EXHIBIT 99.1
EXECUTION COPY
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (the "Agreement") is made this 17th
day of January, 2000 by and among Xxxxxxxx Investments Inc. (the "XL Sub"), XL
Capital Ltd ("XL"), Risk Capital Holdings, Inc. ("RCH") and Risk Capital
Reinsurance Company, a wholly owned subsidiary of RCH (the "RCH Sub").
RECITALS
A. The XL Sub, a wholly owned indirect subsidiary of XL, owns
4,755,000 shares (the "RCH Shares") of the common stock, $0.01 par value, of
RCH.
B. The XL Sub desires to sell to RCH, and RCH desires to repurchase
from the XL Sub, the RCH Shares, upon the terms and subject to the conditions
hereinafter set forth (the "Transaction").
C. The RCH Sub owns (i) 8,360,401 voting shares and 15,551,505
non-voting shares (the "LARC Shares") of LARC Holdings, Ltd. ("LARC"), and
warrants (the LARC Warrants") to purchase 2,391,191 non-voting shares of LARC,
and (ii) 1,418,440 common shares (as the number thereof may be adjusted pursuant
to Section 2(b), the "ALRE Shares") of Annuity and Life Re (Holdings), Ltd.
("ALRE") and warrants (as the number thereof may be adjusted pursuant to Section
2(b), the "ALRE Warrants") to purchase an additional 100,000 common shares of
ALRE (the ALRE Shares, the ALRE Warrants, the LARC Shares and the LARC Warrants,
collectively, the "Interests") and has the right to designate one nominee for
election to the Board of Directors of ALRE.
D. Immediately prior to the Closing (as hereinafter defined), the RCH
Sub will transfer and assign all of its right, title and interest in and to the
Interests to RCH.
E. RCH desires to sell to the XL Sub, and the XL Sub desires to
purchase from RCH, the Interests, upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Sale of RCH Shares. Upon the terms and subject to the conditions
set forth in this Agreement, the XL Sub agrees to sell, transfer and assign the
RCH Shares to RCH and RCH agrees to purchase the RCH Shares from the XL Sub, at
the Closing, at which time and concurrently with the transfer of the Interests
and other consideration pursuant to Section 2 below, the XL Sub shall deliver to
RCH certificates representing the RCH Shares duly endorsed in blank or
accompanied by stock powers duly endorsed in blank having attached thereto all
necessary stock transfer and documentary stamps at the XL Sub's expense.
2. Consideration for the RCH Shares; Transfer of the Interests.
(a) The purchase price per RCH Share (the "Discounted Per
Share Price") shall be equal to 85% of the average closing price per
share of RCH common stock on the NASDAQ National Market during the
twenty trading days (the "Measuring Period") beginning on the third
full trading day following the date on which the Transaction is first
disclosed to the public in accordance with Section 10 hereof;
provided, however, that the maximum Discounted Per Share Price shall
not exceed $15 and if the Discounted Per Share Price would be greater
than such maximum, then the Discounted Per Share Price shall be deemed
to be equal to such maximum. The aggregate purchase price for the RCH
Shares (the "Aggregate RCH Share Price") shall be equal to the number
of RCH Shares multiplied by the Discounted Per Share Price.
(b) The Aggregate RCH Share Price shall be paid by RCH to
the XL Sub in the form of (i) the LARC Shares and the LARC Warrants
(which together shall be deemed to have an aggregate value of
$25,000,000), (ii) the ALRE Shares, which will be deemed to have an
aggregate value (the "Aggregate ALRE Share Value") equal to the number
of ALRE Shares multiplied by the average closing price per ALRE Share
on the NASDAQ National Market during the Measuring Period (the "ALRE
Per Share Price"), (iii) the ALRE Warrants, which will be deemed to
have an aggregate value (the "Aggregate ALRE Warrant Value") equal to
the number of ALRE Warrants multiplied by the Black-Scholes value per
ALRE Warrant (using such assumptions as RCH and the XL Sub shall
reasonably agree, which they shall use reasonable best efforts to do
within 10 days after the date hereof) (the "ALRE Per Warrant Price"),
and (iv) cash (the "Cash Component") in an amount equal to the
difference between (x) the Aggregate RCH Share Price and (y) the sum
of (A) $25,000,000, (B) the Aggregate ALRE Share Value and (C) the
Aggregate ALRE Warrant Value; provided, however, that in the event
that the Cash Component is a negative number, XL may, in its sole
discretion, (i) choose to pay such Cash Component to RCH at the
Closing, (ii) choose to have the number of ALRE Shares and/or ALRE
Warrants to be delivered pursuant to this paragraph (b) to be
decreased so as to eliminate the Cash Component that XL would have to
pay or (iii) choose a combination of the procedures described in the
preceding (i) and (ii).
