EXHIBIT 10.31
Dated __________ 2007
VALIDUS HOLDINGS LTD
and
TALBOT HOLDINGS LTD
AGREEMENT TO PROVIDE INFORMATION
LINKLATERS
Xxxxxxxxxx XXX
Xxx Xxxx Xxxxxx
Xxxxxx XX0X 0XX
AGREEMENT TO PROVIDE INFORMATION
THIS AGREEMENT is made on _____ May 2007
BETWEEN:
(1) TALBOT HOLDINGS LTD, a company incorporated in Bermuda (Registration No.
31149) whose registered office is at Xxxxxxxxx Xxxxx, 0 Xxxxxx Xxxxxx,
Xxxxxxxx, XX00, Xxxxxxx (the "COMPANY"); and
(2) VALIDUS HOLDINGS LTD, a company with limited liability organised under the
laws of Bermuda (Registration No. EC37417) whose registered office is at 00
Xxx Xx Xxxxx Xxxx, Xxxxxxxx, XX00, Xxxxxxx ("VALIDUS").
WHEREAS:
(A) The shareholders of the Company have agreed to sell the Shares to Validus
in accordance with the terms of the Share Sale Agreement dated on or about
the date of this Agreement and subject to the satisfaction of certain
conditions precedent therein ("SHARE SALE").
(B) During the period prior to the completion of the Share Sale the Company has
agreed to provide certain information to and cooperate with Validus as is
necessary or advisable in connection with Validus' reporting obligations
to, among others its current or prospective shareholders or capital
providers and any regulatory body including the Securities and Exchange
Commission.
It is agreed as follows:
1 INTERPRETATION
In this Agreement, unless the context otherwise requires, the provisions in
this Clause 1 apply:
1.1 DEFINITIONS
"2005 ACCOUNTS" means the audited consolidated financial statements of the
Group for the year ended and as at 31 December 2005;
"2006 ACCOUNTS" means the audited consolidated financial statements of the
Group for the year ended and as at the Accounts Date;
"ACCOUNTS DATE" means 31 December 2006;
"AFFILIATE" means each officer or director of the Company or any Group
Company;
"GROUP" or "GROUP COMPANIES" means the Company and the subsidiaries and
"GROUP COMPANY" means any one of them;
"IPO ACCOUNTS" means the 2005 Accounts and the 2006 Accounts, with such
amendments and appropriate reconciliations in respect of US GAAP as may be
necessary to comply with the provisions set out in the memorandum attached
as Appendix A, to the extent determined necessary or appropriate by KPMG,
or such other accountants as the
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parties (acting reasonably) may agree, in connection with the delivery of
the audit opinions, consents and comfort letters referred to in Clause 3
below, for inclusion in Validus's Registration Statement;
"REGISTRATION STATEMENT" means the registration statement filed or to be
filed by Validus with the Securities Exchange Commission;
"SHARE SALE AGREEMENT" means the agreement dated on or about the date of
this Agreement under which Validus agrees to purchase the entire issued
share capital of the Company; and
"US GAAP" means generally accepted accounting practices and principles in
the US.
2 AGREEMENT TO PROVIDE FINANCIAL AND OTHER DATA
2.1 The Company shall use all reasonable endeavours to provide and to
cause its and the Group Companies' respective officers, employees,
representatives and advisers, including legal, actuarial and
accounting advisers, to provide to Validus as promptly as practicable,
from the date hereof until completion of the Share Sale, all
cooperation and information reasonably requested by Validus that is
necessary or advisable in connection with Validus's reporting
requirements to its current or prospective shareholders or capital
providers, or any regulatory body, including the Securities and
Exchange Commission, or any rating agencies to whom Validus otherwise
deems it advisable or beneficial to report, including, to the extent
and at the times reasonably requested by Validus:
2.1.1 participation in meetings with Validus and its advisers,
drafting sessions, due diligence sessions, management
presentation sessions, road shows and sessions with rating
agencies;
2.1.2 assistance with the preparation of materials for rating agency
presentations and business projections and obtaining any
necessary rating agencies' confirmations or approvals; and
2.1.3 provision of other pertinent information regarding the business
of the Group Companies as may reasonably be requested by Validus
in connection with the preparation of its Registration Statement.
2.2 The Company shall use all reasonable endeavours to ensure that the
information presented pursuant to this clause 2 above and the IPO
Accounts provided pursuant to clause 3 below will not contain any
untrue statement of a material fact or omit to state any material fact
regarding the Group Companies necessary in order to make such
information not misleading.
