SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT ("SECOND
AMENDMENT") is entered into as of May 26, 1999 between ACE Bermuda Insurance,
Ltd., an insurance company licensed and registered under the laws of the Islands
of Bermuda (the "PURCHASER"), and Capital Re Corporation, a Delaware corporation
(the "COMPANY").
Background and Purpose
The Purchaser and the Company are parties to that certain
Stock Purchase Agreement dated as of February 19, 1999, as amended by that
certain First Amendment to Stock Purchase Agreement dated as of March 16, 1999
(as so amended, the "AGREEMENT") pursuant to which the Purchaser agreed to
purchase and the Company agreed to issue shares of the Company's common stock,
$.01 par value per share (the "COMMON STOCK"). The parties hereto have agreed to
amend certain provisions contained in the Agreement and have therefore agreed to
enter into and perform this Second Amendment.
NOW, THEREFORE, in consideration of the continuance of the
Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound thereby, hereby agree as follows:
Agreement
1. Definitions. All capitalized terms used in this
Second Amendment shall have the meanings given them in the Agreement.
2. Amendment to Conditions Precedent to the Purchaser's
Obligations. Section 3.2(e) of the Agreement is hereby deleted in its entirety
and the following inserted in place thereof:
"(e) There have shall not have occurred any
downgrading of the financial strength rating of Capital
Reinsurance Company below Aa3 by Xxxxx'x Investor Services,
Inc.("Moody's") or below AAA by the Standard & Poor's
Corporation, nor the current financial strength ratings of
Capital Mortgage Reinsurance Company and KRE Reinsurance Ltd.
below the double A category by the Standard & Poor's
Corporation; provided, however, that (i) at the closing date
Moody's will continue to provide to Capital Reinsurance
Company's financial guaranty ceding companies at least 85%
capital credit in respect of Capital Reinsurance Company's
reinsurance, (ii) announcement of a credit watch or credit
review action by a rating agency shall not be considered a
downgrade and (iii) each such rating agency may condition
maintenance of ratings upon the consummation of the sale of
the Shares pursuant to this Agreement and the consummation of
a merger or other business combination which results in the
Company becoming a wholly-owned subsidiary of an Affiliate of
the Purchaser.
3. Waiver of Conditions Precedent. Purchaser hereby waives
fulfillment of the condition precedent set forth in Section 3.2(l) of the
Agreement relating to the absence of the occurrence of any event, change or
effect having, or that would reasonably be likely to have, individually or in
the aggregate, a Material Adverse Effect to the extent that matters that have
been referred to in the financial projections prepared in connection with the
proposed transaction between Purchaser and its affiliates and the Company and
delivered to the President of A.C.E. Insurance Co. Ltd. on or prior to the date
hereof could constitute any such occurrence (the "Disclosed Matters"). In
addition, Purchaser hereby waives the condition set forth in Section 3.2(b) of
the Agreement relating to the truth and correctness of the Company's
representations and warranties as of the Closing Date to the extent the
Disclosed Matters would constitute the basis for a breach of any such
representation or warranty.
4. Continuance of Agreement. Except as specifically amended
hereby, the terms, conditions, provisions and agreements contained in the
Agreement shall be and remain in full force and effect, unchanged, unamended and
unaltered in any way or manner whatsoever.
5. Counterparts. This Second Amendment may be executed by the
parties hereto in one or more counterparts each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
agreement, it being understood that all of the parties need not sign the same
counterpart.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Second Amendment, or have caused this Second Amendment to be duly executed on
their behalf, as of the day and year first above written.
PURCHASER:
ACE BERMUDA INSURANCE, LTD.
By: /s/ Xxxxx Xxxxxxxxxxx
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Xxxxx Xxxxxxxxxxx
Director/Chairman of the Board
COMPANY:
CAPITAL RE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