(c) At the Closing, concurrently with the transfer of the
RCH Shares by the XL Sub to RCH pursuant to Section 1 above, (a) RCH
shall deliver to the XL Sub certificates representing the Interests
being transferred duly endorsed in blank or accompanied by stock
powers duly endorsed in blank having attached thereto all necessary
stock transfer and documentary stamps at RCH's expense, (b) RCH shall
pay the Cash Component to the XL Sub, if such amount is a positive
number, by wire transfer of immediately available funds to a bank
account designated by the XL Sub in writing to RCH not later than the
close of business on the second business day immediately preceding the
Closing Date and (c) XL shall, or shall cause the XL Sub, to pay the
Cash Component to RCH, if such amount is a negative number after any
adjustment pursuant to paragraph (b) of
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this Section 2, by wire transfer of immediately available funds to a
bank account designated by RCH in writing to the XL Sub not later than
the close of business on the second business day immediately preceding
the Closing Date.
(d) RCH and the RCH Sub agree to take all actions required
to transfer and assign all right, title and interest in and to the
ALRE Shares and the ALRE Warrants from the RCH Sub to RCH. RCH and the
RCH Sub further agree that, both before and, if applicable, after the
Closing, each shall use its reasonable best efforts to take all
actions necessary to complete the transfer of the ALRE Shares and the
ALRE Warrants to the XL Sub (including without limitation all actions
required under the Purchase Agreement (as hereinafter defined) and the
Letter Agreement (as hereinafter defined)) as expeditiously as
reasonably possible and at its expense. RCH and the RCH Sub further
agree that they will use their reasonable best efforts to take all
actions necessary to (1) assign to the XL Sub all rights under the
Letter Agreement relating to the selection of one individual to be
nominated as a director of ALRE and (2) assign to the XL Sub all
rights under the Registration Rights Agreement dated as of March 4,
1998 between ALRE and the RCH Sub relating to the right of the RCH Sub
to require the registration by ALRE of the ALRE Shares and the ALRE
Warrants under the Securities Act of 1933, as amended (the
"Registration Rights Agreement").
(e) Notwithstanding the foregoing paragraphs (c) and (d),
the following shall apply:
(i) Only that number of ALRE Shares shall be transferred to
the XL Sub at the Closing such that the ALRE Shares, together with the
common shares of ALRE held by XL or any affiliate of XL as of the
Closing, accounts for 9.9% of the total outstanding shares of ALRE
common stock. The ALRE Warrants shall not be transferred to the XL Sub
at the Closing.
(ii) Any ALRE Shares that are not transferred to the XL Sub
as a result of the restrictions contained in the preceding paragraph
(i) and the ALRE Warrants shall be held initially by RCH for the sole
and exclusive benefit of XL and the XL Sub, and such ALRE Shares and
any common shares of ALRE issued upon the exercise of ALRE Warrants
shall be subject to, and the parties shall execute and deliver prior
to the Closing, a Voting and Disposition Agreement, which shall be
substantially in the form attached hereto as Exhibit A (the "Voting
and Disposition Agreement"); provided, however, that RCH shall
transfer such ALRE Shares, ALRE Warrants, common shares of ALRE issued
upon the exercise of ALRE Warrants, cash realized upon the sale of any
of the foregoing and any dividends or other distributions (whether
cash, stock or otherwise) with respect thereto in accordance with the
terms of such Voting and Disposition Agreement; provided, further,
that neither XL nor the XL Sub shall be permitted (A) to request such
transfer of securities of ALRE to XL or any subsidiary of XL or
exercise any right to vote or to direct the voting of common shares of
ALRE so held by RCH, until such time as XL or the XL Sub has obtained
the approval of the applicable insurance regulatory authorities for
the acquisition of control of
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ALRE or has determined upon consultation with outside legal counsel
that such transfer can be effected or such voting rights exercised
under applicable law and XL or the XL Sub so notifies RCH or (B) to
request such transfer of securities of ALRE to XL or any subsidiary of
XL, until such time as XL or the XL Sub has obtained the approval of
the Board of Directors of ALRE, if required, to effect such transfer
or has determined upon consultation with outside legal counsel that
such transfer can be effected under the applicable provisions of the
ALRE Bye-Laws and XL or the XL Sub so notifies RCH.