2.3 For the avoidance of doubt:
2.3.1 neither the Company nor any Group Company accepts responsibility
for nor makes any representation, express or implied nor gives
any warranty to Validus with respect to the accuracy or
completeness of any information provided by any person other than
the Company; and
2.3.2 the parties agree that if any directors, officers or employees
of any Group Company shall participate in road shows or meetings
with, or presentations to, prospective investors in Validus or
other external third parties in
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connection with the Registration Statement or otherwise in
connection with Validus's public offering of its shares, it shall
be made clear to all such prospective investors and external
third parties that any such director's, officer's or employee's
participation is as a representative of Validus rather than as a
representative of any Group Company.
3 US GAAP AUDIT OPINION
The Company shall use all reasonable endeavours to provide and to cause its
and the Group Companies' respective officers, employees, representatives
and advisers, including legal, actuarial and accounting, to provide Validus
promptly with IPO Accounts and to obtain, as promptly as practicable and in
co-operation with Validus, a US GAAP audit opinion with respect to the IPO
Accounts to the reasonable satisfaction of Validus, as well as accountants'
comfort letters and accountants' consent to include such audit opinion in
Validus's Registration Statement.
4 CONTINUING OBLIGATIONS
The Company shall use all reasonable endeavours to notify and to cause its
and the Group Companies' respective officers, employees, representatives
and advisers, including legal, actuarial and accounting, to notify Validus
promptly if at any time from the date hereof until completion of the Share
Sale any of the information provided pursuant to clauses 2 or 3 above
ceases to be accurate in any material respect and will promptly supplement
such information so as to rectify such inaccuracy.
5 COMPLIANCE WITH SHARE SALE AGREEMENT
The Company shall procure that the Group Companies comply with clauses 5.1,
5.2 and 5.4 of the Share Sale Agreement.
6 PROTECTION AND INDEMNITY
The Company has entered into this Agreement as an accommodation to Validus
and without making any charge to Validus for the services to be provided to
Validus under this Agreement. Accordingly, Validus agrees for the benefit
of the Company and the Affiliates that neither the Company nor any of the
Affiliates shall have any liability to Validus and/or any of its existing
or future shareholders for any loss, damage, cost or liability suffered or
incurred by Validus and/or any of its existing or future shareholders as a
result of relying upon any information provided (or failed to be provided)
pursuant to this Agreement or otherwise in connection with the Registration
Statement or Validus's public offering of its shares and Validus shall
indemnify the Company and each Affiliate from any loss, damage, cost or
liability incurred or threatened by or against any of them in connection
with any such information or otherwise in connection with the Registration
Statement or Validus's public offering of its shares save that this
provision shall not protect any individual against the consequences of that
individual's own fraud, wilful default or dishonesty and shall not protect
any individual or body corporate against liability for physical injury or
death caused by negligence on the part of that individual or body
corporate. For the avoidance of doubt, the provisions of this Clause 6
shall not reduce the liability of the Warrantors (as defined in
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the Share Sale Agreement) in their capacity as such for any breach of the
warranties set out in Schedule 4 of the Share Sale Agreement under the
terms of that agreement.
7 TERMINATION
The obligations of the Company under this Agreement shall terminate
automatically (i) if the Share Sale Agreement is terminated in accordance
with the relevant provisions therein or (ii) upon completion of the Share
Sale Agreement and, in either case, the Company will have no on-going
obligations under this Agreement thereafter. For the avoidance of doubt
Clause 6 shall continue in force and effect notwithstanding the termination
of the Company's obligations hereunder.
8 THIRD PARTY RIGHTS
This Agreement does not create any right under the Contracts (Rights of
Third Parties) Xxx 0000 which is enforceable by any person who is not a
party to it except that Affiliates shall be entitled to the benefit of and
may enforce and rely on any term of this Agreement to the same extent as if
it were a party.
9 GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of England and Wales.
SIGNED by )
for and on behalf of VALIDUS HOLDINGS )
LTD )
)
SIGNED by )
for and on behalf of TALBOT HOLDINGS )
LTD )
)
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APPENDIX A
MEMORANDUM REGARDING SEC MANDATED REQUIREMENTS FOR
INCLUSION OF HISTORICAL AND PRO-FORMA FINANCIAL STATEMENTS
IN CONNECTION WITH A POTENTIAL ACQUISITION
This memorandum address the technical, rule-based requirements for the inclusion
of historical and pro-forma financial statements in connection with a potential
acquisition in a registration statement filed under the Securities Act of 1933
or under Form 8-K. This memorandum does not address the general materiality and
related disclosures that must also be considered in an acquisition context when
the acquirer is also issuing securities into the market. This memorandum does
not address the situation where securities are being issued as part of the
acquisition consideration.
