Incentive Plan) where that change of
control also involves Xxxxxx Xxxxx and either one of Xx Xxxxxx or Xxxxxx
Xxxxx no longer continuing in a senior management role equivalent to, or of
greater responsibility than, the role they held prior to the change of
control.
"RESTRICTED PERIOD" shall be for the duration and have the meaning set out
in paragraphs 3 and 4 (as applicable);
"TRANSFER" means, with respect to Validus Common Shares, to sell, assign,
dispose of, exchange or otherwise transfer such shares or any participation
interest therein (including, without limitation, voting and/or economic
rights with respect thereto), whether directly or indirectly, or agreeing
to do any of the foregoing; provided, however, that (i) Transfers to the
shareholder's spouse or partner or lineal relatives, or any custodian or
trust for the benefit of any of the foregoing or the estate of such
shareholder, shall be permitted but the transferee shall agree to be bound
by such transfer restrictions, and (ii) Transfers pursuant to a transaction
approved by either a majority of the directors of Validus or by holders of
a majority of the outstanding Validus Common Shares (or pursuant to any
offer made to all holders of Validus Common Shares and accepted by holders
of a majority thereof) or in a transaction that constitutes a change in
control of Validus (as defined in the Validus 2005 Long Term Incentive
Plan) shall be permitted; and
"VALIDUS GROUP COMPANY" means Validus or any of its subsidiaries.
98
SCHEDULE 10
RULE 3B-4 OF THE EXCHANGE ACT AND DEFINITION OF US PERSON
PART 1
RULE 3B-4 OF THE EXCHANGE ACT
"FOREIGN PRIVATE ISSUER" means a corporation or entity organised under the laws
of a country other than the United States, except that such corporation or
entity will not be considered a Foreign Private Issuer if more than 50 percent
of its outstanding voting securities are directly or indirectly held by
residents of the United States and any of the following apply: (i) the majority
of the executive officers or directors are United States citizens or residents;
(ii) more than 50 percent of the assets of such corporation or entity are
located in the United States; or (iii) the business of such corporation or
entity is administered principally in the United States.
PART 2
US PERSON
Set forth below is the definition of the term "U.S. PERSON" as used within the
meaning of Regulation S under the United States Securities Act of 1933, as
amended.
a. U.S. person.
1. "U.S. person" means:
i. Any natural person resident in the United States;
ii. Any partnership or corporation organized or incorporated under
the laws of the United States;
iii. Any estate of which any executor or administrator is a U.S.
person;
iv. Any trust of which any trustee is a U.S. person;
v. Any agency or branch of a foreign entity located in the United
States;
vi. Any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person;
vii. Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United
States; and
viii. Any partnership or corporation if:
A. Organized or incorporated under the laws of any foreign
jurisdiction; and
B. Formed by a U.S. person principally for the purpose of
investing in securities not registered under the Act, unless
it is organized or incorporated, and owned, by accredited
investors (as defined in Rule 501(a)) who are not natural
persons, estates or trusts.
2. The following are not "U.S. persons":
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i. Any discretionary account or similar account (other than an
estate or trust) held for the benefit or account of a non-U.S.
person by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United
States;
ii. Any estate of which any professional fiduciary acting as executor
or administrator is a U.S. person if:
A. An executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect
to the assets of the estate; and
B. The estate is governed by foreign law;
iii. Any trust of which any professional fiduciary acting as trustee
is a U.S. person, if a trustee who is not a U.S. person has sole
or shared investment discretion with respect to the trust assets,
and no beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person;
iv. An employee benefit plan established and administered in
accordance with the law of a country other than the United States
and customary practices and documentation of such country;
v. Any agency or branch of a U.S. person located outside the United
States if:
A. The agency or branch operates for valid business reasons;
and
B. The agency or branch is engaged in the business of insurance
or banking and is subject to substantive insurance or
banking regulation, respectively, in the jurisdiction where
located; and
vi. The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development
Bank, the Asian Development Bank, the African Development Bank,
the United Nations, and their agencies, affiliates and pension
plans, and any other similar international organizations, their
agencies, affiliates and pension plans.
100
SCHEDULE 11
SHARE ELECTION FORM
Reference is hereby made to that certain Share Sale Agreement dated May [ ],
2007 among Validus Holdings Ltd., a company organised under the laws of Bermuda
("VALIDUS"), and the sellers identified therein relating to the acquisition by
Validus of all of the issued share capital of Talbot Holdings Ltd, a company
organised under the laws of Bermuda (as the same may be amended, supplemented,
restated or otherwise modified from time to time, the "SHARE SALE AGREEMENT").
Capitalised terms used but not defined herein have the meaning ascribed to such
terms in the Share Sale Agreement.
Pursuant and subject to Clause 3.1.4 of the Share Sale Agreement, the
undersigned Employee Seller hereby makes a Share Election to receive ___% of the
Employee Seller Cash Consideration due to the undersigned in Validus Common
Shares. To the extent that the percentage amount referred to in the preceding
sentence would result in the Cash Component payable to the undersigned Employee
Seller being less than his/her Minimum Cash Amount, such percentage amount shall
be reduced such that the amount of the Cash Component received by the
undersigned Employee Seller is not less than the Minimum Cash Amount. This Share
Election, once duly made in accordance with the terms of the Share Sale
Agreement, is irrevocable.
The undersigned Employee Seller hereby acknowledges, agrees and reaffirms
his/her warranties set forth in Part 3 of Schedule 4 of the Share Sale
Agreement.
This Share Election Form will only be effective if executed and completed and
delivered to Validus before the earlier of the expiration of the period of two
weeks of the date of the Share Sale Agreement and the Business Day preceding the
day on which the Conditions Precedent shall first have been fulfilled at the
following address:
Validus Holdings, Ltd.
00 Xxx-Xx-Xxxxx Xxxx
Xxxxxxxx XX00 Xxxxxxx,
Xxxxxxxxx: Chief Financial Officer and General Counsel
(Facsimile: (000) 000-0000)
with a copy to the Company Secretary of Talbot Holdings Ltd
Name (in block capitals):
--------------
Signature:
-----------------------------
Date: 2007
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101