(iii) At the time of any transfer pursuant to the preceding
paragraph (ii), concurrently with such transfer RCH shall deliver to
the XL Sub certificates representing the Interests being transferred
duly endorsed in blank or accompanied by stock powers duly endorsed in
blank having attached thereto all necessary stock transfer and
documentary stamps at RCH's expense.
(iv) The parties agree that following the Closing they shall
continue to use their reasonable best efforts to obtain all
regulatory, board and other approvals as may be required or desirable
under applicable law and under the ALRE Bye-Laws to effect the
transfer of common shares of ALRE held by RCH pursuant to this
paragraph (e) to the XL Sub (or to effect such transfer in a manner
that does not require such approvals) as promptly as practicable after
the Closing.
(f) In the event of any stock split, stock combination,
stock dividend or similar transaction prior to the Closing involving
the RCH Shares, the LARC Shares, the LARC common shares subject to the
LARC Warrants, the ALRE Shares or the ALRE common shares subject to
the ALRE Warrants, the share numbers and prices herein shall be
adjusted as appropriate.
3. Representations and Warranties of XL and the XL Sub. XL and the XL
Sub hereby jointly and severally make the following representations and
warranties, effective as of the date hereof, and jointly and severally represent
and warrant that each such representation and warranty shall be true and
accurate in all material respects as of the Closing Date:
(a) The XL Sub is the record owner of the RCH Shares, which
constitute the entire direct and indirect ownership interest of the XL
Sub and XL in RCH's common stock.
(b) The XL Sub has good title to the RCH Shares, free and
clear of any and all liens, claims, options, security interests and
encumbrances of any kind or nature (collectively, "Adverse
Interests").
(c) Each of the XL Sub and XL is a duly organized and
validly existing corporation in its jurisdiction of incorporation. The
XL Sub and XL have all requisite corporate power and authority to
deliver and perform this Agreement and all other documents requiring
XL's or the XL Sub's execution and delivery hereunder.
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(d) The XL Sub and XL have taken all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, and all other agreements requiring the XL Sub's or XL's
execution and delivery hereunder. Assuming due authorization,
execution and delivery hereof by RCH and the RCH Sub, this Agreement
constitutes the duly authorized, valid and legally binding obligation
of the XL Sub and XL, as the case may be, and is enforceable in
accordance with its terms.
(e) The XL Sub has all requisite corporate power and
authority to transfer and deliver the RCH Shares to RCH in the manner
provided in this Agreement, and upon delivery of the RCH Shares
pursuant to the terms of this Agreement, RCH will receive good title
thereto, free and clear of any and all Adverse Interests.
(f) The execution, delivery and performance of this
Agreement by XL and the XL Sub and the performance of the transactions
contemplated hereby by the XL Sub do not require the consent of any
third party, including but not limited to that of any governmental
authority or agency in any jurisdiction, other than such approvals as
may be required by the applicable state insurance regulatory
authorities and the insurance regulatory authorities of Bermuda for
the transfer of ALRE Shares and the ALRE Warrants in the event that
the aggregate interest of XL in ALRE would constitute 10% or more of
the outstanding shares of ALRE.
(g) With the exception of its arrangement with Xxxxxxx,
Sachs & Co., neither XL nor the XL Sub has made any agreement for the
payment of a broker's fee or commission as a result of the
transactions contemplated hereby. Any fee, commission or other amount
payable to any financial advisor or consultant engaged by the XL Sub
or by XL, including, but not limited to Xxxxxxx, Xxxxx & Co., will be
paid by XL.
(h) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
by the XL Sub and XL do not and will not constitute a breach or
violation of, or a default under, either of their articles or
certificates of incorporation, by-laws or similar governing documents,
or any material contract to which the XL Sub or XL is a party, whether
currently in existence or entered into before the Closing.
(i) No litigation, claim or other proceeding before any
court or governmental agency is pending against the XL Sub or XL that
would reasonably be expected to materially adversely affect the
completion of the transactions contemplated by this Agreement.
4. Representations and Warranties of RCH and the RCH Sub. RCH and the
RCH Sub hereby jointly and severally make the following representations and
warranties, effective as of the date hereof and jointly and severally represent
and warrant that each such representation and warranty shall be true and
accurate in all material respects as of the Closing Date:
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(a) RCH is a duly organized and validly existing Delaware
corporation, is in good standing in Delaware and is in good standing
as a foreign corporation in the State of Connecticut. The RCH Sub is a
duly organized and validly existing Nebraska corporation, is in good
standing in Nebraska and is in good standing as a foreign corporation
in the State of Connecticut. RCH and the RCH Sub have all requisite
corporate power and authority to deliver and perform this Agreement
and all other documents requiring RCH's or the RCH Sub's execution and
delivery hereunder.