INCLUSION IN AN IPO REGISTRATION STATEMENT
Form S-1 and Regulation S-X together require that, when a business of a certain
size in relation to a registrant has been acquired by the registrant, or the
acquisition is "probable", the registrant provide financial statements for the
business acquired or to be acquired (the "Acquired Company"). Where these
historical financial statements are required, Regulation S-X also requires that
the registrant provide pro-forma financial information showing the effects of
the business combination. (Form S-1, Item 11(e) and Regulation S-X, Rule 3-05
and Article 11.)
The application of these rules, as well as the determination of which of the
Acquired Company's financial periods are to be presented, depends upon the size
of the Acquired Company relative to the registrant, and the impact the
acquisition will have upon the registrant's results. Regulation S-X measures
this relationship using three "conditions:"
- Investments and Advances: measures the registrant's investments in and
advances to the Acquired Company as a percent of the registrant's total
consolidated assets, as of the most recent fiscal year.
- Share of Assets: measures the Acquired Company's total assets as a percent
of the proportionate share of the registrant's total assets, determined as
of the last day of the most recent fiscal year.
- Income from Continuing Operations: measures the Acquired Company's income
from continuing operations as a percent of the registrant's total income
from continuing operations, as of the most recent fiscal year.
Different financial statements of the Acquired Company must be filed depending
upon what percent applies in each of the conditions above. Four thresholds
apply:
- If none of the percents determined according to the conditions above exceed
20%, then no financial statements of the Acquired Company are required.
- If any of the percents determined according to the conditions above exceed
20% but none exceed 40%, then financial statements are required for the
most recent year and any interim periods.
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- If any of the percents determined according to the conditions above exceed
40% but none exceed 50%, then financial statements are required for the
most recent two years and any interim periods.
- If any of the percents determined according to the conditions above exceed
50%, the financial statements of the Acquired Company must be filed for all
periods as would be required for the Acquired Company independently.
There is however an exception to the above rules. No separate financial
statements for the Acquired Company are required where none of the percents
determined according to the conditions above exceed 50% and either 1) the
acquisition has not yet occurred, or 2) the date of the final prospectus of an
offering is no more than 74 days after the consummation of the acquisition, and
the financial statements have not previously been filed. The requirement that
pro-forma financials be provided is also conditioned by this exception, such
that the pro-forma effects of an acquisition need not be presented if the
separate financial statements of the Acquired Company are not included in the
filing.
Financial Statements Required in the IPO Prospectus if (a) the 50% test is met,
and (b) the acquisition is probable:
If the 50% test is met and the acquisition is probable, the following financial
statements of the Acquired Company would be required to be included in the IPO
prospectus:
- audited balance sheets as of the end of each of the two most recent fiscal
years;
- if the IPO prospectus is filed 134 days subsequent to the end of the
Acquired Company's most recent fiscal year, also include an interim
unaudited balance sheet dated within 135 days of the date of filing (i.e.
the same stub period as that which would be presented by Validus);
- audited statements of income and cash flows for three years preceding the
filing;
- unaudited statements of income and cash flows for the period for which
interim balance sheets are being presented; and
- financial statements for the earliest of the three fiscal years required
may be omitted if net revenues reported by the Acquired Company in its most
recent fiscal year are less than $25 million.
If the 50% test is met and the acquisition is probable, pro-forma financial
information showing the effects of the business combination must also be
included in the IPO prospectus as follows:
- A pro forma condensed balance sheet as of the end of the most recent period
for which balance sheets are being presented; and
- Pro forma condensed statements of income for the most recent fiscal year
and the interim period.
With respect to historical financial statements, if the Acquired Company is a
"foreign private issuer" (as defined below), then interim financial statements
are required only if the filing is made 9 months or more after the end of the
most recent fiscal year. However, to the extent that a foreign private issuer
has published interim financial information more current than that required by
this standard, then the more current interim financial information must be
included in the prospectus. A foreign private issuer is a corporation or entity
organized under the laws of a foreign country, except that an issuer will not be
considered a foreign private issuer if more than 50 percent of its
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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 the issuer are located in the United
States, or (iii) the business of the issuer is administered principally in the
United States. (See Regulation S-X Rule 3-02 and Form 20-F Item 8.A(5))
Form 8-K
In addition to the rules above, a completed acquisition must be reported on in
an 8-K filing. Form 8-K governs this disclosure and provides that the financial
statements of an Acquired Company must be provided to the same extent as is
required under Regulation S-X as outlined above. The exception is that the
financial statements here required may be filed by amendment to the 8-K up to 71
calendar days following the date on which the initial 8-K must be filed.
In addition to the above requirements, the impact (and, consequently, the
applicable disclosure) of a potential acquisition must also be assessed
according to general materiality and disclosure principles.
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