(b) RCH and the RCH Sub have taken all corporate action
necessary (including obtaining the unanimous approval by the members
of the board of directors (other than those directors affiliated with
the XL Sub and XL) of RCH and obtaining the requisite approval by the
members of the board of directors of the RCH Sub) to authorize the
execution, delivery and performance of this Agreement, and all other
agreements requiring the RCH Sub's or RCH's execution and delivery
hereunder, and all transactions contemplated in connection with this
Agreement and any other such agreement, and the RCH board of directors
has determined that the transactions so contemplated are fair to and
in the best interests of the holders of common stock of RCH (other
than XL and the XL Sub). Without limiting the foregoing, no approval
of the transactions contemplated in this Agreement is required by
RCH's shareholders. Assuming due authorization, execution and delivery
hereof by the XL Sub and XL, this Agreement constitutes, and the
documents required hereunder to be executed and delivered by the RCH
Sub or RCH will, when executed and delivered, constitute, the duly
authorized, valid and legally binding obligations of the RCH Sub or
RCH, as the case may be, and this Agreement is, and those documents
will be, enforceable in accordance with their terms.
(c) The capital of RCH is not impaired and the completion of
the repurchase of the RCH Shares contemplated hereby will not cause
any impairment of the capital of RCH, within the meaning of Section
160 of the General Corporation Law of the State of Delaware. The
completion of the transactions contemplated hereby will not cause
RCH's common stock to be delisted from, or to cease to be eligible for
listing on, the Nasdaq National Market.
(d) The execution, delivery and performance of this
Agreement by RCH and the RCH Sub and the performance of the
transactions contemplated hereby by RCH and the RCH Sub do not require
the consent of any third party, including but not limited to that of
any governmental authority or agency in any jurisdiction, other than
such approvals as may be required by the insurance regulatory
authorities of the State of Nebraska.
(e) With the exception of its arrangement with Xxxxxxxxx
Lufkin & Xxxxxxxx Securities Corporation ("DLJ"), RCH and the RCH Sub
have not made any agreement or taken any other action which might
cause anyone to become entitled to a broker's fee or commission as a
result of the transactions
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contemplated hereby. Any fee, commission or other amount payable to
any financial advisor or consultant engaged by RCH or the RCH Sub,
including, but not limited to DLJ, will be paid by RCH.
(f) RCH has received, and has provided to XL and the XL Sub
a true copy of, an opinion of DLJ to the effect that, at the time of
execution of this Agreement, the terms of the transactions
contemplated hereby are fair, from a financial point of view, to RCH.
(g) The RCH Sub is the record owner of each Interest
(disregarding for the purposes of this Section 4 any adjustment
pursuant to Section 2(b)) as of the date of this Agreement, and RCH
will be the record owner of each Interest as of the Closing, which
Interests constitute RCH's and the RCH Sub's entire direct and
indirect ownership or other interest in LARC and ALRE. RCH has
provided to the XL Sub and XL a true and complete copy of the letter
agreement (the "Letter Agreement") dated March 4, 1998, between the
RCH Sub and ALRE, relating to the RCH Sub's right to designate one
individual to be nominated as a director of ALRE, which Letter
Agreement is in full force and effect and is valid and enforceable in
accordance with its terms, and which has not been amended or
supplemented in any manner (and there are no oral or written
agreements relating to taking any such action). RCH has provided to
the XL Sub and XL a true and complete copy of the Registration Rights
Agreement, which Registration Rights Agreement is in full force and
effect, is valid and enforceable in accordance with its terms, and
which has not been amended or supplemented in any manner (and there
are no oral or written agreements relating to taking any such action).
(h) The RCH Sub and RCH have good title to each Interest,
free and clear of any and all Adverse Interests. The RCH Sub and RCH
have all requisite corporate power and authority to transfer and
deliver such Interest to XL and the XL Sub in the manner provided in
this Agreement, and upon delivery of the Interests pursuant to the
terms of this Agreement, XL or the XL Sub will receive good and
marketable title thereto, free and clear of any and all Adverse
Interests (subject to the provisions of ALRE Bye-Law 52 (Limitation on
voting rights of Controlled Shares (as such term is defined in the
ALRE Bye-Laws))).
(i) The execution, delivery and performance of this
Agreement by RCH and the consummation of the transactions contemplated
hereby by RCH and the RCH Sub do not and will not constitute a breach
or violation of, or a default under, either of their articles or
certificates of incorporation, by-laws or similar governing documents,
or any material contract to which the RCH Sub or RCH is a party
currently in existence or entered into prior to the Closing, subject
to compliance with Section 5.1(a) of the Securities Purchase Agreement
(the "Purchase Agreement") dated as of March 4, 1998 between ALRE and
the RCH Sub relating to resale of the ALRE Shares and ALRE Warrants.
RCH has provided to the XL Sub and XL a true and complete copy of the
Purchase Agreement, which Purchase Agreement is in full force and
effect, is valid and enforceable in accordance with its terms, and
which has not been amended or
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supplemented in any manner (and there are no oral or written
agreements relating to taking any such action).
(j) No litigation, claim or other proceeding
before any court or governmental agency is pending against
the RCH Sub or RCH that would reasonably be expected to
materially adversely affect the completion of the
transactions contemplated by this Agreement.
(k) Both before and after consummation of the
transactions contemplated by this Agreement, each of RCH and
the RCH Sub (a) owns and will own assets the fair salable
value of which are (i) greater than the total amount of its
liabilities (including contingent liabilities) and (ii)
greater than the amount that will be required to pay the
probable liabilities of its then existing debts and claims
as they become absolute and matured, (b) has capital that is
not unreasonably small in relation to its businesses as
presently conducted, including after giving effect to the
consummation of the transactions contemplated hereby, and
(c) will be able to pay its debts and other liabilities
(including the reasonably anticipated amount of
subordinated, unmatured, unliquidated and contingent
liabilities and claims) as they become due.
5. Closing. The closing (the "Closing") of the purchase and sale of
the RCH Shares pursuant to this Agreement shall take place on the second
business day following satisfaction or waiver of all conditions to closing (the
"Closing Date") at 10:00 a.m. on the Closing Date at the offices of Wachtell,
Lipton, Xxxxx & Xxxx in New York or at such other time or place as the parties
may mutually agree.
6. Conditions to the Obligations of RCH and the RCH Sub to Close. It
shall be a condition to the obligations of RCH and RCH Sub to consummate the
transactions contemplated hereby that:
(a) All representations and warranties of the XL Sub and XL
contained in this Agreement shall be true and accurate in all material
respects as of the date hereof and on the Closing Date as made again,
on and with respect to the Closing Date.
(b) Each of the XL Sub and XL shall have performed and complied in
all material respects with all of its agreements contained in this
Agreement required to be performed and complied with by it by the
Closing.
(c) The XL Sub and XL shall each have delivered to the RCH Sub a
certificate dated the Closing Date and signed by one of its senior
executive officers confirming the matters referred to in Sections 6(a)
and 6(b) above.
(d) Any filings required under antitrust laws shall have been made
and any required waiting period under such laws applicable to the
transactions contemplated hereby shall have expired or been earlier
terminated and any required approval or consent under such laws
applicable to the transactions contemplated hereby shall have been
received.
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(e) Any filings required under state or other insurance laws and
regulations shall have been made and any required waiting period under
such laws and regulations applicable to the transactions contemplated
hereby shall have expired or been earlier terminated and any required
approval or consent under such laws and regulations applicable to the
transactions contemplated hereby shall have been received without the
imposition on RCH or the RCH Sub of any onerous condition.
(f) No temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the Closing shall be in effect.
(g) The Measuring Period shall have run in full.
7. Conditions to the Obligations of XL and the XL Sub to Close. It
shall be a condition to the obligations of XL and the XL Sub to consummate the
transactions contemplated hereby that:
(a) All representations and warranties of RCH contained in
this Agreement shall be true and accurate in all material respects as
of the Closing Date as made again, on and with respect to the Closing
Date.
(b) RCH shall have performed and complied in all material
respects with all of its agreements contained in this Agreement
required to be performed and complied with by it by the Closing.
(c) RCH and the RCH Sub shall each have delivered to the XL
Sub and to XL a certificate dated the Closing Date and signed by one
of its senior executive officers confirming the matters referred to in
Sections 7(a) and 7(b) above.
(d) Any filings required under antitrust laws shall have
been made and any required waiting period under such laws applicable
to the transactions contemplated hereby shall have expired or been
earlier terminated and any required approval or consent under such
laws applicable to the transactions contemplated hereby shall have
been received.
(e) Any filings required under state or other insurance laws
and regulations shall have been made and any required waiting period
under such laws and regulations applicable to the transactions
contemplated hereby shall have expired or been earlier terminated and
any required approval or consent under such laws and regulations
applicable to the transactions contemplated hereby shall have been
received without the imposition on XL or the XL Sub of any onerous
condition.
(f) No temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the Closing shall be in effect.
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(g) The Measuring Period shall have run in full.
(h) RCH and the RCH Sub shall have duly executed and
delivered the Voting and Disposition Agreement if required
pursuant to Section 2(e).
8. Indemnification.
(a) The XL Sub and XL hereby agree to jointly and severally
indemnify, save, defend and hold harmless the RCH Sub and RCH and
their respective officers, directors, employees and authorized agents
from and against all losses, liabilities, damages, actions, causes of
action, claims, judgments, penalties, fines, costs, obligations,
taxes, expenses and fees, including all reasonable attorneys' fees and
court costs (collectively, "Loss"), incurred by or asserted against
the RCH Sub, RCH or their respective officers, directors, employees or
authorized agents resulting from, arising out of, relating to, in the
nature of or caused by, any inaccuracy in or any breach by the XL Sub
or by XL of, any representation, warranty or agreement of the XL Sub
or XL contained herein.
(b) RCH and the RCH Sub hereby agree to jointly and
severally indemnify, save, defend and hold harmless XL and the XL Sub
and their respective officers, directors, employees and agents from
and against all Loss incurred by or asserted against XL, the XL Sub or
their respective officers, directors, employees and authorized agents
resulting from, arising out of, relating to, in the nature of or
caused by any inaccuracy in, or the breach by RCH or the RCH Sub of,
any representation, warranty or agreement of RCH or the RCH Sub
contained herein.
(c) Promptly after receipt by any party hereto (the
"Indemnitee") of notice of any demand, claim or circumstance which,
with the lapse of time, would or might give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation that may result in Loss as to which the Indemnitee is
entitled to indemnification hereunder (an "Asserted Liability"), the
Indemnitee shall give notice thereof (the "Claims Notice") to any
other party (or parties) obligated to provide indemnification with
respect to such Asserted Liability pursuant to this Section 8 (the
"Indemnifying Party"). The Claims Notice shall describe the Asserted
Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary and to the extent feasible) of the Loss that
has been or may be suffered by the Indemnitee. Failure to provide the
Claims Notice shall not relieve the Indemnifying Party of its
obligations under this Section 8 except to the extent that the
Indemnifying Party demonstrates that it has been materially prejudiced
by the failure to give such notice. The Indemnifying Party (as
hereinafter defined) shall make any payment required in respect of its
obligations under this Section 8 to the Indemnitee promptly upon
receipt of notice from such Indemnitee that such Indemnitee has
incurred such Loss.
(d) The Indemnifying Party may elect to settle, compromise
or defend, at its own expense and by its own counsel (which shall be
reasonably acceptable to
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the Indemnitee), any Asserted Liability; provided, however, that if
the named or potential parties to any action or proceeding in
connection with such Asserted Liability include both the Indemnifying
Party and the Indemnitee, and the Indemnitee shall have been advised
in writing by counsel that joint representation would be inappropriate
due to an actual or potential conflict of interest and that the
Indemnitee should have separate counsel, or if the Indemnifying Party
does not notify the Indemnitiee of its election as required herein,
fails to timely fulfill its indemnity obligations under this Agreement
or contests its obligation to indemnify under this Agreement, the
Indemnifying Party shall not have the right to settle, compromise or
defend such Asserted Liability, and the Indemnitee may elect to employ
one separate counsel in each applicable jurisdiction at the expense of
the Indemnifying Party to settle, compromise or defend such Asserted
Liability, as it relates to such Indemnitee. If the Indemnifying Party
is entitled to and elects to settle, compromise or defend an Asserted
Liability, it shall within 30 days after receipt of the Claims Notice
(or sooner, if the nature of the Asserted Liability so requires)
notify the Indemnitee of its intent to do so, and the Indemnitee shall
(subject to the foregoing) cooperate, at the expense of the
Indemnifying Party (except with respect to the legal fees of
Indemnitee's separate counsel as provided for above), in the
settlement or compromise of, or defense against, such Asserted
Liability. If the Indemnifying Party elects not to settle, compromise
or defend the Asserted Liability, fails to notify the Indemnitee of
its election as herein provided, fails to timely fulfill its indemnity
obligations under this Agreement or contests its obligation to
indemnify under this Agreement, the Indemnitee may settle, compromise
or defend such Asserted Liability. Notwithstanding anything to the
contrary contained in this Section, neither the Indemnifying Party nor
the Indemnitee may settle or compromise any claim over the objection
of the other; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld; provided further that
the parties agree that it shall not be unreasonable to withhold such
consent if such settlement or compromise contains any material
restrictions, limitations or other conditions on the conduct of such
party's business or business operations. In any event, each of the
Indemnitee and the Indemnifying Party may participate, at its own
expense, in the defense of the Asserted Liability.
9. Resignation of Director Nominees. (a) Effective as of the Closing,
Xx. Xxx X. Xxxx shall resign from RCH's Board of Directors, and Xx. Xxxxxxx X.
Xxxxxxxx, Xx., shall continue as a director of such Board but not as XL's
designee; provided, however, it is understood and agreed that the
indemnification and exculpation rights of such directors under the certificate
of incorporation and bylaws of RCH shall survive the Closing in accordance with
their present terms to the fullest extent permitted by law for at least six
years from the date of the Closing, and that RCH shall cause its directors' and
officers' liability insurance policies to continue to apply to such directors
with respect to their periods of services in such capacities on terms and with
coverage limits no less favorable in the aggregate than presently existing, in
each case with respect to any claim, action, suit, proceeding or investigation,
whether civil, criminal or administrative or investigative, arising out of
actions or omissions occurring prior to or at the Closing (including the
transactions contemplated in connection with this Agreement).
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(b) The directors nominated by RCH or the RCH Sub to the Board of
Directors of LARC shall resign from such Board, effective as of the Closing.
(c) From and after the Closing, Mr. Xxxxxx Xxxxxxxx shall continue to
serve on the Board of Directors of ALRE as the designee of XL until his
resignation or until XL or the XL Sub (together with RCH or the RCH Sub pursuant
to the provisions of the Voting and Disposition Agreement if applicable)
designates his replacement and any required consents from ALRE or the ALRE Board
of Directors relating thereto are obtained.
10. Public Announcement. Immediately following the execution of this
Agreement, RCH and XL will issue press releases which include the language in
Exhibit B (provided that such press releases may contain additional language
relating to matters other than the transactions contemplated hereby). No party
hereto will, without the prior approval of the other parties (which approval
shall not be unreasonably withheld), issue any press release or make any public
statement relating to the transactions contemplated hereby, except for
discussions with investors and analysts consistent with the press releases
referred to in the first sentence of this Section 10 or with such party's public
filings with the SEC or as may otherwise be required by applicable law or
regulation or the rules of an applicable stock market. To the extent reasonably
practicable, neither RCH nor XL will make any filing with the SEC or with any
other governmental entity relating to the transactions contemplated hereby
without first providing the other a reasonable opportunity to review such
filing.
11. Reasonable Best Efforts. The parties to this Agreement shall each
use its reasonable best efforts to take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or advisable
under applicable law or otherwise to consummate and make effective the
transactions contemplated by this Agreement, including by making all required
regulatory filings as promptly as practicable, and to cooperate with one another
in connection therewith; provided that neither party shall be required to incur
any material expenses in connection therewith.
12. Conduct of Business. From the date hereof through the Measurement
Period, RCH and the RCH Sub shall, and shall cause each of its subsidiaries to,
operate in the ordinary course of business consistent with past practice, each
shall, and shall cause each of its subsidiaries to, use reasonable efforts to
preserve its business intact and shall not, and shall cause its subsidiaries not
to, engage in any conduct (including by failing to take action) that is designed
to or would reasonably be expected to have an adverse effect on RCH's stock
price, including issuing or trading in securities of RCH or derivatives thereof;
provided, however, that RCH and the RCH Sub may enter into and close the
transaction provided for in the asset purchase agreement attached hereto as
Exhibit C substantially upon the terms, and subject to the conditions, set forth
in such agreement in the form attached. RCH and the RCH Sub shall take all
actions required to cause any purchaser (whether such purchase is by stock or
asset acquisition, merger, consolidation or otherwise) of RCH, the RCH Sub or
the RCH Sub's reinsurance business to assume all obligations of RCH and the RCH
Sub hereunder; provided that the first clause of this sentence shall not apply
if following any such purchase RCH is able to perform all obligations of RCH and
the RCH Sub hereunder in a timely manner and without adversely affecting the
benefits to be obtained by XL and XL Sub hereunder.
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13. Assignment. This Agreement and the rights hereunder shall not be
assignable or transferable by any party without the prior written consent of the
other parties hereto and any purported assignment or transfer in breach hereof
shall be void and of no effect; provided, however, that the XL Sub and XL may
assign their rights under this Agreement to any wholly owned subsidiary of XL
and the XL Sub may assign its rights under this Agreement to XL (it being
understood that any such assignment shall not relieve the XL Sub or XL of their
obligations hereunder). Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns.
14. Termination. This agreement may be terminated:
(a) by mutual written consent;
(b) by either XL (on behalf of itself and the XL Sub) or RCH (on
behalf of itself and the RCH Sub) if the Transaction shall not have been
consummated by July 31, 2000; provided, however, that the right to terminate
this Agreement under this Section 14(b) shall not be available to any party
(including any of its subsidiaries) whose action or failure to act has been a
principal cause of or resulted in the failure of the Transaction to be
consummated on or before such date if such action or failure to act constitutes
a breach of this Agreement;
(c) by either XL (on behalf of itself and the XL Sub) or RCH (on
behalf of itself and the RCH Sub)if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action, in any case having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Transaction, which order, decree or ruling is final and nonappealable;
(d) by XL (on behalf of itself and the XL Sub) if RCH or the RCH Sub,
or by RCH (on behalf of itself and the RCH Sub)if XL or the XL Sub, as the case
may be, has materially breached any of the representations, warranties,
covenants or agreements of RCH or the RCH Sub or the representations,
warranties, covenants or agreements of XL or the XL Sub, respectively, and such
breach has not been cured within 30 calendar days after the giving of notice of
such breach.
15. Covenant Regarding ALRE Shares and ALRE Warrants.
(a) RCH agrees it will not permit any of the ALRE Shares, ALRE
Warrants or common shares of ALRE issued upon the exercise of ALRE Warrants,
cash realized upon the sale of any of the foregoing and any dividends or other
distributions (whether cash, stock or otherwise) with respect thereto, if any,
to be held by it pursuant to Section 2(e) to become subject to any Adverse
Interests, and that it will not, and will not permit any of its subsidiaries to,
take any action that could impair the title of RCH and the XL Sub thereto. Upon
any transfer effected pursuant to Section 2(e), the XL Sub shall receive good
and marketable title thereto, free and clear of any and all Adverse Interests
(subject to the provisions of ALRE Bye-Law 52 (Limitation on voting rights of
Controlled Shares (as such term is defined in the ALRE Bye-Laws))).
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(b) This Section 15 is intended to be for the benefit of, and shall be
enforceable by, XL and the XL Sub and its permitted successors and assigns. If
RCH shall consolidate with or merge into any other corporation or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, then proper provisions shall be made so that the
successors and assigns of RCH shall assume all of the obligations set forth in
this Agreement and the Voting and Disposition Agreement.
16. Fees and Expenses. All fees and expenses of investment banking
advisors, counsel, accountants and other experts and all other expenses incurred
in connection with this Agreement and the purchase and sale of the RCH Shares
contemplated hereby shall be paid by the party incurring such costs or expenses.
17. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to XL or to the XL Sub, to:
XL Capital Ltd.
Cumberland House
One Victoria Street
Xxxxxxxx XX JX, Bermuda
Attention: Xxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 X. 00xx Xx.
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to RCH or to the RCH Sub, to
Risk Capital Holdings, Inc.
00 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
18. Amendments and Waiver. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by each of the parties
hereto. No waiver of any provision of this Agreement shall be effective unless
in writing and signed by the party benefited by such provision.
19. Entire Agreement. This Agreement, together with the exhibits
hereto (including the Voting and Disposition Agreement), contains the entire
agreement and understanding between the parties hereto with respect to the
matters covered hereby and supersedes all other agreements and understandings
relating thereto.
20. Specific Enforcement. XL, the XL Sub, RCH and the RCH Sub
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
they may be entitled by law or equity.
21. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without reference to its
principles of conflicts of law. Nothing contained in this Agreement shall be
construed to require any party hereto or any of their respective subsidiaries,
affiliates, directors, officers, employees, agents or representatives to take or
refrain from taking any action in violation of applicable law.
22. Severability. In the event that any provision of this Agreement or
the application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto so long as the economic or legal
substance of the transactions contemplated hereby are not materially adversely
affected. The parties further agree to negotiate in good faith to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of such void or unenforceable provision.
23. Survival of Representations, Warranties, Agreements and Covenants.
All representations, warranties, agreements and covenants contained herein shall
survive the execution of this Agreement and the consummation of the transactions
contemplated hereby.
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24. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original hereof and all of which
together shall constitute one instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Stock
Repurchase Agreement to be duly executed on the date first above written.
RISK CAPITAL HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx, Esq.
Title: Executive Vice President and Chief
Operating Officer
RISK CAPITAL REINSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx, Esq.
Title: Executive Vice President and Chief
Operating Officer
XL CAPITAL LTD
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President and Controller
XXXXXXXX INVESTMENTS INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Vice President
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